TN 14 (08-11)
RS 01404.120 Gap Development
A. Background on gap development
1. Gaps on the earnings record
Gaps on the earnings record may occur because:
An employer filed a Form W-3 and Forms W-2 reports but omitted the NH's W-2 report; or
Earnings reported under the wrong SSN or surname could not be validated during AWR and were placed in suspense; or
The employer failed to file a wage report or filed Social Security tax reports with IRS but did not file W-3/W-2 wage reports with SSA; or
The employer filed the W-2 for the NH, but erroneously failed to show any wages in the Social Security wage block when the individual was covered for Social Security.
2. Gaps identified on EARQ
The EARQ identifies the following types of earnings record gap alerts for years after 1977 (1978 and later) for development and resolution:
a. Possible employer gap
A possible employer gap exists when the following conditions are met:
There are earnings in 1977 without details available, AND
There are no earnings posted in 1978 or 1978 and 1979, AND
There are earnings details in 1979 or 1980 (depending if the gap is 1 or 2 years), AND
The earnings before (1977) and after the gap (1979 or 1980) are both greater than $2,500.00.
The gap is only for the above year(s). The gap is displayed because there are no MEF record details available to determine if the gap is for a particular employer. If there are MEF record details available then the alert will be Employer Gap. See SM 00355.010.
b. Employer gap (EIN gap)
An Employer Gap is identified when a search of the MEF records for the entered SSN indicates the following:
For a one year gap the difference in the total yearly earnings before and after the gap year exceeds the total yearly earnings in the gap year by $2,500.00. Both totals must be greater than $2,500.00; and
For a two year gap, the difference in the total yearly earnings before the 1st gap year and after the 2nd gap year exceeds the total yearly earnings in the gap year by $2,500.00. Both totals must be greater than $2,500.00; and
The average earnings exceed $2,500.00 for that EIN posted in the year(s) before and after the gap; and
The total posted earnings for the gap year are the “total of the FICA MAX (minus) $2,500.00.
c. Self-employment gap
A Self-Employment Gap (SE) exists when:
There is no SE income posted for an individual in one or two consecutive years; and
There is SE income for an individual posted in the years before and after the gap; and
The year prior to or after the gap year(s) has SE earnings in excess of $2,000.00 and the FICA MAX has not been reached in the gap year(s).
If FICA Max from wages is present in the gap year, no alert is generated.
B. Procedure for resolving gaps in the earnings record
Take the following action to resolve potential earnings gaps on the earnings record:
1. Earnings record review
Review the earnings record with the NH (or claimant). See RS 01404.110D for acceptable earnings records and queries.
2. Verify for an exception to development
Verify whether an exception to development exists per RS 01404.110B. If an exception exists, document the claims case for any alerted year after 1977 per RS 01404.110E.
3. Discuss gaps and employment history
In claims cases, discuss all EARQ alerts from 1978 and later if required in RS 01404.110C.
If development is required per RS 01404.110C; ask the NH (or claimant) if the earnings record is accurate and reflects his or her (or the deceased’s) earnings and work.
If yes, obtain a statement from the claimant indicating the agreement with the earnings record, providing the specific years alerted by EARQ and the reason for no earnings.
EXAMPLE: I did not have any earnings in 1992 because I was laid off from my job in 11/91. I was unemployed until 02/93, when I was re-hired.
If the claimant states the earnings record is wrong, develop per RS 01404.120B.5.
If development is not required (e.g., the claimant agrees with the earnings on the Social Security Statement or similar earnings record query per RS 01404.110B, document the claim that an exception to development exists.
4. Gap development for years prior to 1978
Take the following action to resolve alleged missing earnings on an individual’s earnings record if development/documentation is needed for any year prior to 1978, per RS 01404.110:
Request feedback if the sum of the posted details does not equal the summary earnings or the summary earnings are zero and the QC pattern is other than NNNN.
If the missing earnings are posted by OCO as a result of the feedback, no additional development is needed. Notify the claimant that the earnings have been added.
If the missing earnings are not posted as the result of feedback, query the Earnings Suspense File (ESF) and reinstate the earnings, if located, to the NH’s SSN record.
NOTE: Do not reinstate if two or more individuals are shown in the ESF for the same employer with the same or similar name(s) without sufficient evidence of earnings. If, after reviewing the ESF and the earnings history for the NH, it can clearly be determined which earnings belong to the NH and a reasonable assumption can be made, correct the earnings record. Develop as a potential scrambled earnings situation if it cannot clearly be determined to whom the earnings belong. (RM 03870.045 through RM 03870.060)
If the missing earnings cannot be located in the ESF, then request evidence of earnings per RS 01403.000. When the appropriate evidence is received, add the earnings to the earnings record.
