SSA - POMS: RS 02510.026 - Enforcement of the Earnings Test

A. Background

The Earnings Enforcement Operation (EEO) is an automated system that was designed to detect overpayment situations where a beneficiary failed to report, or under reported their earnings for the year. 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 ET (usually posted to the Master Beneficiary Record (MBR)). Also, the EEO identified potential underpayment situations, and SSA then notified the beneficiary that an annual report was required for the underpayment to be issued.

In 1991, the EEO was modified to consider not only the current year earnings, but also earnings in the three prior years. This change took into account late employer postings and earnings corrections.

In 1997, we changed our regulations to use earnings posted to the MEF as the annual report required by law. The annual report is the W2 filed by the employer and the self-employment tax return filed by the beneficiary. These earnings are automatically posted to the MEF. We use the MEF data, along with other information in our records to adjust benefits payable under the ET. This change reduced the reporting burden on the public. Beneficiaries only need to contact us to provide additional earnings information or correct inaccuracies. Examples of situations where beneficiaries need to contact us include Special Wage Payments (SWP) or incorrect MEF earnings posted to the record. Beneficiaries also may still file an earnings report with SSA. They may also call the 800-teleservice center number to report additional earnings information.

The EEO continues to detect overpayments and underpayment situations by comparing earnings posted to the MEF with earnings data posted to the MBR. The EEO automated process identifies cases where earnings are unclear and further investigation is needed to determine the deduction. The EEO system's process compares current and prior year earnings data reported by employers based on individual Employer Identification Number (EIN) checks, with any earnings data reported by the beneficiary. The automated system performs three enforcement selections per year in June, September, and the following February.

B. Description of T2 Earnings Enforcement Operation (EEO)

The EEO program:

•

Ensures that all pertinent earnings information posts to the MEF before selecting the beneficiary for adjustment. We do this via an EIN match. We compare the EINs in the enforcement year against the prior year.
•

Compares earnings data on the MBR to earnings on the MEF.
•

Considers SWPs and Self Employment Income (SEI) losses annotated to the MEF. See RS 02510.016 through RS 02510.020.
•

Detects cases where no annual report data on the MEF exists, yet the beneficiary's estimate earnings (see RS 02510.005) for the earnings year exceed the exempt amount, or MEF earnings are higher than those reported by the beneficiary.
•

Detects cases where an underpayment may be due.
•

Automatically processes cases when certain criteria are met. Manual review and processing is needed when automatic processing is not achievable.

The EEO examines the current enforcement year and the prior three years. The system is looking for changes to the MEF 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 June, September, and February following the close of the calendar year.

EXAMPLE: In August 2021 an employer files a W-2C for a beneficiary changing the earnings reported for 2020 from $20,000 to $22,000. The automated EEO process will select this beneficiary for enforcement because of the 2020 earnings. We will look at this case during the September 2021 enforcement operation run. This is assuming all other criteria listed in section C.1 are met.

C. Policy - General

1. Cases selected for enforcement

The MEF is the primary source for benefit adjustment under the ET. The goal is to select cases and process the benefit adjustment as quickly and accurately as possible.

In general the EEO selects T2 beneficiaries subject to benefit withholdings during the year. This is due to an earnings estimate or actual earnings posted. In either event, these cases will be considered for EEO selection.

To be considered for selection, the beneficiary must be:

•

Entitled to T2 benefits, but not based on their own disability; AND
•

Be under full retirement age (FRA) or in the year of FRA attainment during the enforcement year.

In addition, the beneficiary must at least meet one of these requirements:

•

Earn over the applicable exempt amount;
•

Receive some benefits during the year and file no annual report or have no prior enforcement action;
•

Receive some benefits during the year and have a prior annual report or enforcement action,and the current earnings exceed the previous report of earnings;
•

Receive no benefits during the year, and due to the posted earnings (over or under the applicable exempt amount), some benefits are due.

IMPORTANT: When applying the monthly earnings test in a grace year, as outlined in RS 02501.030, we use the Non-Service Month (NSM) information on the MBR to consider work deductions when:

•

NSMs show in the current enforcement year; AND
•

The annual report or earnings estimate is greater than the annual exempt amount.

Therefore, it is extremely important that adjudicators correctly code NSM information provided by the beneficiary. Remember, NSM is an overlay field in Post Entitlement Online System (POS). NSM information must be reinput whenever you process a work report, even if there is no change to the NSM. If NSM is omitted in the input for a year when the monthly earnings test is applicable(year shown under the LST MONTHLY TEST field of the BENE ENT line (SM 00510.190), the MBR will update with no NSM.

