[Federal Register Volume 60, Number 158 (Wednesday, August 16, 1995)]
[Rules and Regulations]
[Pages 42431-42435]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-19501]
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SOCIAL SECURITY ADMINISTRATION
20 CFR Parts 404 and 422
RIN 0960-AD70
Wage Reports and Pension Information
AGENCY: Social Security Administration.
ACTION: Final rules.
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SUMMARY: We are updating our rules on the need for and use of employer
identification numbers and on processing reports of wages provided
annually by employers to the Social Security Administration (SSA). In
addition, we are adding to our rules the procedures we have for
maintaining and providing information we receive from employers on
deferred vested pension benefits.
effective DATe: These rules are effective August 16, 1995.
ADDRESSES: Organizations and individuals desiring to submit comments on
the information collection requirements under ``Paperwork Reduction
Act'' should submit them to the Office of Information and Regulatory
Affairs, OMB, New Executive Office Building, Room 3208, Washington, DC
20503, Attention: Desk Officer for SSA.
FOR FURTHER INFORMATION CONTACT: Jack Schanberger, Legal Assistant, 3-
B-1 Operations Building, 6401 Security Boulevard, Baltimore, MD 21235,
(410) 965-8471.
[[Page 42432]]
SUPPLEMENTARY INFORMATION:
Employer Identification Numbers
Pursuant to section 205(c)(2)(A) of the Social Security Act (the
Act), SSA maintains a record of the wages and self-employment income of
each individual. The record includes earnings covered under title II of
the Act, earnings covered under title XVIII of the Act, and earnings
not covered under the Act. The record is identified by the individual's
social security number. Wages posted to an individual's record are
based on wage reports submitted to SSA and the Internal Revenue Service
(IRS) by employers. IRS regulations at 26 CFR 31.6011(a)-1 require an
employer to file employment tax returns with IRS each year and IRS
regulations at 26 CFR 31.6051-2 and 31.6091-1(d) require an employer to
file wage reports with SSA each year. These requirements are also
explained on wage reporting forms and in related instructions issued by
SSA and IRS. To help account for these returns and reports, IRS assigns
an employer identification number (EIN) to every employer. However, SSA
will assign a special identification number to one or more political
subdivisions of a State which submits a modification to its coverage
agreement under section 218 of the Act. These numbers are assigned only
for State bookkeeping purposes unless coverage is extended to periods
prior to 1987. Then, the special number will be assigned and used for
reporting the pre-1987 wages to SSA. The special number will also be
assigned to an interstate instrumentality if pre-1987 coverage is
obtained.
Annual Wage Reporting
Section 232 of the Act was added by section 8 of Public Law 94-202.
Section 8 is cited as the ``Combined Old-Age, Survivors, and Disability
Insurance-Income Tax Reporting Amendments of 1975.'' Section 232, as
amended by section 107 of Public Law 103-296, provides authority for
the Secretary of the Treasury to make available to the Commissioner of
Social Security such documents that are agreed upon as being necessary
for processing information contained in returns required by the
Internal Revenue Code and by IRS regulations. Under this authority and
Public Law 94-455 and 95-216, SSA and IRS have entered into an
Agreement governing the manner in which employer wage reports will be
processed. Included in this process are the wage reports which
employers are required to file annually with SSA. As required by IRS
regulations at 26 CFR 301.6011-2, employers who file 250 or more wage
reports per year must file them on magnetic media, unless the
requirement is waived by IRS. These regulations reflect these
requirements for filing annual wage reports with SSA and explain how
SSA will process the reports and reconcile reporting errors with IRS,
employees, and employers.
Incorrect Wage Reports
We are also consolidating Secs. 422.115 and 422.120 to include in
one section (Sec. 422.120) our current procedures for processing wage
reports submitted to us by employers that do not include a worker's
social security number or include an incorrect name or number. The
existing regulations provide that we will first contact the employer
for the missing information or correction. However, in this revised
regulation, we state our current procedure which is to attempt to
contact the employee first. Additionally, we provide that we may return
to the employer a wage report submittal if 90 percent or more of the
wage reports in that submittal are unidentified or incorrectly
identified. We also explain in revised Sec. 422.120 that we will inform
IRS of all wage reports filed with SSA that do not include the required
social security numbers. IRS may then assess the employer a penalty for
erroneous report filing, pursuant to the authority provided in section
6721 of the Internal Revenue Code.
