I-9 compliance changes raise the stakes for employers

For years, plenty of employers have long viewed certain Form I-9 mistakes as minor paperwork issues that could be corrected during an audit. That approach may no longer be enough.

On March 16, 2026, U.S. Immigration and Customs Enforcement (ICE) updated its Form I-9 inspection guidance. These changes significantly expanded the list of errors that are now considered “substantive” violations, significantly increasing monetary penalties. 

For employers, both small and large, as well as tax professionals that provide employee onboarding and payroll services, compliance is essential. Although ICE issues and prosecutes these violations, tax professionals may need to help their clients deal with the aftermath.

What has changed

Form I-9, Employment Eligibility Verification, is a federal form used by employers to verify an employee’s identity and authorization to work in the United States, as required under the Immigration Reform and Control Act of 1986. Employees must complete Section 1 by the first day of employment, while employers generally must complete and sign Section 2 within three business days of the employee’s hire date. Some employers use E-Verify, a federal electronic system that confirms the information on the I-9.

Historically, ICE classified many Form I-9 mistakes as “technical or procedural” violations. Employers generally had at least 10 business days to correct those errors after receiving notice from ICE. The updated fact sheet reclassifies these errors as substantive and can trigger immediate penalties, increasing financial risk even when employees are legally authorized to work. This means employers may no longer have the opportunity to cure the issue before fines are assessed.

Examples include:

• Missing employee birth dates or hire dates 
• Missing signatures or dates  
• Incomplete preparer or translator information 
• Missing employer title information 
• Incomplete document information
• Improper use of the Spanish-language form outside Puerto Rico 
• Remote verification errors tied to E-Verify procedures 

Penalties can add up quickly

Current Form I-9 paperwork penalties can range from hundreds to thousands of dollars per violation, depending on the employer’s error rate and inspection findings.  Meaning penalties can be anywhere from $288 to $2,861 per violation. 

For a small business with 50 employees, even a modest error rate can add up to a five-figure exposure quickly. For a larger employer with hundreds or thousands of Forms I-9 and any degree of decentralized onboarding, the math gets uncomfortable fast.

The updated guidance also places additional focus on electronic Form I-9 systems and remote verification procedures. Employers using digital onboarding platforms or alternative document examination procedures should confirm those systems comply with DHS requirements.

Understanding the inspection process

ICE inspections generally begin with a Notice of Inspection, which requires employers to produce Forms I-9 and supporting records within three business days. 

Following review, ICE may issue several types of notices, including:

• Notice of Technical or Procedural Failures 
• Warning Notice 
• Notice of Suspect Documents 
• Notice of Intent to Fine 

If ICE identifies substantive violations or uncorrected deficiencies, employers may receive a Notice of Intent to Fine outlining alleged violations and proposed penalties. However, employers can request a hearing before an administrative law judge, but strict deadlines apply. 

Time for a compliance review

Although Form I-9 compliance is often viewed as an HR responsibility, payroll firms and outsourced accounting providers frequently assist clients with onboarding procedures, payroll setup and record retention practices. Employers must provide an accurate Form I-9 to validate they have verified the identity and work authorization of each of their employees, whether full or part time. 

Encourage clients to:

• Conduct internal I-9 audits to ensure the documents are complete and accurate (retained for three years after hire date or at least one year after employee leaves, whichever is later)
• Review onboarding procedures 
• Train staff responsible for employment verification 
• Evaluate electronic I-9 systems 
• Confirm remote verification procedures meet current requirements 
• Correct existing errors before an inspection occurs 

The increased focus on substantive violations means that employers may face fines even when employees are authorized to work, if documentation requirements are not properly met. 

For tax professionals and business advisors, this creates an opportunity to help clients strengthen their compliance practices before an audit. Reviewing procedures now may help employers avoid costly penalties later and reinforce the importance of accurate, timely and complete employment verification records.