If you receive an allegation that a beneficiary, who is a corporate officer or self-employed,
is misreporting his or her earnings, do not develop or refer the allegation to the
Office of Inspector General (OIG). The IRS independently handles these earnings-taxation
If the IRS determines that a beneficiary misreported earnings, it reports the correct
earnings, which adjust the MEF for the year. EEO triggers any benefit adjustments
based on the adjusted earnings and posts the appropriate overpayment to the record.
For example, Mr. Smith, a beneficiary who is a corporate officer, has earnings of
$20,000.00 posted to his MEF for tax year 2011, which match the earnings posted to
the MBR. In 2013, someone reports to the IRS that Mr. Smith misreported his earning
for 2011. The IRS conducts an audit and determines Mr. Smith’s actual earnings are
$40,000.00. The IRS reports the actual earnings for 2011, which adjusts Mr. Smith’s
MEF record. Later in 2013, an EEO run compares the corrected 2011 MEF record with
the 2011 earnings posted to the MBR. It posts the corrected 2011 earnings to the MBR
and adjusts Mr. Smith’s benefits for 2011, causing an overpayment posting.