TN 25 (11-99)

RS 02510.026 Enforcement of AET

A. Background

In order to ensure beneficiary compliance with the reporting requirements under the earnings test, SSA historically used the earnings posted to the Master Earnings File (MEF) and compared those amounts to what the beneficiary reported for purposes of the earnings test (usually posted to the MBR). The system was designed to detect overpayment situations where a beneficiary failed to report, or underreported his/her earnings for the year. Certain potential underpayment situations were identified, and the beneficiary was notified that an annual report was required in order for the underpayment to be paid.

In 1991, the Earnings Enforcement Operation (EEO) program was modified to consider not only the current EEO year earnings, but also earnings in the 3 prior years. This change was made to take into account late employer postings and earnings corrections.

In 1997, we changed our regulations to state that we could consider the earnings posted to the MEF to be the annual report of earnings required by law. We would use the information on the MEF, along with other pertinent information in our records to adjust benefits payable under the earnings test. This change was made to reduce the reporting burden on the public. Beneficiaries will only need to contact us to report their earnings if they need to provide us with additional information, such as special wage payments, or if the earnings information we have is not correct for purposes of the earnings test.

In order to make benefit adjustments as quickly as possible, we added an earlier enforcement selection (May following the close of the tax year) to the historical two enforcement selections (July and the following February). Beneficiaries may still file a report of earnings with SSA if they choose to do so by calling, writing or visiting their local office or calling the 800 number.

B. Description of RSI Earnings Enforcement Operation (EEO)

The EEO program is designed to:

  • ensure that all pertinent earnings information is posted to the MEF prior to selecting the beneficiary for adjustment. This is done through an EIN match (enforcement year against prior year).

  • Match earnings data on the MBR against earnings on the Master Earnings File (MEF).

  • Consider special wage payments and SEI losses annotated to the MEF (see RS 02510.016 - RS 02510.020).

  • Detect cases where no annual report data exists, yet posted earnings exceed the exempt amount, or MEF earnings are higher than those reported by the beneficiary.

  • Detect cases where an underpayment may be due.

  • Determine, on the basis of programmed criteria, whether the case can be processed and benefits adjusted without further review, or if manual review and possible beneficiary contact will be required.

Effective with the 1991 enforcement operation, the system examines the current enforcement year, plus any year in the 3 prior years in which a change was made on the MEF for a beneficiary during the current tax year posting cycle. The tax year posting cycle runs from March through January, following the close of the calendar year. The enforcement selection is done in May, July and February following the close of the calendar year.

EXAMPLE: In 6/98 an employer files a W-2C for a beneficiary changing the earnings reported for 1996 from $20,000 to $22,000. That beneficiary may be selected for enforcement based on those earnings for 1996, during the enforcement operation run in 8/98, provided he meets the other criteria for selection.

C. Policy - general

1. Cases selected for enforcement

The elimination of the Annual Report of Earnings form and the reliance on the earnings posted to the MEF as the primary source of benefit adjustment under the earnings test required several changes to the EEO selection criteria. The goal is to select cases and process the benefit adjustment as quickly as possible, while trying to ensure the accuracy and the integrity of the process.

In general, all RSI beneficiaries who had some benefits withheld during the year because of estimated earnings or who should have had some benefits withheld during the year because of posted earnings will be considered for EEO selection.

To be considered for selection, the beneficiary must be:

  • Entitled to RSI benefits, but not on the basis of their own disability; and

  • Under full retirement age (FRA) (year of attainment of FRA if annual report was filed) in the enforcement year.

In addition, the beneficiary must have:

  • Earned over the applicable exempt amount; AND

  • Received some benefits during the year; AND

  • No annual report filed and no prior enforcement action; OR

  • There was a prior annual report, or enforcement action and the current enforcement earnings exceed previously reported earnings; OR

  • The beneficiary received no benefits during the year and based on the posted earnings (over or under the applicable exempt amount), some benefits are due.

IMPORTANT: Beginning with the 1996 EEO, we will use the Non-Service Month (NSM) information posted to the MBR when considering work deductions when: NSMs are reflected for the current enforcement year; and the annual report or estimate is greater than the annual exempt amount. Therefore, it is extremely important that adjudicators correctly code NSM information when it is provided by a beneficiary. Remember, NSM is an overlay field in POS. Therefore, NSM information must be reinput whenever a work report is processed, even if there was no change to the NSM.

