The IRC controls the maintenance, use, and disclosure of tax return information. We also must comply with the Privacy Act when maintaining, using, and disclosing tax return information. We may use and disclose tax return information only as authorized by the IRC, the Social Security Act, or the IRS.

Sometimes we obtain wage and employment information from a source other than the wage reporting process, i.e., other than a tax return or schedule filed with IRS or with us. For example, a person may give the field office a copy of their W-2 or 1040 tax return as proof of employment in a claims situation. Because the information was received directly from the person, it is not considered tax return information subject to the restrictions in the IRC (see second bullet GN 03320.001D.2).

If we receive wage or employment information directly from a person and use the information to create or amend the person’s official earnings record, the newly created or amended earnings record is tax return information controlled by the IRC. This situation could occur when we do not receive a W-2 wage report from the employer or self-employed person and we use the information provided by the wage earner to create or amend their earnings record. We provide the definition and examples of earnings or wage information that does not constitute tax return information in GN 03320.001D.2.

Employers report wages to us on form W-2 (Wage and Tax Statement). We use this information to maintain individual earnings records needed to administer our programs. We also make wage data available to the IRS for tax purposes. Historically, if we could not match the first and last name and SSN reported on form W-2 to information in our records, we sent a DECOR letter to the employee to resolve the discrepancy, or no-match. When we did not have a valid employee address, we sent a DECOR letter to the employer. In addition, we sent EDCOR letters to employers if the incidence of no-matches in the employer’s wage report exceeded a certain number. Currently we are sending EDCOR letters to employers if they submitted wage reports with one or more mismatches. For additional information on these letters, see RM 01105.027 - EDCOR and DECOR Letters Mailed when Names and SSNs Do Not Match Our Records. DECOR letter mailings are currently suspended.

Tax return information in our possession means such information as defined in the IRC. In part, the IRC defines “return information” as “a taxpayer's identity, the nature, source, or amount of his income, payments, receipts, deductions, exemptions, credits, assets, liabilities, net worth, tax liability, tax withheld, deficiencies, over-assessments, or tax payments.” (26 U.S.C. § 6103(b))

Examples of tax return information:

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  Any tax return or schedule filed with the IRS or with us for the IRS;

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  Form SS-4 (Application for Employer Identification Number) and any information derived from this form;

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  Any information taken from such a return or schedule, whether the information is kept separate or is incorporated into a system of records;

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  Any information pertaining to identifiable taxpayers that has been taken from returns and schedules, including Summary Earnings Query (SEQY), Detail Earnings Query (DEQY), and the Full Claims Earnings Record (FCER);

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  Earnings information that is a part of the Informational/Certified Earnings Records System (ICERS);

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  Earnings information on the Interactive Computation Facility (ICF);

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  Earnings information reported directly to us by employers on Form W-2 such as employer names and addresses, employee first and last names and Social Security numbers (SSN), the amount of wages earned and the period(s) during which such wages were earned;

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  Business addresses of self-employed individuals and the identities and addresses of employers of individuals if taken from IRS records;

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  Earnings data received by us from IRS prior to 1/1/1976;

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  The summary earnings portion of the Social Security Statement online query output; and

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  Tax returns and employer reports (schedules attached to Form 941, the Employer's Quarterly Federal Tax Return) filed with IRS. This also includes Form 942, which IRS used prior to 1978 for reporting wages of household and agricultural employees.

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  DECOR letters (currently suspended) – We prepared and sent DECOR letters, commonly referred to as employee “no-match” letters, to employees, self-employed persons, and employers (only when there was no valid employee address), relating to Form W-2 reports and self-employment income reported on the Schedule SE in which the first and last name and SSN combination does not match our records.

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  EDCOR letters – We are sending EDCOR letters to employers, commonly referred to as employer "no-match" letters.

Non-tax return information is any earnings or wage information we receive from any source other than a tax return or schedule filed with IRS, as well as information such as benefit entitlement or eligibility data, payment data, and medical records.

Examples of wage and employment data that are non-tax return information:

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  Form SSA-1099 (including deceased individuals);

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  Quarters of coverage (QC) and average current earnings (ACE);

  (Although QC and ACE data are derived from tax return information, the IRS formally advised us that these data are not tax return information because once we use this information in our computations, the tax return information cannot be “backed out”);

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  Earnings or wage data provided to us by the wage earner or self-employed person from their own records (e.g., W-2 or photocopies of the person's tax return);

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  Information furnished by an employer other than on a tax report filed with IRS (e.g., forms SSA-7010-U5 (Notice of Determination of FICA Wages) or SSA-7011-F4 (Statement of Employer)); and

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  Employee State government tax returns filed with us prior to January 1, 1987 for Social Security coverage. (State government employees file these returns with IRS beginning January 1, 1987. The IRS defines them as tax return information).