This category of DIRCON was established to prevent erroneous underpayments to beneficiaries.
When the earnings posted (TRE earnings) are more than $2,000 less than the estimated
earnings, the case should be examined prior to payment of the underpayment.
Get a DEQY for the prior year and the enforcement year. Were multiple employers, or
wages AND self-employment involved in the prior year? If so, check to see that the
same pattern (look at EINs) is present in the enforcement year. If an employer or
self-employment posting seems to be “missing", contact the beneficiary for a report,
be sure to ask about NSMs (if LMETY still available), Special payments and current
If review of the MBR shows only one employer in the prior year, the enforcement year
posting is for the same employer and the decline in earnings is not significant (RS 02510.005B.4.) input the report using the PEEN screen. If the decline is significant, contact
the beneficiary for an explanation and input the report using the PEAR screen.
EXAMPLE 1:1997 EEO -- TE DIRCON with TRE earnings of $17,584. Work estimate was $23,500. DEQY
shows “AA” (REGULAR FICA WAGES) posted for 1996 of $16,979 (EMPLOYER ALRIGHT TRUCKING CO.),
and SEI posted for 1996, in the amount of $5,027. For 1997, the DEQY shows an AA posting
for the same employer in the amount of $17,584 and no SEI posting. The beneficiary
is contacted and states that she had started a craft business making doll clothes
and selling them at craft fairs. However, her health was poor early in the year and
she basically gave up the business. There was no profit to be shown, and she was not
claiming a loss. She was not filing an SE tax return for the year. She is continuing
to work for ALRIGHT TRUCKING and expected to earn around $18,000 in 1998.
Input the 1997 earnings of $17,584 as the annual report and the 1998 estimate of $18,000.
EXAMPLE 2:1997 EEO -- TE DIRCON with TRE earnings of $27,965. The work estimate for 1997 was
$47,000. DEQY shows one employer for 1996 with earnings of $45,734.36. The 1997 posting
for the same employer is for $27,965.00. Although the earnings are probably correct,
since there was only one employer involved, there was a “significant decline in earnings”. Therefore the reason for the decline should be documented.
When contacted, the beneficiary explains that she converted to part-time in April
of last year. She continues to work part-time and expects to earn around $22,500 in
1998. She has always, and continues to earn over the monthly exempt amount.
Input the posted earnings $27,965 as the AR for 1997. Input the estimated earnings
of $22,500 as the 1998 estimate.
1997 EEO -- TE DIRCON with TRE of $34,652.29. The work estimate for 1997 was $39,500.
The DEQY for 1996 shows both wages and SEI posted. The wages were $31,578.28 and the
SEI for 1996 was $7,459.
In 1997 there are again 2 postings, one wages (same employer) and an SEI posting.
The wages are $31,883.29 and the SEI posting is for $2,769.00.
In the above example it is reasonable to conclude that all of the earnings are posted
correctly. The beneficiary continues to work for the same employer, and continues
to have SEI. Apparently, the business profit was down in 1997. Input the enforcement
earnings of $34,652 using the PEEN screen.