Under the authority provided by Section 232 of the Social Security Act, the Internal Revenue Service (IRS) and the Social Security
Administration (SSA) signed an inter-agency agreement, a Memorandum of Understanding
(MOU), that specifies how the CAWR process works. CAWR is a joint responsibility between
SSA and IRS ensuring that employers pay and report the proper amount of taxes, as
well as to ensure all Forms W-2 (Wage and Tax Statement), and W-3 (Transmittal of
Wage and Tax Statement), or equivalent electronic reports are filed. SSA records earnings
data to determine eligibility for, and to calculate and pay Retirement, Survivors,
and Disability Insurance (RSDI) benefits. The IRS records earnings data to collect
taxes from employees, self-employed individuals, and employers.
The CAWR system authorizes the SSA and the IRS to:
enter into an agreement for jointly processing wage reports; and
share documents that are agreed upon as being necessary for purposes of implementing
the annual wage reporting process.
2. Improving wage reporting
Significant ways IRS and SSA work to improve wage reporting:
periodically review the method and effectiveness of data exchange processes for any
changes that will improve processing;
participate in employer workshops and payroll conferences; and
conduct a review process for all IRS forms and publications.
SSA works with the IRS to provide automated data exchanges to improve:
name and Social Security number (SSN) discrepancies (when name and SSNs do not match
NOTE: SSA will maintain all federal tax returns and return information (FTI) received
from the IRS in accordance with the Internal Revenue Code (IRC) section 6103(p)(4)
and also comply with all additional Federal safeguards required by IRS Publication
1075 (Tax Information Security Guidelines for Federal, State, and Local Agencies).