2. Cases not subject to enforcement

We exclude the following categories of cases from the EEO process:

a.

Earnings estimate that results in no benefits paid to the beneficiary during the year and the MEF earnings (current enforcement) support no benefits are due;
b.

Beneficiary is one year or more beyond the year of FRA;
c.
Beneficiary files an amended annual report (i.e. TOER -M on the MBR) or is a previous enforcement selection; AND either:
- •
  
  Attained FRA in the enforcement year; OR
- •
  
  The difference between the beneficiary earnings report and the enforcement earnings results in an overpayment of less than $100.

Apply these same tolerances to all situations where you discover a potential work deduction overpayment. 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 their own initiative). The instructions apply even if it is necessary to develop another issue, including the correctness of a posting for primary insurance amount (PIA) computation purposes.

3. Relationships between recomputation and enforcement

We must pay special attention when applying the ET to situations involving a requested recomputation or Automatic Earnings Reappraisal Operation (AERO).

•

If a beneficiary requests a recomputation, or an AERO action is pending, and the possibility of overpayment exists, the enforcement action takes precedence over the recomputation action. Delay the recomputation action 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. Input the Annual Report (PEWE screen) via POS and enter the recomputation via Change in PIA (CIP) at the same time.
•

Do not routinely perform a manual adjustment for permanent deductions when working an AERO action. Instead, wait for the EEO program to assess the deductions. For example, if summarizing a January 2021 AERO increase, and the EEO has not yet assessed permanent deductions, base the current payment on the previous estimate (if any). We adjust benefits and impose permanent deductions using the EEO program and the EIN matching criteria.

D. Description of Enforcement Process

1. Background

SSA uses the MEF earnings to verify beneficiary compliance with the reporting requirements under the ET.

•

The EEO program compares the MEF earnings with the earnings reported for deduction purposes (posted to the MBR). The program identifies beneficiaries who fail to report or under report their earnings.
•

Since 1996, most beneficiaries no longer report their earnings to SSA. The EEO now determines the correct earnings for deduction purposes. The system identifies both underpayment and overpayment situations. It also recognizes situations where we need to manually review the posted earnings or contact the beneficiary to determine if the posted earnings are correct. Note, many cases selected for Direct Contact (“DIRCON”) in the 1996 enforcement process were actually “paid” correctly or determined that no action was needed(“NANed”) through an automated process developed by Office Program & Integrity Reviews (OPIR). This came after a determination that the characteristics of the case were such that a review of the earnings was not required. The goal of this enforcement process is to reduce unnecessary manual workloads in the PCs.
•

Adjudicators and beneficiaries must recognize potential issues in using the earnings that post to the MEF when adjusting benefits under the earnings test. There may be issues with employer reports. You may encounter errors in reporting, earnings adjustments, and late reports that cause problems in enforcement.
•

Adjudicators need to remember that the enforcement process reflects our best attempt to adjust benefits under the ET based on the earnings posted to the MEF. If a case is selected for Direct Contact (DIRCON) under this process, the EEO automated process has detected a characteristic that makes the system question the earnings for deduction purposes. A review of the record may be the only necessary action to verify that the earnings are likely correct. However, in some cases we must contact a beneficiary for an earnings report. Beneficiaries responding to an enforcement may offer evidence that the earnings we used to adjust their benefits were not correct. Remember, we may accept a reasonable explanation 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. If a case has new MEF earnings posted since the last enforcement selection, then it is passed to the EEO enforcement for consideration.

b. Employer Identification Number (EIN) match

The intention of the EIN match is to try to ensure that all earnings post before the EEO automated process selects a case for enforcement. We do not want to pay an underpayment too early, only to select the case for an overpayment in a later pass when additional earnings post.

The automated EIN check looks for a special payment in the enforcement year, if one was present in the prior year. This helps to prevent erroneous enforcement actions.

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

•

There is no posting in the year prior to the enforcement year.
•

An EIN=70-8888888 (Self-employment income loss SEI), is present for the prior year and not present for the enforcement year.
•

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

All EINs in the prior year match the EINs in the enforcement year and there are additional EINs in the current year that do not match the prior year.

NOTE:

If there is no estimate of earnings on the MBR, or the posted earnings are more than the estimated earnings, the case will process without an EIN match.