Pension Plan Information
Under section 6057 of the Internal Revenue Code, certain private
pension plan administrators must file with the IRS annual reports that
identify individuals who separated from plan coverage during the year
and still have a right to future retirement benefits. In addition, this
provision of the Internal Revenue Code, as amended by section 108(h)(5)
of Public Law 103-296, provides for transmitting copies of the annual
reports to the Commissioner of Social Security. Then SSA transcribes
the reports onto an electronic record for the purpose of maintaining
the pension information which SSA must provide to specified
individuals, as explained below.
Section 1131 of the Act, as amended by section 108(b)(11) of Public
Law 103-296, requires that whenever the Commissioner of Social Security
is requested to do so, or whenever he or she makes a finding of fact
and a decision as to the entitlement of an individual to social
security or medicare benefits under title II of the Act, he or she must
transmit to the individual any information, as reported by the
employer, regarding any deferred vested benefits under a private
pension plan. In these rules, we explain how we administer this
provision.
Final Rules
On August 30, 1994, we published proposed rules in the Federal
Register at 59 FR 44674 with a 60-day comment period. We received no
comments on these proposed rules. We are, therefore, publishing the
proposed rules essentially unchanged as final rules.
Regulatory Procedures
Executive Order 12866
We have consulted with the Office of Management and Budget (OMB)
and determined that these rules do not meet the criteria for a
significant regulatory action under Executive Order 12866. Thus, they
were not subject to OMB review.
Regulatory Flexibility Act
We certify that these final rules will not have a significant
economic impact on a substantial number of small entities because the
procedures stated in these rules are already in effect without having
caused a significant impact. Therefore, a regulatory flexibility
analysis as provided in Public Law 96-354, the Regulatory Flexibility
Act, is not required.
Paperwork Reduction Act
These final rules contain reporting requirements in Secs. 422.114
(e) and (f) and 422.120(a). We would normally seek approval of these
requirements, under the Paperwork Reduction Act, from OMB. We are not
doing so in this situation because we already have clearance from OMB
to collect this information using forms SSA-L93, 95 and 97 (OMB No.
0960-0432) and form SSA-2765 (OMB No. 0960-0471).
There is also a reporting requirement in Sec. 422.122, which deals
with information on deferred vested pension benefits. As required by
section 2(a) of the Paperwork Reduction Act of 1980, 44 U.S.C. 3504(h),
we have submitted a copy to OMB for its review of this information
collection requirement. Other organizations and individuals desiring to
submit comments on these information collection requirements should
direct them to the address shown in ADDRESSES.
Public reporting burden for this collection of information is
estimated to average 30 minutes per response. This includes the time it
will take to understand what is needed, gather the necessary facts, and
provide the information. We expect that annually there will be 2,280
requesters of pension plan information. Therefore, the annual
[[Page 42433]]
reporting burden is expected to be 1,140 hours. If you have any
comments or suggestions on this estimate, write to the Social Security
Administration, ATTN: Reports Clearance Officer, 1-A-21 Operations
Building, Baltimore, MD 21235, and to the Office of Management and
Budget, Paperwork Reduction Project (0960-NEW), Washington, DC 20503.
(Catalog of Federal Domestic Assistance Program Nos. 96.001 Social
Security-Disability Insurance; 96.002 Social Security-Retirement
Insurance; 96.004 Social Security-Survivors Insurance.)
List of Subjects
20 CFR Part 404
Administrative practice and procedure, Blind, Disability benefits,
Old-Age, Survivors, and Disability Insurance, Reporting and
recordkeeping requirements, Social Security.
20 CFR Part 422
Administrative practice and procedure, Freedom of information,
Organization and functions (Government agencies), Social security.
Dated: July 27, 1995.
Shirley Chater,
Commissioner of Social Security.
For the reasons set out in the preamble, we are amending subpart M
of part 404 and subpart B of part 422 of 20 CFR chapter III as follows:
PART 404--FEDERAL OLD-AGE, SURVIVORS AND DISABILITY INSURANCE
(1950- )
Subpart M--[Amended]
1. The authority citation for subpart M of part 404 continues to
read as follows:
Authority: Secs. 205, 210, 218, and 1102 of the Social Security
Act; 42 U.S.C. 405, 410, 418, and 1302; sec. 12110 of Pub. L. 99-
272, 100 Stat. 287; sec. 9002 of Pub. L. 99-509, 100 Stat. 1970.
