It's A Bad Month To Be Trying To Do Business With Social Security

     January is usually a tough month for the Social Security Administration. There's a bit of hangover of work that didn't get done during the holidays but, more important, there's an increased workload because of the number of people who retire at the end of a calendar year and because SSA-1099s go out in January and their receipt occasions calls, not to mention those who call because they didn't receive an SSA-1099. All of this is still happening in January 2022 but Social Security faces more service delivery obstacles than usual. We still lack an appropriation for FY 2022 so the agency has little money to spend on overtime and the Omicron variant is causing a lot of employees absenteeism. All of this put together is a perfect storm that is causing horrific problems for anyone trying to do business with Social Security's field offices and teleservice centers. It's also likely to lead to little regular work getting done at the payment centers which get called upon to help the teleservice centers when they can't answer their phones.

Do Not Fold, Spindle Or Mutilate

How many are now familiar with that once familiar phrase, “Do not fold, spindle or mutilate”?

Punch card operations at Social Security in 1930s

The 1099 Problem

Social Security is now sending out 1099s to attorneys and others who have received direct payment of fees for representing Social Security claimants. These 1099s show the gross amount of the fees paid before the user fee which is charged by Social Security.

Attorneys and others who represent Social Security claimants keep accounting records. We record income as it arrives in our offices. At the time we receive a payment of a fee we record what we receive rather than some theoretical fee as it might have been before the user fee.

Eventually, when the 1099s show all fees paid, the totals reported by Social Security on the 1099s will be higher than the totals shown on attorney financial records and that will cause tax problems for those who represent Social Security claimants.

It seems to me that there are two good solutions for this problem. One would be for Social Security to report on the 1099s the net fees actually paid to those who represent Social Security claimants. The other would be for Social Security to provide an annual statement of user fees withheld to each entity receiving a 1099. The entity could then make two offsetting entries in its financial records, one to show the user fees as income and the other to show the user fees as an expense. The accounting records would then match up with the 1099s and everyone would be happy.

I hope that Social Security does not take a third approach to this problem, which would be, "It's your problem. You figure out a solution."

Attorney Fee Payments

Social Security has released the following figures on payments of fees to attorneys and others for representing Social Security claimants:

Fee Payments
Month/Year	Volume	Amount
Jan-10	32,227	$111,440,046.23

I have some concerns that the numbers that Social Security is giving out are misleading. Every attorney that I have talked with about the 1099s they recently received from Social Security reports that their 1099 was way low. The aggregate stats that Social Security is releasing may be similarly flawed.

More On 1099s

I am hearing from an attorney who has spent more time studying his 1099 than I have that the amount being reported is the gross amount of the attorney fee before deduction of the user fee. Was that intended?

Update: I have had a chance to review my own 1099 and list of cases and can confirm that the user fee was included as if paid to me. One person has suggested that this is just like W-2s and all attorneys have to do is to post the user fee as a deduction on our income tax forms. That is not as easy as the poster thinks. Social Security is not sending out a list of user fees paid and it would be almost impossible to keep track of them. My bookkeeper records the bank deposits she makes and those are my firm's gross income. Doing it any other way would be quite cumbersome and unnatural. If Social Security ever figures out a way to report accurate figures on payments of attorney fees, there is going to be trouble.

1099s

Attorneys and others who receive fees paid directly by Social Security for representing Social Security claimants have been receiving 1099s this week that are supposed to show the monies they were paid by Social Security in 2009. The comment heard from almost everyone receiving one of these 1099s is that it shows significantly less gross income than it should, perhaps 20% to 35% less. This is no big deal since it will not cause any tax problems for anyone but, still, it is something that should be fixed. I have heard speculation that the 1099s are not including fees paid in Supplemental Security Income (SSI) cases, that they do not include fees paid on dependent benefits or that only fees authorized by Social Security's Office of Central Operations are included. I expect that someone at Social Security knows the explanation. Can anyone enlighten us?

1099s Start Arriving

Attorneys have started receiving 1099s from Social Security showing attorney fees paid by Social Security. I have already received reports of income reported in box 7 instead of box 14, which is where I believe it is supposed to be reported, and of a 1099 not recording all Social Security attorney fees paid to an attorney in 2009, which will not cause problems for the attorney, but which is a bad sign anyway.

What are you seeing?

Some News From Nancy Shor

Nancy Shor has been Executive Director of the National Organization of Social Security Claimants Representatives (NOSSCR) since 1979. Ms. Shor spoke this past Friday at a Continuing Legal Education (CLE) conference put on by the North Carolina Association for Justice (NCAJ). Below are a few items that I gleaned from her remarks, with one interjection from me in brackets. Could someone explain to me how the last item below could possibly be achieved?

• In January 2010 Social Security will be distributing 1099s to attorneys and others who have received direct payment from Social Security in 2009 of fees for representing Social Security claimants. There will be one 1099 for each individual who received at least one fee totaling $600 or more and another 1099 for each firm for which such an individual worked. Each 1099, however, will list each individual payment of a fee.
• Social Security has no advice for attorneys who receive 1099s containing mistakes other than to call the agency's 800 number or one of its field offices. Ms. Shor suggested that this sounded inadequate to her.
  
• Ms. Shor thinks that all those who represent Social Security claimants will have full access to Social Security's computer records on their clients within something like six months, although it sounded like she would not be amazed if this date slipped a bit.
  
• Ms. Shor is hopeful that withholding of fees for representing Supplemental Security Income (SSI) claimants as well as withholding of fees for certain non-attorney representatives will soon become permanent.
• David Foster, head of Social Security's Office of Disability Adjudication and Review (ODAR), has told Ms. Shor that it has been noticed that there are an unusually high number of objections to video hearings when certain Administrative Law Judges (ALJs) are to preside. Social Security is considering withholding the name of the ALJ with which a video hearing is being scheduled in order to prevent forum shopping. [What do attorneys do as a counter-move? Does Social Security want that?]
  
• The public has until February 15, 2010 to comment upon the recent report of the Occupational Information Development Advisory Panel (OIDAP) of which Ms. Shor is a member. Ms. Shor recommended that the attendees read the report and file comments upon it.
• Ms. Shor has been told that claimants filing a request for a hearing today will receive a hearing within 275 days, but this may happen at the expense of claimants who already have pending requests for hearings.