TN 13 (08-10)

RS 01804.080 Coverage Questions

A. Policy

SEI must be developed if a coverage question is raised by the nature of the business or other evidence in file.

1. Nature of business

For example, the following must be questioned (note this list is not all-inclusive).

  • The nature of the business is such that rental income may have been included in computing NE from SE, e.g., income from a rooming house;

  • Material participation development is required, see RS 01803.700 for a discussion of material participatio);

  • Income is from a partnership arrangement which must be developed per RS 01802.310.

  • Form SSA-7156 (Farm Self-Employment Questionnaire) indicates that income from the sale of livestock held for breeding or dairy purposes was erroneously included as NE from SE, refer to RS 01804.200.

2. Employee or self-employed

SEI must be developed if there is a question as to whether the NH is an employee or self-employed. However, if this is the only question, the SEI may be accepted as correct unless:

  • A coverage question is raised by the claimant; or

  • The nature of the activity is such that if the person were an employee, the services would be excluded from coverage; or

  • The issue must be resolved to ensure proper reporting in the future; or

  • The ER-EE question may affect others performing the same or similar services as the NH. See RS 02101.808 for situations where employers may not be liable for Social Security taxes if an employee was treated as an independent contractor.

EXAMPLE: Harold James filed an application for RIB and alleged self-employment as a securities salesman. He performed services for the Biggs Corporation, a large brokerage firm which utilizes the services of hundreds of securities salesmen.

Mr. James must be questioned about the circumstances under which he performed services for the Biggs Corporation. If it appeared that the NH is in an employment relationship similar to that described in SSR 72-58 at social and undertake full employer-employee relationship development. See RS 02101.800 for a discussion of coverage development in employer and employee relationship cases. It is possible that an ER-EE relationship exists between the Biggs Corporation and its securities salesman, and that the amounts paid to the salesmen by the corporation are not being properly reported as wages.

Unless it is obvious from the information in the claims development, the FO must document the file as to the findings.

To Link to this section - Use this URL:
RS 01804.080 - Coverage Questions - 08/19/2010
Batch run: 07/03/2014