2. Section 404.1220 is amended by revising paragraphs (a) and (e)
to read as follows:
Sec. 404.1220 Identification numbers.
(a) State and local government. When a State submits a modification
to its agreement under section 218 of the Act, SSA will assign a
special identification number to each political subdivision included in
that modification. SSA will inform the State of the special
identification number(s) by sending a Form SSA-214-CD, ``Notice of
Identifying Number,'' to the State. These numbers are assigned only for
State bookkeeping purposes unless coverage is extended to periods prior
to 1987. Then, the special number will be assigned and used for
reporting the pre-1987 wages to SSA. The special number will also be
assigned to an interstate instrumentality if pre-1987 coverage is
obtained and SSA will send a Form SSA-214-CD to the interstate
instrumentality to notify it of the number assigned.
* * * * *
(e) Use. For wages paid prior to 1987, the employer shall show the
appropriate SSA-issued identifying number, including any coverage group
or payroll record unit number, on records, reports, returns, and claims
to report wages, adjustments, and contributions.
PART 422--ORGANIZATION AND PROCEDURES
Subpart B--[Amended]
1. The authority citation for subpart B of part 422 is revised to
read as follows:
Authority: Secs. 205, 232, 1102, 1131, and 1143 of the Social
Security Act (42 U.S.C. 405, 432, 1302, 1320b-1, and 1320b-13).
2. Section 422.112 is revised to read as follows:
Sec. 422.112 Employer identification numbers.
(a) General. Most employers are required by section 6109 of the
Internal Revenue Code and by Internal Revenue Service (IRS) regulations
at 26 CFR 31.6011(b)-1 to obtain an employer identification number
(EIN) and to include it on wage reports filed with SSA. A sole
proprietor who does not pay wages to one or more employees or who is
not required to file any pension or excise tax return is not subject to
this requirement. To apply for an EIN, employers file Form SS-4,
``Application for Employer Identification Number,'' with the IRS. For
the convenience of employers, Form SS-4 is available at all SSA and IRS
offices. Household employers, agricultural employers, and domestic
corporations which elect social security coverage for employees of
foreign subsidiaries who are citizens or residents of the U.S. may be
assigned an EIN by IRS without filing an SS-4.
(b) State and local governments. To facilitate a State's
bookkeeping, SSA will assign a special identification number to each
political subdivision included in a modification to the State's
agreement under section 218 of the Act. These numbers are not used for
reporting purposes unless coverage is extended to periods prior to
1987. Then, the special number will be assigned and used for reporting
the pre-1987 wages to SSA. This special number will also be assigned to
an interstate instrumentality if pre-1987 coverage is obtained. SSA
will inform the appropriate State or interstate instrumentality
official of the assigned number by sending a Form SSA-214-CD, ``Notice
of Identifying Number.''
3. A new Sec. 422.114 is added to read as follows:
Sec. 422.114 Annual wage reporting process.
(a) General. Under the authority of section 232 of the Act, SSA and
IRS have entered into an agreement that sets forth the manner by which
SSA and IRS will ensure that the processing of employee wage reports is
effective and efficient. Under this agreement, employers are instructed
by IRS to file annual wage reports with SSA on paper Forms W-2, ``Wage
and Tax Statement,'' and Forms W-3, ``Transmittal of Income and Tax
Statements,'' or equivalent W-2 and W-3 magnetic media reports. Special
versions of these forms for Puerto Rico, Guam, American Samoa, the
Virgin Islands, and the Commonwealth of the Northern Mariana Islands
are also filed with SSA. SSA processes all wage reporting forms for
updating to SSA's earnings records and IRS tax records, identifies
employer reporting errors and untimely filed forms for IRS penalty
assessment action, and takes action to correct any reporting errors
identified, except as provided in paragraph (c) of this section. SSA
also processes Forms W-3c, ``Transmittal of Corrected Income Tax
Statements,'' and W-2c, ``Statement of Corrected Income and Tax
Amounts'' (and their magnetic media equivalents) that employers are
required to file with SSA when certain previous reporting errors are
discovered.