2. Cases eliminated from enforcement

The following categories of cases are excluded from the enforcement process:

  1. Beneficiary was paid no benefits during the year based on estimated earnings AND based on MEF earnings (current enforcement), no benefits were due.

  2. Beneficiary is one year beyond year of FRA attainment or over in enforcement year; OR.

  3. Beneficiary filed an annual report (MBR TOER “A” or “M” ) or was previously enforced; AND

    • attained FRA in the enforcement year; OR

    • the difference between the beneficiary reported earnings and the enforcement earnings would result in an overpayment of less than $100; OR

    • the posted earnings are lower than the reported earnings.

These same tolerances should be applied to all situations in which a potential work deduction overpayment is discovered. Therefore, if one of these tolerances applies, do not develop for an (amended) annual report, or change a prior deduction determination (unless the beneficiary submits information on his/her own initiative). This instruction applies even if it is necessary to develop another issue, including the correctness of a posting for PIA computation purposes.

3. Relationships between recomputation and enforcement

If a beneficiary-initiated recomputation or AERO action is pending and the possibility of overpayment exists, the enforcement action takes precedence over the recomputation action. The recomputation should be delayed until the enforcement issue is resolved.

When a beneficiary requests a recomputation of benefits and submits evidence of earnings for the year, the FO should ask if those earnings are also correct for deduction purposes. The Annual Report should be input (PEAR screen) at the same time the recomputation is processed.

Adjudicators should not routinely adjust for permanent deductions manually when working an AERO action. Instead, wait for the enforcement program to assess the deductions. For example, if summarizing a 1/98 AERO increase, and the EEO has not yet assessed permanent deductions, base the current payment on the previous estimate (if any). We will adjust benefits and impose permanent deductions using the EEO program and the EIN matching criteria described below.

D. Description of enforcement process

1. Background

SSA has historically used the earnings posted to the MEF as a check to ensure beneficiary compliance with the reporting requirements under the earnings test. The enforcement program compared the earnings posted to the MEF with the earnings reported for deduction purposes (posted to the MBR). The program was used to identify beneficiaries who failed to report, or underreported their earnings.

Elimination of the annual report forms for reporting years 1996 and later required a major change to the RSI earnings enforcement program. Since most beneficiaries would no longer be reporting their earnings to SSA, the program needed to be modified to determine the correct earnings for deduction purposes, as accurately as possible; identify both underpayment and overpayment situations; and identify situations where a review of the posted earnings should be done to determine if the posted earnings are correct or contact the beneficiary if some question exists regarding the validity of the posting.

Adjudicators and beneficiaries must recognize that there will be problems in using the earnings that are posted to the MEF to adjust benefits under the earnings test. Problems with employer reports, e.g., errors in reporting, earnings adjustments and late reports, have always caused problems in enforcement. These problems are magnified as we increase the number of beneficiaries in the enforcement process.

The new enforcement process is currently under study and will evolve as we gain experience. Many cases selected for “DIRCON” in the 1996 enforcement process were actually “paid” or “NANed” through an automated process developed by OPIR, after a determination that the characteristics of the case were such that a review of the earnings was not required. This same process, of a “second tier” enforcement will be done in the 1997 enforcement process. This process is designed to reduce unnecessary manual workloads in the PCs and the “second tier” process will be incorporated into the enforcement process as we identify the necessary case characteristics and the systems programming resources become available.

Adjudicators should remember that the enforcement process reflects our attempt to adjust benefits under the earnings test based on the earnings posted to the MEF. If a case is selected for “DIRCON” under the new process, it means that there is some characteristic which makes us unsure of the correct earnings for deduction purposes, through the automated process. A review of the record may be all that's required to verify that the earnings are likely correct. However, in some cases beneficiary contact will be required to get an earnings report for the year. Beneficiaries reacting to an enforcement notice will likely offer some evidence that the earnings we used to adjust their benefits were not correct. Remember that a reasonable explanation can be accepted without development.