Any case failing the EIN match criteria in pass one or two will be sent to the RSI finder file. The EEO will reselect the case in the next pass if additional earnings post. In the third and final pass of enforcement, all cases remaining on the finder file from pass one and pass two will process 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, also known as the Total Reported Earnings (TRE),the EEO program uses both covered and non-covered earnings. The TRE represents the enforceable earnings amount from the MEF. The automated program examines the amounts posted to the MEF in both the COVERED and the NONCOVERED DETAILS, sums up the covered and non-covered earnings, and uses either the result of the summarized FICA earnings( total sum of covered earnings) or the result of the summarized TOTAL COMP earnings( field on DEQY that represents Wages, Tips,and other compensation), whichever is higher for the TRE amount. The EEO takes the following steps as applicable, to determine the earnings for deduction purposes:

•

Sums all COVERED FICA EARNINGS shown in the "posted" and "unposted" segments of the MEF for the selected earnings year (EY).
•

Sums all TOTAL COMP earnings shown in the "posted" and "unposted" segments of the MEF for the EY.
•

Extracts all Railroad wages from the Railroad Main Earnings File (RRM for selected EY).

If the TOTAL COMP earnings of the un-posted segment of the MEF for the selected EY contains a DR posting (current railroad Non-FICA W-2), adds earnings from RRM to the summarized FICA earnings only. Otherwise, adds earnings from RRM to BOTH summarized FICA and summarized TOTAL COMP.
•

Adds all special wage payments (DB) and all Non-Covered wages (DA,D2,D3,FA,F2,F3) earnings postings to the summarized FICA earnings and the summarized TOTAL COMP.
•

If DK posting is present for same year as DA posting, checks EIN. If DK EIN = DA EIN,then adds DK to both summarized TOTAL COMP and summarized FICA. Otherwise, adds DK to summarized TOTAL COMP.
•

Adds all SEI postings to the summarized TOTAL COMP.
•

USES either the RESULT of the summarized FICA earnings or the RESULT of the summarized TOTAL COMP earnings, whichever is higher as the TRE.

d. Year of FRA attainment

In the year of FRA attainment, we only count earnings for months prior to FRA. In calculating enforcement earnings, we will assume the beneficiary worked the entire year. The steps listed below is the manual process that should be taken to determine the enforcement earnings in the year of FRA attainment:

•

Divide the TRE by 12 (Round down and drop the cents), AND
•

Multiply the result by the number of months in the year prior to FRA attainment. The result will be used as the TRE.

The following are important points to remember:

•

Always obtain BOTH the “DETAIL COVERED EARNINGS and DETAIL NONCOVERED EARNINGS when examining the earnings record.
•

For enforcement year 2000 and beyond, any beneficiary who attains FRA in the selected enforcement Year ( January 2nd of Earnings Year through January 1st after the Earnings Year), and a TOER of A or M is present on the MBR, the claim is dropped from the earnings enforcement.

E. Description of DEQY postings

The following is a brief description of the types of postings that you will most often see in the enforcement process. Adjudicators will need to develop some expertise in reading and analyzing the DEQY postings in order to explain the earnings enforcement 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 available in SM 00344.011 through SM 00344.035. Also see DEQY Quick Reference Guide.

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. The most common data elements that will be seen in enforcement are:

"R" Code of	Represents
A	Current W-2 FICA
D	Current Non-FICA W-2 (non-covered earnings)
E	Current Corrected FICA W-2
F	Current Corrected Non-FICA W-2 (non-covered earnings)

"E" Code of	Represents
A	Regular
Q	Medicare Qualified Government Employment
J	Employee contribution (from wages) to non-qualified deferred compensation plan (counts under the ET)
B	Special wage payment (SWP)
K	457 plan contribution (state/local) (SWP)
T	Tips earned in regular employment

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

NOTE:

"DB" postings and “DK” postings will show 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






 0017  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






                  17 YEARLY TOTAL 32750.00

In example 1, the worker had only one employer (TARA CORP) in 2017 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 EEO 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






 0017  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






                  17 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






 0017  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






          17 YEARLY TOTAL -14300.00






                  17 YEARLY TOTAL 32750.00

In example 2 , the worker retired and received a lump sum payment for accumulated unused sick leave totaling $14,300.00. The beneficiary reported this special payment to the field office when filing for benefits, and the special payment was input by the FO. The SWP 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 T2 earnings enforcement operation calculates the earnings for deduction purposes, it uses the "DB"posting and “adds” the negative $14,300.00 to the FICA wages of $32,750.00. The earnings for enforcement purposes are $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






 0017  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






                  17 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






 0017  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






               17 YEARLY TOTAL 18881.66

In example 3 , the worker had FICA earnings of $32,750.00 for TARA CORP in 2017. 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 2017 and had total earnings of $18,881.66. The “DA” posting represents “regular NON-FICA wages.” The “DJ” posting represents an employee contribution to a tax deferred savings plan. Remember, employee contributions to a tax deferred plan from regular wages earned during the year are counted under the earnings test. See RS 02505.240 for types of income counted. In this case, the beneficiary's earnings for deduction would be the total of the FICA and the NON-FICA earnings ($32,750.00 +$18,881.66 = $51,631.66).