(b) Magnetic media reporting requirements. Under IRS regulations at
26 CFR 301.6011-2, employers who file 250 or more W-2 wage reports per
year must file them on magnetic media in accordance with requirements
provided in SSA publications, unless IRS grants the employer a waiver.
Basic SSA requirements are set out in SSA's Technical Instruction
Bulletin No. 4, ``Magnetic Media Reporting.'' Special filing
requirements for U.S. territorial employers are set out in SSA
Technical Instruction Bulletins No. 5 (Puerto Rico), No. 6 (Virgin
Islands), and No. 7 (Guam and American Samoa). At the end of each year,
SSA mails these technical instructions to employers (or third parties
who file wage reports on their behalf) for their use in filing wage
reports for that year.
(c) Processing late and incorrect magnetic media wage transmittals.
If an employer's transmittal of magnetic media wage reports is received
by SSA after the filing due date, SSA will notify
[[Page 42434]]
IRS of the late filing so that IRS can decide whether to assess
penalties for late filing, pursuant to section 6721 of the Internal
Revenue Code. If reports do not meet SSA processing requirements
(unprocessable reports) or are out of balance on critical money
amounts, SSA will return them to the employer to correct and resubmit.
In addition, beginning with wage reports filed for tax year 1993, if 90
percent or more of an employer's magnetic media wage reports have no
social security numbers or incorrect employee names or social security
numbers so that SSA is unable to credit their wages to its records, SSA
will not attempt to correct the errors, but will instead return the
reports to the employer to correct and resubmit (see also
Sec. 422.120(b)). An employer must correct and resubmit incorrect and
unprocessable magnetic media wage reports to SSA within 45 days from
the date of the letter sent with the returned report. Upon request, SSA
may grant the employer a 15-day extension of the 45-day period. If an
employer does not submit corrected reports to SSA within the 45-day
(or, if extended by SSA, 60-day) period, SSA will notify IRS of the
late filing so that IRS can decide whether to assess a penalty. If an
employer timely resubmits the reports as corrected magnetic media
reports, but they are unprocessable or out of balance on W-2 money
totals, SSA will return the resubmitted reports for the second and last
time for the employer to correct and return to SSA. SSA will enclose
with the resubmitted and returned forms a letter informing the employer
that he or she must correct and return the reports to SSA within 45
days or be subject to IRS penalties for late filing.
(d) Paper form reporting requirements. The format and wage
reporting instructions for paper forms are determined jointly by IRS
and SSA. Basic instructions on how to complete the forms and file them
with SSA are provided in IRS forms materials available to the public.
In addition, SSA provides standards for employers (or third parties who
file wage reports for them) to follow in producing completed reporting
forms from computer software; these standards appear in SSA
publication, ``Software Specifications and Edits for Annual Wage
Reporting.'' Requests for this publication should be sent to: Social
Security Administration, Office of Financial Policy and Operations,
Attention: AWR Software Standards Project, P.O. Box 17195, Baltimore,
MD 21235.
(e) Processing late and incorrect paper form reports. If SSA
receives paper form wage reports after the due date, SSA will notify
IRS of the late filing so that IRS can decide whether to assess
penalties for late filing, pursuant to section 6721 of the Internal
Revenue Code. SSA will ask an employer to provide replacement forms for
illegible, incomplete, or clearly erroneous paper reporting forms, or
will ask the employer to provide information necessary to process the
reports without having to resubmit corrected forms. (For wage reports
where earnings are reported without a social security number or with an
incorrect name or social security number, see Sec. 422.120.) If an
employer fails to provide legible, complete, and correct W-2 reports
within 45 days, SSA may identify the employers to IRS for assessment of
employer reporting penalties.
(f) Reconciliation of wage reporting errors. After SSA processes
wage reports, it matches them with the information provided by
employers to the IRS on Forms 941, ``Employer's Quarterly Federal Tax
Return,'' for that tax year. Based upon this match, if the total social
security or medicare wages reported to SSA for employees is less than
the totals reported to IRS, SSA will write to the employer and request
corrected reports or an explanation for the discrepancy. If the total
social security or medicare wages reported to SSA for employees is more
than the totals reported to IRS, IRS will resolve the difference with
the employer. If the employer fails to provide SSA with corrected
reports or information that shows the wage reports filed with SSA are
correct, SSA will ask IRS to investigate the employer's wage and tax
reports to resolve the discrepancy and to assess any appropriate
reporting penalties.