2. Current enforcement process

The following is a description of the current enforcement process:

a. Earnings posted to the master earnings file

The enforcement process begins with earnings activity on the MEF. Cases in which there have been earnings posted to the MEF for the enforcement year, since the last enforcement selection, are passed to the enforcement program for consideration.

b. Employer Identification Number (EIN) match

The intention of the EIN match is to try to ensure that all earnings are posted before the case is selected for enforcement so that we do not pay an underpayment in an early pass of enforcement, only to select the case for an overpayment in a later pass, when additional earnings are posted.

The EIN check will also check for a special payment in the enforcement year, if a special payment was present in the prior year. This is also designed to prevent erroneous enforcement actions.

The EIN check examines both the posted (FICA) and the unposted (NON-FICA) details on the MEF. The case will be selected for processing if:

  • There is no posting in the year prior to the enforcement year,OR

  • All EIN's in the prior year match the EINs in the enforcement year (including SWPs (DB postings), OR

  • All EINs in the prior year match the EINs in the enforcement year and there are additional EINs in the current year,

EXCEPTION: There can be a prior year SEI loss (EIN=70-8888888) without a corresponding current year posting.

NOTE:IF there is no estimate of earnings on the MBR, or the posted earnings are more than the estimated earnings, the case will be processed without an EIN match.

Any case failing the EIN match criteria in pass 1 or 2 of enforcement will be sent to the RSI finder file. Cases will be reselected in the next pass if additional earnings are posted. In the 3rd and final pass of enforcement, all cases remaining on the finder file from pass 1 and pass 2 will be processed with data from the current earnings record. New cases will not be subject to the EIN check in the final pass of enforcement.

c. Determining the enforcement earnings

When calculating the earnings for deduction purposes, known as the Total Reported Earnings (TRE) in the program, the enforcement program uses both covered and noncovered earnings. The program examines the amounts posted to the MEF in both the COVERED and the NONCOVERED DETAILS, sums up the covered earnings, sums up the noncovered earnings, and uses the higher of the two sums as the TRE amount. Since special payment are only posted as noncovered and should not be counted under the earnings test, the program subtracts special payments from the “COVERED EARNINGS” sum. The following steps are used by the enforcement program when determining the earnings for deduction purposes:

  • Sum all earnings shown in the COVERED FICA EARNINGS detail of the MEF, *

Sum the amounts under “EARNINGS” and sum separately the amounts under “TOTAL COMP”

*NOTE:The earnings fields used by the enforcement program shows the MEDICARE wages as the difference between the Social Security wages and the Medicare total. The DEQY displays both the total Social Security wages (up to the FICA MAX) and the total Medicare wages (which includes amounts posted as SS wages). This must be considered when summing the fields on the DEQY.

  • Sum the EARNINGS shown in the DETAIL NONCOVERED EARNINGS PORTION of the MEF and ADD this amount to the TOTAL COMP sum above,

  • Add any special wage payments earnings to the FICA sum, calculated above,

NOTE:the special payments are posted as a negative amount, so adding the negative amount to the sum, will actually subtract the special payment amount.

  • Add any SEI postings to the NON-FICA sum,

  • USE the HIGHER of the totals (FICA or NON-FICA) as the enforcement earnings (total reported earnings “TRE”).

d. Year of FRA attainment

In the year of attainment of FRA we only count earnings for months prior to attainment of FRA in calculating [excess earnings]. In calculating enforcement earnings, we will assume the beneficiary worked the entire year and will,

  • divide the TRE (RS 02510.026D.2.c.) by 12,

  • multiply the result by the number of months in the year prior to attainment of full retirement age. The result of this multiplication will be used as the TRE.

NOTES:

  • Always remember to get BOTH the “DETAIL COVERED EARNINGS and DETAIL NONCOVERED EARNINGS when examining the earnings record,

  • The “TRE” as computed above may not always be correct for deduction purposes. The computation is currently done as shown because it results in the most correct calculation for the most beneficiaries. However, if the beneficiary has earnings that are not wages, but are shown in the Total comp field, the actual earnings for deduction purposes may be less than we use. We are currently studying the issue and may alert these cases for DIRCON in the future.

