Wrong Social Security # on W2

My son's employer has the wrong social on his W-2. He will be contacting employer to get a corrected W-2C however, my question is if this was the wrong soc sec # all year, where did this withholding $ go? Will there be a penalty fed/state for taxes not paid during year for him?  Did the paid taxes get applied to someone else with "wrong" soc sec #.  Will this withheld taxes ever get applied to his soc?