While family offices focus on investment strategy, tax efficiency, and wealth transfer, a federal regulatory enforcement surge in the US is quietly targeting the businesses behind the wealth – and most of them are not ready.

The author of this article, Carol R Kaufman (pictured below), founder and CEO of Alternatives TLC (and someone that many of our readers will know well), argues that institutions such as family offices must pay close attention to Form 1-9 compliance. Kaufman says the regulatory environment in the US poses a risk for all US companies with 100 or fewer employees – about six million companies.

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Carol R Kaufman
 

When professionals who serve high net worth and ultra-HNW families gather to discuss risk, the conversation almost always turns to the same set of concerns: portfolio concentration, succession planning, tax exposure, insurance coverage, security, reputational risk, governance, and family continuity. These are legitimate and important concerns. But one category of operational risk rarely makes it onto the family office agenda even though it can create immediate financial, legal, and reputational exposure for business-owning families.

It’s called Form I-9 compliance. And if your clients own operating companies with employees in the US, they most probably have a I-9 problem they don’t know about.

What Is a Form I-9, and why does it matter now?
Form I-9 is an Employment Eligibility Verification document that has been a federal requirement for every employer in the US since November 6, 1986, including companies with only one or two employees. It is enforced by Immigration and Customs Enforcement (ICE) and falls under the Department of Homeland Security.

The Form I-9 must be completed for every new employee, regardless of citizenship status. When an employee fills out a W-4, they must fill out Section 1 of the Form I-9, which is completed solely by the employee no later than the end of the first day of employment; Section 2 is completed solely by the employer within three business days of the employee’s start date. Both sections must be accurate, timely, and properly documented.

This sounds straightforward but in practice, it isn’t. The form has precise rules governing who and how the form is filled out, which documents are acceptable, when the form must be completed, how corrections must be made (no whiteout, no backdating), how long the retention period must be after employment ends, and even how quickly and how the files must be produced if the business receives a federal Notices of Inspection. The January 2025 version of the Form I-9 introduced additional changes that many employers still have not fully absorbed.

What has changed dramatically in 2026 is the enforcement environment. ICE workplace audits – formally initiated through Notices of Inspection – have dramatically increased. They are running more than 30 per cent above prior-year levels. Field offices have been given explicit enforcement quotas. Congress has authorized $170 billion in new immigration enforcement funding. In the past four months,12,000 additional ICE agents have been hired, bringing the total number to 22,000 so they can step up audits between now and 2029. Federal priorities have shifted toward a more systematic review of employer compliance. The result is a less forgiving environment for businesses that have allowed I-9 files to sit unreviewed for years.

For operating companies owned by wealthy families, this creates a specific and underappreciated exposure.

The operating company problem
Family offices are exceptionally good at what they do: coordinating advisors, managing complex entity structures, planning for generational transfer, and optimizing tax outcomes. What they are not typically focused on is the day-to-day HR compliance of the underlying operating companies within the family’s portfolio.

Research consistently shows that HNW and UHNW families are prolific business owners. Studies of multi-generational family wealth suggest that the typical family with a structured office controls not one but five to seven operating entities across their history – including companies created, acquired, and currently active. These entities employ people. Every employee in every one of those entities that filled out a W-4 is required to have filled out a Form I-9.

The businesses most at risk aren’t the large ones. Large companies typically have HR departments, employment counsel on retainer, and compliance infrastructure. The vulnerable businesses are the smaller operating companies in the family’s portfolio: the restaurant group, the construction firm, the specialty retailer, the medical practice, the landscaping business, the light manufacturer. These are businesses with 10, 25, or 75 employees – run by an owner, an office manager, or a bookkeeper who handles HR as one of a dozen responsibilities.

While ICE doesn’t reveal statistics on errors, private legal and audit firms consistently reveal at least one error in the vast majority of I-9s (90 per cent), with paper forms having an average error rate of 95 per cent and electronic forms not far behind, at 75 per cent.

In recent internal I-9 audits I have conducted for clients with anywhere from 14 to 88 employees, I’ve found these numbers to be surprisingly accurate. More than 90 per cent of the Form I-9s I review contain at least one error. Not fraud – errors. Missing I-9s. Wrong versions of the Form I-9 used. Missing dates. Incorrect document notations. Corrections made with whiteout rather than a single strikethrough. Forms not retained for the proper retention period. These are exactly the types of findings that trigger fines in an ICE audit, and they are extraordinarily common.

To the employer, these may seem like clerical errors. To an ICE auditor, these are violations.

The fine schedule is increasingly unforgiving. Signaling a continued trend of increased workplace enforcement, on March 16, 2026, ICE issued new rules that significantly raised the threat of penalties for employers. The top paperwork violations traditionally classified as “technical” errors were reclassified to “substantive” errors.

Previously, one Form I-9 paperwork error could be cured within 10 days of the audit. As of March 16, 2026, the cure period has gone so an error or missing form is now considered an immediate “substantive” violation starting at $288 per form and going up to $2,861 per form. A business with 50 employees and common filing mistakes could easily face six figures in penalties without a single allegation of unauthorized employment and with all employees being US citizens.