  • For enforcement year 2000 and on, any beneficiary who files an annual report (W-2 or self-employment tax return) for the year of attainment of full retirement age will not be selected for enforcement. This is because our TRE is only an estimate of the earnings for deduction purposes. We assume the annual report to be more accurate than our estimate.

E. Description of DEQY postings

Following is a brief description of the types of posting that will most often be seen, i.e., most common, in the enforcement process. Adjudicators will need to develop some expertise in reading and analyzing the DEQY postings in order to explain the enforcement earnings to beneficiaries, determine the correct enforcement earnings when the case is selected for review and determine when direct contact is needed because the posted earnings are questionable. A complete description of all DEQY postings is provided in SM 00344.014.

See the DEQY example shown below. The abbreviations (with values shown under each) are as follows:

  • RPYR -- reporting year

    R -- Type of Report Code

    E -- Earnings type of employment code

    EIN -- Employer Identification Number

    Earnings -- Total FICA and/or MEDICARE earnings

    Total Comp -- Wages, Tips and other compensation

    Total Amount -- Amount reported (NON-FICA earnings)

    PR -- Posting cycle

    S - Source code

In evaluating the DEQY, adjudicators must pay special attention to the “R” and the “E” codes. Again, a complete listing is shown in SM 00344.014. The most common data elements that will be seen in enforcement are:

R" Code ofRepresents
ACurrent W-2 FICA
DCurrent Non-FICA W-2 (non-covered earnings)
ECurrent Corrected FICA W-2
FCurrent Corrected Non-FICA W-2 (non-covered earnings)
E" Code ofRepresents
ARegular
QMedicare Qualified Government Employment
JEmployee contribution (from wages) to non-qualified deferred compensation plan (counts under the ET)
BSpecial wage payment (SWP)
K457 plan contribution (state/local) (SWP)
TTips earned in regular employment

Thus, a posting with an “AA” code under “RE” would represent a regular current FICA W-2 and would be shown in the “DETAIL COVERED FICA EARNINGS” portion of the DEQY. A “DA” posting (which would be shown in the “DETAIL NON-COVERED EARNINGS...” portion of the DEQY) would represent a current, regular non-FICA W-2. A “DB” posting represents a special wage payment

NOTE: DB postings and “DK” postings are shown as a negative amount on the DEQY and are always in the “DETAIL NON-COVERED EARNINGS” portion of the DEQY.

1. Example 1: (DEQY)

 

 RPYR  REO  EIN-SEI  LOAC NAME  EARNINGS  TOTAL COMP  CONTROL NUMBER    PR  S 
 0096  AA  xxxxxxxxx   C J DOE   32750.00    32750.00    8436-47847  00897V 

 

                    WAGE TOTAL       32750.00 
                 MEDICAL TOTAL      32750.00 
                EMPLOYER TOTAL      32750.00 
          EIN xxxxxxxxx 
          TARA CORP 
          101 E. MAIN ST 
          ANYTOWN, VA 10767-7899 
                  96 YEARLY TOTAL 32750.00 

In the above example, the worker had only one employer (TARA CORP) in 1996 and earned $32,750.00 in covered (FICA) wages, designated by the “AA” code. The FICA “EARNINGS” on the DEQY are the same as the total comp field. The Enforcement Program would adjust benefits based on the posted earnings of $32,750.00.

2. Example 2 (DEQY)

DETAILED COVERED FICA EARNINGS AND EMPLOYER NAME AND ADDRESS FOR YEARS REQUESTED

 

 RPYR  REO  EIN-SEI  LOAC NAME  EARNINGS  TOTAL COMP  CONTROL NUMBER  PR  S 
 0096  AA  xxxxxxxxx   CJ DOE   32750.00    32750.00    8436-47847  00897V 

 

                    WAGE TOTAL       32750.00 
                 MEDICAL TOTAL      32750.00 
                EMPLOYER TOTAL      32750.00 
          EIN xxxxxxxxx 
          TARA CORP 
          101 E. MAIN ST 
          ANYTOWN, VA 10767-7899 
                  96 YEARLY TOTAL 32750.00 

DETAILED NON-COVERED EARNINGS AND W-2 PENSION DATA

 

