20 CFR 404.975, 404.976, 404.977, and 404.977a
UNITED STATES OF AMERICA v. LEWIS and HICKS, 235 F. Supp. 220 (1964)
WILSON, District Judge:
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An issue of law that merits careful consideration is raised upon behalf of the defendant Lewis with respect to her conviction upon Counts 3 thru 6. The defendant is charged in these counts with charging fees in excess of that permitted by law for services to social security applicants in connection with the claim for social security benefits. The defendant contends that such charges as were made by her were for work performed in the preparation of the subject's income or self-employment tax returns and not for any representation before the Social Security Administration. The defendant further contends that the law does not purport to authorize the Social Security Administration to regulate fees with respect to services performed in the filing of tax returns, including self-employment tax returns, and that charges for such tax services could not constitute a criminal offense.
The difficulty with the defendant's contentions in this respect is twofold. In the first place, a dispute of fact exists under the record in this case whether the fees charged were solely for services in regard to tax work, as testified by the defendant, or whether in fact the fees charged were at least in part for services rendered the social security applicant in other respects in the presentation and processing of his claim before the Social Security Administration. In the second place, it cannot be held as a matter of law that charges for services performed in regard to preparation of self-employment tax returns could not under any circumstances constitute a violation of the law regulating fees charged for services performed in connection with any claim before the Social Security Administration.
The statute here involved, 42 U.S.C. § 406, provides in relevant part:
The regulation governing fees adopted in accordance with the above statute, to the extent that the same is relevant to the present discussion, is as follows:
In light of the issue now before the Court, it is apparent that the significant language in the above statute is the phrase "service performed in connection with any claim before the Secretary". The word "services" does not necessarily exclude tax services. Neither does it necessarily include tax services. Rather, such inclusion or exclusion must depend upon the facts of the particular case. Whether a fee charged for preparation of the self-employment tax return would or would not be subject to regulation would depend upon whether, under the facts of the particular case, such service might properly be considered a "service performed in connection with any claim before the Secretary". If the real purpose of determining self-employment income was to knowingly further a claim then made or to be made before the Social Security Administration, such would constitute a "service" the fee for which may be regulated. On the other hand, if there was no evidence that the real purpose of the service performed in the determination of the self-employment income was knowingly performed in furtherance of a claim then made or to be made before the Social Security Administration, such work would not constitute a service the fee for which was subject to regulation.
Under the record in this case there was evidence from which a jury could conclude on each count that the tax work performed by the defendant Lewis was in fact a service knowingly performed in connection with a claim before the Social Security Administration. In each instance there was evidence that (a) the applicant initially came to or was referred to the defendant for assistance in making a social security claim, (b) application was made for social security benefits immediately before or after the tax work was performed, (c) the tax returns filed were delinquent returns and reflected only delinquent self-employment tax which would have the effect of establishing social security eligibility, and (d) even though the defendant contended no charge was made for additional services, but only for the tax work, in most instances the defendant performed additional services in connection with the claim before the Social Security Administration. The Court is therefore of the opinion that under the record in this case a jury issue existed under Counts 3, 4, 5, and 6 as to whether the fee charged by the defendant was one subject to regulation under 42 U.S.C. § 406.
Having fully considered the defendants' motions for new trial, the Court is of the opinion that the motions should be overruled as to each count thereof.
An order will enter accordingly.
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