PROGRAM OPERATIONS MANUAL SYSTEMPart RM – Records MaintenanceChapter 038 – Earnings DiscrepanciesSubchapter 70 – Development of Earnings Records InaccuraciesTransmittal No. 16, 07/30/2020
This transmittal updates some subsection headings, clarifies referrals to the Internal Revenue Service regarding real estate rental income, updates the Social Security Statement form name, and adds policy references.
Summary of Changes
RM 03870.035 Coverage or Wage Question
We updated some subsections headings, clarified earnings income from real estate rentals, changed the form name for the current Social Security Statement and added new references.
Subsection A - We updated this subsection title.
Subsection B - We rewrote this subsection:
Relabeled the subsection to correct the outline format,
Clarified that payments can be made or received,
Clarified the example on real estate rental income; and
Updated the form name of the Social Security Statement
Subsection C - We updated this subsection to include procedural references.
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.
When an employer or employee questions the wage or coverage status of a payment made or received, develop according to the issue.
If possible, obtain an SSA-7011-F4 or other wage statement from the employer.
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 income from real estate rentals;
The effects of a proposed arrangement or current arrangement for a taxable year which has not yet ended.
In the following situations, obtain evidence to make a formal determination:
Information indicates ( via a Social Security Statement, 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.
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.
For coverage questions concerning State and local employers, see RS 01505.042 and RS 01505.044.
Coverage and Exceptions, RS 01901.000
Employer - Employee Relationships, RS 02101.000
Self employment development, RS 01804.000
Wages, RS 01401.001
Wage Exceptions, RS 01402.001