Program Operations Manual System (POMS)
TN 5 (09-82)
RM 03146.002 Production of Trust Fund Wage Data
The purpose of the operations which produce the data used in the Trust Fund Letter is to ensure that SSA receives credit for all the wage items which it processes and maintains. In addition, the letter must accurately reflect certain special conditions and must maintain the stability of the Trust Fund appropriation process.
To attain the first objective, SSA must account for all the wage items processed, whether they are valid postable items or not. To ensure that this is done, the money amounts of each earnings record have always been accumulated at the earliest point possible in the process. Under the quarterly processing system this was Operation 16, and now it is done during the Validation to the Numident File. This give the Trust Funds credit for suspense wage items as well as ones which post.
Under the annual processing system, an additional type of wage item must be accounted properly for trust fund purposes, namely the corrected W-2 record.
When a corrected W-2 is posted the FICA wage amounts on it replace the ones on the original W-2.
The difference between the two amounts is calculated and a Trust Fund Adjustment record is created.
Once a year the total of all Trust Fund Adjustment Records for each tax year is forwarded from posting through Validation for use in preparing the Trust Fund letter.
The counters for the Trust Fund totals mentioned in B and C above are structured and operate as follows:
For years up through 1973, a counter is kept for every tax year or group of years for which both of the following conditions apply:
The applicable tax rate is constant.
The distribution of tax among the various funds remain the same.
For example, there is one counter for the years 1937-1949, when there was only the OASI fund and the tax rate was 2 percent. On the other hand, for 1967 and 1968 there are separate counters because although the rate was 8.8 percent for both years, the distribution between the funds changed from 7.1 percent OASI, .7 percent DI and 1 percent HI to 6.65 percent OASI, .95 percent DI, and 1.2 percent HI.
For years after 1973, a separate counter is kept for statistical purposes. In the future these will be combined when possible.
In addition to being subdivided by tax rate year, the counters are further subdivided by type of employment as follows:
Impossible period (Self-employment and tips)
Impossible period (Self-employment)
NOTE: Other counters are also maintained for non-FICA items.
When an item is processed through Validation its type of employment and period are noted and the amount of money entered into the appropriate counter. For example, when processing a military decrease adjustment for the third quarter of 1976 for which the net difference between the originally reported and currently reported amount is $200, a -200.00 would be entered into the 1976 military wage counter.
When a Validation run is completed, a sysout of the distribution of wages by employment type and tax year is produced, the Trust Fund Statistics Sysout (See RM 03146.099A).
These counters are not the sole source of data used in the Trust Fund Letter. Two additional sources are the Pacific Maritime Association Letter and the IRS 941T tape.
The letter from the Pacific Maritime Association contains an adjustment to the amount of reported wages, as authorized by the Treasury Department's letter of June 2, 1950, and as amended by the Treasury Department's letter of April 22, 1955. It represents wages for which only the employer taxes were paid.
The Association maintains all record-keeping functions for numerous employers. A seaman may work for several of these in a quarter. As the law is written, each employer and employee pays FICA up to the maximum; when several employers are involved, their combined liability can legally exceed the maximum.
Since only the employee wages is reported to SSA and not the employer and employee taxes due, excess wages upon which the employers paid taxes must be reported in some fashion so that the taxes may be properly credited to the Trust Fund.
Each quarter the Association mails SSA a letter containing this information.
The IRS 941T tape provides data for two items in the Trust Fund letter, Interim Trust Fund Adjustment Data and Tips Deemed to be Wages. The tape is IRS's employer tax return processing record.
When Congress passed the law mandating annual wage reporting, it was feared that this procedure would be inadequate for trust fund purposes. Concern was expressed that if the transferred estimates were not adjusted quarterly, an estimating error might be made which would result in four quarters worth of transferred monies which would either be excessively high or low. In particular the specter of a one billion dollar deappropriation was feared.
In searching for possible substitutes, it was discovered that the IRS 941T tape might be useful for purposes of making interim adjustments to the Trust Fund between annual adjustments based on SSA processed wages.
Examination of the amounts of money in prior year's SSA trust fund letters revealed that the money amounts on the IRS 941T tape closely approximated the same amounts in the letters over a 6 year period. It was therefore decided to use the tape to report interim trust fund adjustment data.
The ERTRUST program produces the ERTRUST sysout which contains a display of the data processed from the IRS 941T tape (see RM 03146.099B).
In 1977, Congress passed a law imposing an employer tax on that portion of an employees tips which are the difference between the wage he is actually paid and the (higher) Federal minimum wage. The employer reports this on an attachment to this tax return and IRS data enters it and forwards it to SSA as a data field on the IRS 941T tape.
In addition to these external sources, the Trust Fund letter may also contain data derived from two sources within SSA other than the record of wages.
Occasionally a special memorandum will be used as a data sources.
Once a year, The Office of Research an Statistics prepares an estimate of single employer excess taxes and forwards it in the SERET memorandum.