TN 10 (10-94)

RM 03870.035 Coverage or Wage Question


Inquiries concerning an individual's tax status should be referred to IRS. This includes employer or employee questions concerning the tax status of a payment or if the coverage issue affects tax liability.


1. Wages

When an employer or employee questions the wage or coverage status of a payment, develop according to the issue.

If possible, obtain an SSA-7011-F4 or other wage statement from the employer.

2. SEI

Refer general inquiries to IRS that do not involve a problem or question with the amount of SEI shown on the ER. (The questions are usually concerned with the amount of taxes owed, not with the amount of SEI.)


  • Whether the amounts are subject to the Social Security tax.

  • Whether all or part of the income is Net Earnings (NE) from SE;

  • Whether the individual is engaged in a trade or business;

  • Whether earnings are rentals from real estate;

  • The effects of a proposed arrangement or current arrangement for a taxable year which has not ended yet, etc.

In the following situations, obtain evidence to make a formal determination:

  • Information indicates (PEBES, SEQY, DEQY, etc.) that there is an error with the earnings credited to the individual's ER; or

  • In the development of a claim or preclaim, it cannot be readily determined whether the individual is engaged in a covered trade or business.

3. Federal Employment

If an individual who worked for the U.S. Government or an instrumentality of the U.S. after 1950 raises a question of coverage, follow RS 01901.340.

NOTE: Prior to 11/10/88 a determination as to whether a NH worked in covered employment was made only by the head of the employing agency. Beginning 11/10/88, SSA and/or IRS are responsible for the determination of whether the federal employment is covered.

4. State and Local Employment

For coverage questions concerning State and local employers, see RS 01505.042 and RS 01505.044.


  • Coverage and Exceptions

  • Employer - Employee Relationships

  • Self employment development, RS 01804.000ff.

  • Wages, RS 01401.001ff

  • Wage Exceptions, RS 01402.001ff

To Link to this section - Use this URL:
RM 03870.035 - Coverage or Wage Question - 10/21/1994
Batch run: 03/27/2012