F. Description of Enforcement Categories

After the EEO program determines the TRE,the program decides the category of the case by considering various case characteristics.. This includes comparing the estimated or reported earnings from the beneficiary on the MBR to the 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 Title 2 Redesign (T2R).

The following is a description of enforcement categories:

1. Potential underpayment

We select a case as a “Potential Underpayment” if:

a.

Some benefits were withheld during the year based on an estimate of earnings (RFD of “2”), AND
b.
Additional benefits are payable based on the TRE calculation,

UNLESS:
- •
  
  The TRE calculation equals “$0” or a negative amount, OR
- •
  
  The TRE calculation, PLUS $2,000 is less than the estimated earnings, OR
- •
  
  The TRE calculation is greater than the estimated earnings (TE NO 777).

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 TRE exceeds 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 earnings estimate present for the enforcement year or the earnings estimate is less than the exempt amount.

3. TE discrepancy - Overpayment

An annual report:

•

Is present and the TRE exceeds 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 case characteristics indicate 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 adjudicator should review the case to determine if there is a reasonable basis for concluding the TRE is correct for the purpose of adjusting benefits under the earnings test.

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

The following are characteristics that will cause a TE DIRCON situation:

a. The TRE calculation equals “$0” or a negative amount.

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 was a problem with the earnings posted to the MEF. A “$0” TRE can occur when an incorrect employer report is discovered and SSA ask the employer for a new report. In this circumstance, SSA does a blanket adjustment to the original reported earnings,resulting in a $0 posting.

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

A negative TRE generally results from an incorrect input of SWPs. It can also be the result of a correct SWP input but an inaccurate earnings report.

Sometimes, if the SWP has been incorrectly input, we can determine the correct earnings and input the earnings via the PEWE screen. For example, the earnings record shows an “AA” posting (regular wages) of $27,859.88 for 2019. There is a remark in the special message field, “SP $4,324.22 for 2019 lump sum payment for accumulated unused sick leave-”. There is an erroneous "DB" posting for the same EIN as the "AA" posting in the amount of $432,422.

The "DB" posting indicates the special payment was incorrectly input using the “cents” ($27,859.88 minus $432,422 = -404,562.12). SWP input instruction require dropping cents when inputting the SWP. The correct enforcement earnings ($27,859.88 minus $4,324 = $23,535.88) should be input via the PEWE screen. Correct the SWP posting ($4,324) using the “V” code. See MS 01501.004 - Special Wage Payments (WP01).

b. The TRE calculation, plus $2,000 is less than the estimated earnings

The DIRCON was established to prevent erroneous underpayments to beneficiaries. When the TRE calculation plus $2000 is less than the estimated earnings, the case should be examined prior to releasing 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 Last Monthly Earnings Test Year (LMETY) is still available. Also, inquire about special payments and current year estimates.

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, input the report using the PEWE screen. If the decline is significant, contact the beneficiary for an explanation and input the report using the PEWE screen.

EXAMPLE 1: 2021 EEO -- TE DIRCON with TRE earnings of $17,584. Work estimate was $23,500. DEQY shows “AA” (REGULAR FICA WAGES) posted for 2020 of $16,979 (EMPLOYER ALRIGHT TRUCKING CO.), and SEI posted for 2020, in the amount of $5,027. For 2021, the DEQY shows an "AA" posting for the same employer in the amount of $17,584 and no SEI posting. SSA contacted the beneficiary for an explanation of the SEI posting. The beneficiary states that they had started a craft business making doll clothes and selling them at craft fairs. However, their health was poor early in the year and they basically gave up the business. There was no profit to be shown, and they were not claiming a loss or filing an SE tax return for the year. The beneficiary is continuing to work for ALRIGHT TRUCKING and expected to earn around $18,000 in 2022.

Input the 2021 earnings of $17,584 as the annual report and the 2022 estimate of $18,000.

EXAMPLE 2: 2021 EEO -- TE DIRCON with TRE earnings of $27,965. The work estimate for 2021 was $47,000. DEQY shows one employer for 2020 with earnings of $45,734.36. The 2021 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 they converted to part-time in April of last year. They continue to work part-time and expect to earn around $22,500 in 2022. They continue to earn over the monthly exempt amount.

Input the posted earnings $27,965 as the annual report for 2021. Input the estimated earnings of $22,500 as the 2022 estimate.