 RPYR  REO  EIN-SEI  LOAC NAME         TOTAL AMOUNT   CONTROL NUMBER  PR  S 
 0096  DB  xxxxxxxxx 582   C J DOE  -14300.00      8436-47847    00897V 

 

   NON-QUAIL-PLAN/SPEC PAYT TOTAL      -14300.00 
                     EMPLOYER TOTAL    -14300.00 
      EIN xxxxxxxxx 
      TARA COPR 
      101 E MAIN ST 
      ANYTOWN, VA 10767-7899 
          96 YEARLY TOTAL -14300.00 
                  96 YEARLY TOTAL 32750.00 

 

In example 2, above, the same worker retired and received accumulated sick and vacation pay and severance pay totaling $14,300.00. He reported this special payment to the field office when filing for benefits and the special payment was input by the FO. The special payment is “posted” as a negative amount, and is reflected in the DETAILED NON-COVERED EARNINGS portion of the MEF as a “DB” posting. When the RSI earnings enforcement operation calculates the earnings for deduction purposes, it will use the DB posting and “add” the negative $14,300.00 to the FICA wages of $32,750.00. The earnings for enforcement purposes will be $18,450.00.

3. Example 3: (DEQY)

DETAILED COVERED FICA EARNINGS AND EMPLOYER NAME AND ADDRESS FOR YEARS REQUESTED

 

 RPYR  REO  EIN-SEI  LOAC NAME  EARNINGS  TOTAL COMP  CONTROL NUMBER  PR  S 
 0096  AA  xxxxxxxxx   CJ DOE   32750.00    32750.00    8436-47847  00897V 

 

                    WAGE TOTAL       32750.00 
                 MEDICAL TOTAL      32750.00 
                EMPLOYER TOTAL      32750.00 
          EIN xxxxxxxxx 
          TARA CORP 
          101 E. MAIN ST 
          ANYTOWN, VA 10767-7899 
                  96 YEARLY TOTAL 32750.00 

DETAIL NON-COVERED EARNINGS AND W-2 PENSION DATA AND EMPLOYER NAME AND ADDRESS FOR YEARS REQUESTED

 

 RPYR  RE  EIN      LOAC NAME  EARNINGS TOTAL    CONTROL NUMBER  PR  S 
 0096  DJ  067837788    C J DOE   3254.22     8798089-89098    00997V 
                DEFERRED COMP TOTAL  3254.22 
                     EMPLOYER TOTAL   3254.22 

 

      067837788 COUNTY GOVERNMENT 
      DA  067837788  C J DOE   15627.44      8798-89-89098 
                     WAGE TOTAL   15627.44 
                EMPLOYER TOTAL    15627.44 

 

                    WAGE TOTAL    15627.44 
                 MEDICAL TOTAL   15627.44 
                EMPLOYER TOTAL   15627.44 
          EIN 06737788 
          COUNTY GOVERMENT 
          % OFFICE OF FINANCE 
          897 WEST STREET 
          WEST COUNTY, VA 10767-7898 
               96 YEARLY TOTAL 18881.66 
 REMARKS 
   LAST EARNINGS STATEMENT SENT 1994 
   CLAIMS ACTIVITY -- SEE MBR 

In example 3, above, the worker had FICA earnings of $32750.00 for TARA CORP in 1996. This is shown by the “AA” posting representing regular FICA wages with the same amount reported as Total Compensation. These earnings are shown in both the EARNINGS field and the TOTAL COMP field. The beneficiary also worked for the county government in 1996 and had total earnings of $18881.66. The “DA” posting representing “regular non-fica wages” and the “DJ” posting representing an employee contribution to a tax deferred savings plan. Remember, contributions to a tax deferred plan by an employee from his or her regular wages, earned during the year would be counted under the earnings test. In this case the beneficiary's earnings for deduction would be the total of the FICA and the NON-FICA earnings ($32750.00 +$18881.66 = $51631.66)

F. Description of enforcement categories

Once the determination regarding the amount of earnings for the year (TRE) has been made, the enforcement program must then decide the category of the case. This is done considering various characteristics in the case, including the estimated (or reported) earnings and the earnings on the MEF (TRE calculation). The determination results in either an automated case, or a case in which additional (manual) review will be required. Automated processing is done through AJS-3. For a complete description of AJS-3 categories and processing.

