There is no statutory authority for allocation of back pay under a statute. The authority
is based on U.S. Supreme Court decision, Social Security Board v. Joseph Nierotko, 327 U.S. 358 (1946). The court held that back payments made to Mr. Nierotko by their
employer constituted wages and should be allocated to the periods in which they should
have been paid.
IRS does not allocate back pay because employer tax liability is based on when the
back wages are actually paid.
REFERENCE: Social Security Ruling 83-7