What happens when ICE comes knocking
While ICE raids continue to be headlined, they are an after-effect of prior discovery; an ICE investigation or audit. The audit process begins with a Notice of Inspection, giving the employer three business days to produce all Form I-9s for current and recently terminated employees. Three business days. For a business that has never organized a  Form I-9 binder, doesn’t’ have a tracking system, and has been storing forms in drawers, filing cabinets, and elsewhere – with no backup – this is a crisis, not a compliance exercise.

ICE is allowed to take your documents with them to review them. After their review, the employer receives a Notice of Suspect Documents and/or a Notice of Discrepancies and the process moves toward fines, which are calculated per form and multiplied by the number of incorrect forms.

Businesses that can demonstrate good faith efforts at compliance – documented correction processes, organized files, evidence of internal audits – tend to receive some mitigation. Businesses that can’t demonstrate these efforts don’t.

The single most important thing a business owner can do is conduct an internal self-audit before ICE does it for them. This means reviewing every employee’s Form I-9, checking for errors, correcting them properly (using a single strikethrough, initialing and dating each correction, and documenting the reason in a change log, and building a retention and purge schedule for terminated employees. None of this is impossible, but it can be difficult and takes time. It requires knowing the rules, which unfortunately, continue to change, and having a good system in place.

Most of the operating companies behind family wealth do not have that system. They have good intentions and a filing cabinet.

Why this is a family office issue
Every professional who serves HNW and UHNW families has trusted relationships with clients who own multiple operating companies. You’re often in the room, or on the call, when decisions about risk are made. And you’re the natural point of contact when a risk of that nature surfaces.

And yet Form I-9 compliance almost never surfaces in family office conversations – because it lives in the operational layer of the underlying businesses, not the financial or legal or philanthropic layer. The CPA focuses on tax. The attorney focuses on contracts and estate planning. The wealth manager focuses on portfolios. The insurance broker focuses on coverage. The governance consultant focuses on family dynamics and decision-making structures.

Nobody  across this entire ecosystem of trusted advisors is looking at whether the family’s restaurant group has properly completed Form I-9s for its 30 kitchen employees.

This is a gap that any trusted professional in the family’s orbit can close – not by becoming I-9 compliance experts themselves, but by making sure that the operating companies in their clients’ portfolios have properly identified the risk and have access to the right resources before a Notice of Inspection arrives.

The cost of prevention is a fraction of the cost of a fine schedule. More importantly, it is a fraction of the reputational and operational disruption of a federal ICE audit.

A practical framework for advisors
For any professional who serves business-owning families and wants to address this proactively, the approach is straightforward:

1. Inventory the operating companies. For each entity that has employees, ask a simple question: “When did you last review your Form I-9s?” If the answer is “never” or “I’m not sure,” or “What’s a Form I-9?” that entity has exposure.

2. Prioritize by industry. Restaurants, hospitality, construction, agriculture, food production and processing, moving companies, manufacturing, logistics and e-commerce, healthcare and technology, and landscaping face higher audit frequency. If a client’s portfolio includes businesses in these industries, the urgency is higher.

3. Connect the business to compliance resources. Structured form I-9 compliance training, an internal audit process, and a documented correction protocol are inexpensive relative to the alternative. The cost of becoming compliant is trivial compared with the cost of a Notice of Inspection that finds systemic errors and levies fines.

4. Build an annual internal I-9 audit into the calendar. I-9 compliance is not a one-time event. Form I-9s require updates when employees present new documentation. Retention schedules must be maintained. Terminated employees’ forms must be purged at the right time – not too early (which destroys evidence), not too late (which creates unnecessary retention risk).

5. Reliance on professional, electronic I-9 systems is not foolproof. Many, including those that are associated with payroll systems, are flawed. Some don’t alert you when documents expire. For many, changes to the I-9s must be made manually and then uploaded. Form I-9 compliance is like any other compliance; ultimate responsibility can never be fully outsourced.

An opportunity hidden in plain sight
There is a reason why this issue hasn’t received much attention among the professionals who serve wealthy families: Form I-9s are not a sophisticated wealth strategy. I-9 compliance is unglamorous. It’s paperwork. It’s a federal form that most business owners – if they sign it – sign it and file it away and never think about it again.

But the enforcement environment of 2026 has made that indifference an expensive one. And the families most exposed are not the ones with large, professionally managed businesses. They’re families with portfolios of smaller operating companies – the businesses that built wealth, employ people from the local community, that are run by committed owners who are simply unaware of what is now a significant and imminent risk.

The professional who surfaces this issue – regardless of whether they’re a private banker, an estate attorney, a tax accountant, an insurance advisor, a wealth manager, a security specialist, or a governance consultant – provides a  value that transcends their primary role: each has the ability to ask a single pointed question that may help protect the asset that often matters most to the family. The business itself.

That is worth a conversation.

About the author
Carol R Kaufman is the founder and CEO of Alternatives TLC, LLC, an operational and HR compliance consulting firm based in Hawthorne, New Jersey. She specializes in Form I-9 compliance training and educating business owners and their staff, conducting internal audits, and building the systems and processes companies need to stay compliant before an ICE auditor arrives. She works with small and mid-sized family-owned businesses across a wide range of industries and is a recognized resource for employers navigating the current Form I-9 enforcement environment.