Following is a description of enforcement categories:

1. Potential underpayment

A case will be selected as “Potential Underpayment” if:

  1. some benefits were withheld during the year based on an estimate of earnings (RFD of “2”), AND

  2. additional benefits are payable based on the posted (MEF) earnings,

    UNLESS:

    • the MEF earnings equal “$0” or a negative amount, or

    • the MEF earnings, PLUS $2,000 is less than the estimated earnings, or

    • the MEF earnings are greater than the estimated earnings (TE NO 777),

(See below for explanation of above exceptions)

2. TE No 777

A case will be selected for TE No77 when:

  • an annual report is not present for the enforcement year, AND

  • the enforcement earnings exceed the annual exempt amount by more than $200 (beneficiary under FRA) or more than $300 (beneficiary in year of FRA attainment), AND

  • the beneficiary is not selected for Potential Underpayment or TE DIRCON, AND

  • there is no work notice (estimate) present for the enforcement year or the work notice (estimate) is less than the exempt amount.

3. TE discrepancy - (overpayment)

An annual report:

  • is present and the enforcement earnings exceed the reported amount by more than $200 if the beneficiary is under FRA or $300 if the beneficiary is in year of FRA attainment, OR

  • an annual report is not present for the enforcement year, but an estimate is present AND

    • the estimate was more than the exempt amount, and

    • the beneficiary does not meet the criteria for Potential Underpayment

4. TE DIRCON

This category generally represents cases where a potential underpayment exists, but some characteristic of the case indicates that a manual review is desirable, before the payment is made.

Although the category is identified as a TE DIRCON, contact with the beneficiary is not required in every case. Rather, the case should be reviewed by the adjudicator to determine if there is a reasonable basis for concluding that the TRE (MEF earnings calculated by enforcement) are correct for purposes of adjusting benefits under the earnings test.

If the adjudicator concludes that the earnings are correct for deduction purposes, input using the PEEN screen.

If there is some question as to the validity of the posted earnings, contact the beneficiary and resolve any issues. Treat the beneficiary's report as an annual report of earnings and input using the PEAR screen.

Following, are the characteristics that will cause a TE DIRCON situation:

a. MEF earnings equal “$0” or a negative amount.

As noted in RS 02510.026D.2.a. in this section, the enforcement process begins with MEF activity, i.e., an earnings posting. Therefore, you would not expect to see a “$0” posting in the enforcement operation. However, this situation could occur if there were a problem with the earnings posted to the MEF. A “$0” TRE can occur when an incorrect employer report is discovered and SSA does a blanket adjustment, asking the employer for a new report. The adjustment offsets the original reported earnings and thus the $0 posting.

This situation will usually require a contact with the beneficiary to get a report of earnings. Input the report using the PEAR screen.

A negative TRE generally results from an incorrect input of special wage payments, or a correct input of SWP but an inaccurate earnings report.

Sometimes, if the SWP has been incorrectly input, the correct earnings can be determined and input via the PEEN screen. For example, the earnings record shows an “AA” posting (regular wages) of $27,859.88 for 1997. There is a remark in the special message field, “SP $4,324.22 for 1997-severance pay”. There is a DB posting for the same EIN as the AA posting the amount of the DB posting is $432,422.

The DB posting indicates the SP was incorrectly input using the “cents” . SWP input instruction require dropping cents when inputting the SWP. The correct enforcement earnings ($27,859.88 minus $4324.22 = $23,535.66) should be input via the PEEN screen. Correct the SWP posting ($4324) using the “V” code.

b. EF earnings, plus $2,000 is less than the estimated earnings

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 year estimate.

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.

EXAMPLE 3.

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.

c. Attainment of FRA in enforcement year with NSMs indicated prior to attainment of FRA, some benefits withheld and no annual report

As shown above, the enforcement program will calculate enforcement earnings in the year of attainment of FRA if No if no annual report was filed. However, when non-service months are coded in the year of attainment of FRA (prior to attainment), we cannot do the calculation which is based on the assumption of equal work in all months of the year. Therefore, the case will be a DIRCON and the beneficiary will need to be contacted to file a report.