5. Gap development required for years 1978 to date
Take the following action if development of the EARQ alert “Possible Employer Gap” or “Employer Gap” is required per RS 01404.110C or RS 01404.120B to resolve alleged missing earnings for any year(s) outside the Statute of Limitation period (RS 02201.008) from 1978 on:
a. Request DEQY
Request a DEQY for the alerted year and adjacent years.
b. Query the Employer Query (ERQY)
Query the ERQY to determine whether the employer submitted wage reports for the year(s) in question.
c. Query Earnings Suspense File (ESF)
If the ERQY indicates an employer report was filed, check the ESF for that employer to determine if the earnings for the NH are in the Earnings Suspense Record (ESR).
If the ERQY shows no employer report filed, search the ESF by name and/or SSN. The employer may have reported the earnings under an incorrect EIN.
If the earnings are located in the ESF and it is apparent that the earnings were placed in the ESF as the result of an incorrect name or SSN on the W-2, reinstate the earnings to the NH. It is not necessary to see the W-2, however there must be no question concerning the NH’s identity that the earnings belong to the NH or with the amount of earnings.
If the ESF shows two or more individuals with the same name or if there is a question concerning the amount of earnings, do not reinstate the earnings. Develop to resolve the issue and determine the correct amount of earnings.
EXAMPLE: Maria Gonzalez Alvarez states she worked for the ABC Deli from 04/88 through 10/97. The ERQY shows Employer Gap for the ABC Deli for 1995. She states she earned approximately $13000 in 1995. The ESF shows both a M. G. Alvarez with earnings of $12,720 and a Marisa Gonzalez with earnings of $3115 for the ABC Deli in 1995. Both SSNs differ by only a few digits. A review of Maria Gonzalez Alvarez’s DEQY for the years surrounding 1995 and her SEQY indicate her earnings were between $11,500 and $17,000 for the years she worked for the Deli. Therefore, reasonably assume that her earnings in 1995 were $12,720 and move her earnings from the ESF to her correct SSN. (MSOM EM 012.001 through MSOM EM 015.004)
d. When Scouting is Required
If the wages are not in the ESF and the ERQY shows the employer filed a paper report AND the year is within the Statute of Limitations (RS 02201.001), request scouting. EMOD ICOR will not permit adding earnings for years within the Statute of Limitations if the employer reported earnings to SSA via a paper report (MSOM EM 022.002). Scouting is not required if the employer filed electronically with SSA.
e. Earnings located in ESF or as the result of scouting
If the earnings are located in the ESF or as the result of scouting (i.e., posted to the MEF) then clear the EMOD ICOR earnings action and notify the claimant by a dictated notice that the earnings were added to the earnings record.
If all other factors of entitlement are met, process the claim for benefits.
f. Obtain evidence of earnings
If the employer did not file a report and/or the earnings are not located in the ESF or posted to the MEF as the result of scouting, obtain evidence of earnings per RS 01403.000.
g. No evidence is available
If no evidence is available, only 1 year of earnings is missing and subpoena action (RS 01403.080) is not appropriate (subpoena action is rarely applicable), determine whether to add the earnings pursuant to RS 01403.061.
h. Correct Earnings
Correct the earnings record.
i. Evidence is insufficient or does not support a favorable decision
If the evidence is insufficient or does not support a favorable decision and the requirements in RS 01403.061 do not apply, deny the request for correction. Include appeal rights in the notice. In claims cases, document the claim indicating the NH (or claimant) disagreed with the earnings record but development resulted in insufficient evidence to add the earnings.
EXAMPLE: Mrs. Smith stated she had earnings in 1990 and 1991 as a nanny. She stated she was not self-employed but an employee of the Loving Nanny Corp. The company was no longer in business and Mrs. Smith was unable to present any supporting documentation or evidence of her employment with the Loving Nanny Corp for 1990 and 1991. We denied her request and appropriately annotated the claims file.
6. EARQ Alert is self-employment gap
If the EARQ Alert is Self-Employment Gap and development is required per RS 01404.110C or RS 01404.120B, then:
Request a DEQY for the alerted year and adjacent years.
Determine whether an exception to development exists and document the claims case accordingly.
Follow RS 01804.150 for development and resolution of the SE earnings issue.
Take the appropriate corrective action and notify the NH (claimant) of the action taken.
If the NH agrees with the earnings record, document the claims case accordingly.
EXAMPLE: I agree with my earnings record for 1999. I did not have any income for 1999 because my business took a loss.