EXAMPLE 3:

2021 EEO -- TE DIRCON with TRE of $34,652.29. The work estimate for 2021 was $39,500.

The DEQY for 2020 shows both wages and SEI posted. The wages were $31,578.28 and the SEI for 2020 was $7,459.

In 2021 there are again two postings, wages (same employer) and an SEI posting. The wages are $31,883.29 and the SEI posting is for $2,769.00. It is reasonable to conclude that all the posted earnings are correct. The beneficiary continues to work for the same employer and continues to have SEI. Apparently, the business profit was down in 2021. Input the enforcement earnings of $34,652 using the PEWE screen.

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

The EEO program will calculate enforcement earnings in the year of attainment of FRA if no annual report was filed. However, if the monthly earnings test is applicable and NSMs are coded in the year of FRA attainment,(prior to attainment), we cannot do the calculation based on assumption of equal work in all months of the year. NSMs are only relevant in grace years. Therefore, the case will be a DIRCON, and SSA will contact the beneficiary to file a report.

G. Procedure - Handling TE DIRCON Enforcement alerts

The following is guidance for handling TE DIRCON alerts:

•

Whenever SSA initiates beneficiary contact, check for a current year estimate (CYE). If no CYE is shown, and there is no indication of work stoppage, request a CYE from the beneficiary.
•

If direct contact is unsuccessful use the MEF earnings as enforcement earnings for deduction purposes. Also, if the monthly earnings test is applicable,use the NSMs that are posted to the MBR in a grace year, unless those months are clearly erroneous. If there is reason to believe the beneficiary returned to work and worked over the monthly exempt amount, and direct contact is unsuccessful, assume all months are service months and input the enforcement earnings using the PEWE screen.
•

Refer to SM 00606.115 through SM 00606.120 for systems information. See SM 00606.000 for the automated process phase of enforcement.

H. Procedure - Other related Discrepancies

1. Incorrect Social Security Number

If development shows enforcement is wrong because the Beneficiary's Own Account Number (BOAN) is incorrect, correct the BOAN on the MBR.

2. Surname is misspelled

If the record indicates the surname is misspelled:

a.

Verify the proper spelling with the beneficiary. If the MEF name is correct, correct the MBR. If the MBR is correct, take no further action on the surname mismatch.
b.

In either case , use the MEF earnings for enforcement earnings. If the monthly earnings test is applicable, use any NSMs posted on the MBR in a grace year, 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 Claims Specialist for development of the earnings discrepancy via the Earnings Modernization - Item Correction process or beneficiary contact.

I. Procedure - Beneficiary protest of 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. Reconcile the explanation with the amount of earnings posted to the MEF. Verify any NSMs .If we do not accept the beneficiary’s explanation, follow RS 02510.026 I.2. If we accept their explanation:

•

Input the amended annual report.
•

Input any SWPs as necessary, (see RS 02505.025 and RS 02510.017).
•

If an overpayment recovery action should be stopped, input the appropriate PROTEST/STOP RECOVERY Request screen (DRPR for PCs, 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, and we accept the beneficiary's explanation, do not take an SSA-561. Input the amended annual report and any necessary actions as shown in this section. 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 the MEF to verify earnings amounts. The Claims Specialist corrects the earnings posted to the MEF via EM 2.8 if necessary. When MEF earnings corrections are involved, it may be necessary to recompute the PIA.. If an overpayment balance exists and partial recovery is desired, it can be set up via DMS. See MSOM 01106.015.

2. Beneficiary cannot explain difference between MEF earnings and reported earnings

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

a.

Stop recovery of any overpayment by input of DMS screen DRPR. See MSOM DMS 006.003.
b.

Obtain explanation of MEF.
c.

Initiate contact with employer if necessary to resolve.
d.
If contact or other development establishes that:
- •
  
  The enforcement is wrong, input an amended annual report. Do not obtain Form SSA-561-U2. Input any SWP as necessary. See RS 02505.025 and 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, ask the beneficiary to submit Form SSA-561-U2. See GN 03102.225).

J. Procedure - Reporting error

If duplicate postings, employer reporting errors, scrambled wages, or SEI causes an incorrect enforcement action:

•

Input protest to stop recovery of any overpayment via DMS screen DRPR.
•

Input an amended annual report to delete any overpayment that resulted from the earnings error.
•

Prepare an Earnings Modernization Item Correction (EMIC), as appropriate, to correct the earnings record.

REMINDER: When the posted earnings do not belong to the beneficiary (for example, duplicates or scrambled earnings), the EMIC alone is not the only action required. An amended annual report should also be input.

Social Security

Program Operations Manual System (POMS)

RS 02510.026 Enforcement of the Earnings Test