NOTE: In any of the above situations, PRIOR TO THE 1997 ENFORCEMENT, if there is a discrepancy between the beneficiary surname on the MBR and one of the earnings postings on the MEF, a Name Difference (1C) output is received (see RS 02510.026F.).

The Name Difference criteria was eliminated from the enforcement process beginning with the 1997 Enforcement Operation.

G. Procedure - handling TE DIRCON enforcement alerts

Refer to SM 00606.115 - SM 00606.120 for systems information.

  • Whenever beneficiary contact is initiated, check for a current year estimate (CYE). If no CYE is shown and there is no indication of stop work, request a CYE.
     
    NOTE: See SM 00606.000 for the automated process phase of enforcement.

  • If direct contact cannot be made, use MEF earnings; use the non-service months that are posted to the MBR, unless those months are clearly erroneous. This would be indicated if the beneficiary had a history of long-term employment with one employer and in the year of retirement, earnings are posted from that employer AND a second employer is also shown. If there is reason to believe the beneficiary returned to work and direct contact is unsuccessful, assume all months are service months and input the enforcement earnings using the PEEN screen.

H. Procedure - name difference remark

1. Incorrect social security number

If development shows enforcement is wrong because the BOAN was incorrect, correct the BOAN on the MBR.

2. Surname is misspelled

If the record indicates the surname is misspelled:

  1. Verify the proper spelling. If the MEF name is correct, correct the MBR; if the MBR is correct, take no further action on the surname mismatch.

  2. In either case above, use the MEF earnings, use any non-service months on the MBR, impose deductions, and notify the beneficiary of the adjustment.

3. Incorrect earnings posting or completely different surname

If the record indicates an incorrect earnings posting or a different surname, refer to the CA for development of the earnings discrepancy via the Earnings Modernization - Item Correction process and/or beneficiary contact.

I. Procedure - beneficiary protest - automated processing

1. Beneficiary can explain difference between MEF earnings and reported earnings

If a beneficiary responds to our enforcement adjustment actions, explain that our action was based on the earnings posted to the MEF. Obtain the beneficiary's explanation of the amount of earnings for deduction purposes, reconciling the explanation to the amount of earnings posted to the MEF and verify any non-service months.

  • Input the amended annual report,

  • Input any special wage payments, as necessary, (see RS 02510.016 - RS 02510.017)

  • If an overpayment recovery action should be stopped, input the appropriate PROTEST/STOP RECOVERY Request screen (DRPR for PSCs, DRPF for FOs or DRPT for TSCs) per MSOM DMS 006.003 , MSOM DMS 006.019 and MSOM DMS 006.020 .

NOTE: When a beneficiary protests an earnings enforcement action, do not take an SSA-561. Input the amended annual report and any necessary actions as shown above. An SSA-561 is not appropriate in this situation.

If the beneficiary provides a W-2 for an amount lower than the total enforcement earnings, obtain an explanation of the MEF (DEQY) to verify that earnings from other employers or self-employment are not included.

2. Beneficiary cannot explain difference between MEF earnings and AR

If the beneficiary cannot explain the difference between MEF earnings and AR:

  1. Stop recovery by input of DMS screen DRPR (see MSOM DMS 006.003 ).

  2. Obtain explanation of MEF (DEQY).

  3. Initiate contact with employer if necessary to resolve.

  4. If contact (and/or other development) establishes that:

    • the enforcement is wrong, input an amended annual report (do not obtain Form SSA-561-U2), and input any SP (see RS 02510.016-RS 02510.017);

    • the enforcement is correct and beneficiary agrees, the FO should input to DMS either a full or partial withholding request. If the beneficiary continues to disagree, prepare a Form SSA-561-U2 (see GN 03102.225).

J. Procedure - reporting error

If duplicate posting, employer reporting error, scrambled wages or SEI causes an incorrect enforcement action:

  • Input protest to stop recovery via DMS screen DRPR.

  • Input an amended annual report to delete the overpayment.

  • Prepare an Earnings Modernization Item Correction (EMIC), as appropriate, t