Effective Dates: 09/13/2001 - Present Previous | Next

TN 20 (09-01)

SI 02301.110 Penalty Notices and Collection Actions

A. Introduction

FOs notify individuals of all penalty decisions either orally or in a manually prepared written notice. A decision to collect a penalty always requires a written notice and systems input even when current circumstances do not permit collection.

B. Policy — Decision to Collect a Penalty

1. Appeal Rights

A decision to collect a penalty is an initial determination with appeal rights, but there is no right to payment continuation under GK due process procedures.

NOTE: Collection of a penalty may proceed when the recipient appeals it

unless the recipient also appeals the overpayment determination.

2. Notice Requirements

The collect decision always requires a written notice.

The notice must explain the reason for the penalty deduction, the amount of the deduction and how to file for a reconsideration.

C. Policy — Decision that Good Cause Exists

1. Appeal Rights

A decision that good cause exists for a reporting failure and that SSA will not collect a penalty (a good cause finding) is not an initial determination and has no appeal rights.

2. Notification Requirements

a. Written Notice Not Required

The good cause finding does not require a written notice when:

  • •

    the FO explains the decision in person or by telephone to a recipient, and

  • •

    the individual(s) does not ask for the decision in writing, and

  • •

    the FO documents the file on an SSA-5002 that it personally notified the individual(s).

b. Written Notice Required

The good cause finding requires a written notice when:

  • •

    the FO is unable to personally contact the recipient to explain the decision, or

  • •

    the individual(s) asks for the decision in writing, or

  • •

    the FO chooses to send a notice in lieu of attempting personal contacts.

FOs must explain either orally or in the notice (as appropriate) that SSA will not collect a penalty because good cause exists for the reporting failure.

EXAMPLE 1: Penalty Notice Not Required

During a penalty interview with Claire Miller, the claims specialist (CS) explains that SSA will not collect a penalty because she has a good reason for failing to report. After the interview, the CS documents the file that the recipient was personally notified of the decision.

EXAMPLE 2: Penalty Notice Required

Same as Example 1 except that when the CS explains the decision to

Ms. Miller, she requests the decision in writing. The CS sends a penalty notice to Ms. Miller and places copies in the file.

D. Procedure — General

  • •

    Prepare and send manual notices by following procedures in NL 00801.001 through NL 01001.010 on preparing and sending manual notices. Use only standard notice paragraphs in NL 00804.100 through NL 00804.700.

  • •

    Send penalty notices to recipients and any appointed representatives. See SSI notification policy and procedures in NL 00801.001 and NL 01001.010.

  • •

    Place a copy of any penalty notice in the recipient's file.

  • •

    Do not suppress an AONS notice solely for the purpose of sending a penalty notice with a manual overpayment notice.

E. Procedure — Decision to Collect a Penalty

1. Manual Notice Instructions

Select penalty paragraphs from NL 00804.240 “Miscellaneous”. Use paragraph PENM50 under the caption "Information About Your Payments" and PENM52 under the caption "Things To Remember" on Form SSA-L8166-U2 (Important Information Notice). For a sample notice, see NL 00804.700, Notice Number 2.

2. When to Send

Send the collect notice using this chart.

WHEN A COLLECT DECISION OCCURS . . .

THEN SEND THE PENALTY NOTICE . . .

Before the release of an overpayment notice

After the release of an AONS notice;

 

OR

 

Attached behind a manual overpayment notice (Form SSA-L8170-U3, SSA-L8171-U3, or SSA-L8172-U3.*

For an excess payment that did not result in an overpayment

As soon as possible

After the release of an overpayment notice

As soon as possible

*CAUTION: Do not send the notice before the release of an AONS or manual overpayment notice. See SM 01311.035.C for a description of overpayment notice information in the Overpayment Sequence Data (OPSQ) segment on the SSR.

3. Adding a Penalty Decision to the SSR on Current Pay Records

When a decision has been made to collect a penalty, the Penalty Screen (UOPN) in the DIRECT SSR Update is completed. (See MSOM BUSSR 004.016 on UOPN.)

  • •

    Select ‘Y' for ADD PENALTY. The next penalty increment will be displayed.

    Note: You may over key the penalty amount displayed to increase the increment because penalty periods are not propagated to the new record (e.g., We assessed a penalty of $25 on a terminated prior record and are now assessing a subsequent penalty of $50 on the current active record).

  • •

    The system automatically builds a P98 entry and a RECOVER BY CHECK ADJUSTMENT (D TAC) DECISION.

NOTE: Notice suppression should be input to stop the systems generated notice.

4. Record Goes Into Nonpay Status

When a record goes into nonpay status and the penalty collection has not been completely collected:

  • •

    Select the Penalty option in the Overpayment Menu (UOMN).

  • •

    Select ADJUST PENALTY COLLECT DECISION on the Penalty screen (UOPN).

  • •

    The system will automatically adjust the D TAC to equal the amount of the penalty collected and build a DB decision for the uncollected amount. If none of the penalty amount has been collected, the system will change the D TAC to a DB decision. (See MSOM BUSSR 004.016 and SM 01311.305 and SM 01311.307.)

NOTE: Whenever a record goes from current pay to nonpay or from nonpay to current pay, the ADJUST PENALTY COLLECT DECISION must be used.

If the individual goes back into current pay, a B8 diary is set. Select ADJUST PENALTY COLLECT DECISION OPTION on UOPN to change the DB TAC to D TAC.

5. FLA-D Cases

For cases in FLA-D, penalty assessments may be established but not collected. Recovery of the penalty will automatically begin when the new FLA is transmitted. Suppress the automated notice and issue a manual notice when changing the FLA from D and there is a penalty collect decision on the record.

F. Procedure — Decision that Good Cause Exists

1. Manual Notice Instructions

When a good cause finding requires a written notice, select penalty paragraphs from NL 00804.240 “Miscellaneous”. Use paragraph PENM51 as the opening and PENM52 under the caption "Things To Remember" on Form SSA-L8165-U2 (Important Information Notice).

2. When to Send

Send the notice:

  • •

    as soon as possible, or

  • •

    attached behind a manual overpayment notice or overpayment information notice (Form SSA-L8173-U3 or SSA-L8174-U3) when applicable.

3. Good Cause Finding Decision

If a finding of good cause is made, select DELETE on the UOPN screen to remove the penalty. The system will automatically delete the penalty and if there are no other outstanding overpayments (OPD-OPC) on the record, then any money withheld for the penalty will be automatically reimbursed. (See MSOM BUSSR 004.016 and SM 01311.305 and SM 01311.307.)

Input the good cause finding (code PYGC) to the CG field (see instructions in SM 01301.785 through SM 01301.820).

G. References

Initial Determinations, SI 04010.010 - SI 04010.020

Payment of Underpayments to Survivors, SI 02101.003

General Recovery Procedures for Overpayments, SI 02220.001 through SI 02220.012.

Penalty Input Instructions, SM 01311.305 through SM 01311.307

UOPN Penalty Screen, MSOM BUSSR 004.016

To Link to this section - Use this URL:
http://policy.ssa.gov/poms.nsf/lnx/0502301110
SI 02301.110 - Penalty Notices and Collection Actions - 09/13/2001
Batch run: 08/07/2019
Rev:09/13/2001