Sec. 422.115 [Removed]
4. Section 422.115 is removed.
5. Section 422.120 is revised to read as follows:
Sec. 422.120 Earnings reported without a social security number or
with an incorrect employee name or social security number.
(a) Correcting an earnings report. If an employer reports an
employee's wages to SSA without the employee's social security number
or with a different employee name or social security number than shown
in SSA's records for him or her, SSA will write to the employee at the
address shown on the wage report and request the missing or corrected
information. If the wage report does not show the employee's address or
shows an incomplete address, SSA will write to the employer and request
the missing or corrected employee information. SSA notifies IRS of all
wage reports filed without employee social security numbers so that IRS
can decide whether to assess penalties for erroneous filing, pursuant
to section 6721 of the Internal Revenue Code. If an individual reports
self-employment income to IRS without a social security number or with
a different name or social security number than shown in SSA's records,
SSA will write to the individual and request the missing or corrected
information. If the employer, employee, or self-employed individual
does not provide the missing or corrected report information in
response to SSA's request, the wages or self-employment income cannot
be identified and credited to the proper individual's earnings records.
In such cases, the information is maintained in a ``Suspense File'' of
uncredited earnings. Subsequently, if identifying information is
provided to SSA for an individual whose report is recorded in the
Suspense File, the wages or self-employment income then may be credited
to his or her earnings record.
(b) Returning incorrect reports. SSA may return to the filer,
unprocessed, an employer's annual wage report submittal if 90 percent
or more of the wage reports in that submittal are unidentified or
incorrectly identified. In such instances, SSA will advise the filer to
return corrected wage reports within 45 days to avoid any possible IRS
penalty assessment for failing to file correct reports timely with SSA.
(See also Sec. 422.114(c).) Upon request, SSA may grant the employer a
15-day extension of the 45-day period.
5. A new Sec. 422.122 is added to read as follows:
Sec. 422.122 Information on deferred vested pension benefits.
(a) Claimants for benefits. Each month, SSA checks the name and
social security number of each new claimant for social security
benefits or for hospital insurance coverage to see whether the claimant
is listed in SSA's electronic pension benefit record. This record
contains information received from IRS on individuals for whom private
pension plan administrators have reported to IRS, as required by
section 6057 of the Internal Revenue Code, as possibly having a right
to future retirement benefits under the plan. SSA sends a notice to
each new claimant for whom it has pension benefit information, as
required by
[[Page 42435]]
section 1131 of the Act. If the claimant filed for the lump-sum death
payment on the social security account of a relative, SSA sends the
claimant the pension information on the deceased individual. In either
case, SSA sends the notice after it has made a decision on the claim
for benefits. The notice shows the type, payment frequency, and amount
of pension benefit, as well as the name and address of the plan
administrator as reported to the IRS. This information can then be used
by the claimant to claim any pension benefits still due from the
pension plan.
(b) Requesting deferred vested pension benefit information from SSA
files. Section 1131 of the Act also requires SSA to provide available
pension benefit information on request. SSA will provide this pension
benefit information only to the individual who has the pension coverage
(or a legal guardian or parent, in the case of a minor, on the
individual's behalf). However, if the individual is deceased, the
information may be provided to someone who would be eligible for any
underpayment of benefits that might be due the individual under section
204(d) of the Act. All requests for such information must be in writing
and should contain the following information: the individual's name,
social security number, date of birth, and any information the
requestor may have concerning the name of the pension plan involved and
the month and year coverage under the plan ended; the name and address
of the person to whom the information is to be sent; and the
requester's signature under the following statement: ``I am the
individual to whom the information applies (or ``I am related to the
individual as his or her ____________''). I know that if I make any
representation which I know is false to obtain information from Social
Security records, I could be punished by a fine or imprisonment or
both.'' Such requests should be sent to: Social Security
Administration, Office of Central Records Operations, P.O. Box 17055,
Baltimore, Maryland 21235.
[FR Doc. 95-19501 Filed 8-15-95; 8:45 am]
BILLING CODE 4190-29-P
