SSR 76-32c: SECTION 205(c)(4)(A) (42 U.S.C. 405(c)(4)(A)) CONCLUSIVENESS OF EARNINGS RECORD AFTER EXPIRATION OF TIME LIMITATION -- SELF-EMPLOYMENT INCOME
20 CFR 404.804
SSR 76-32c
Ascherman v. Mathews, USDC, N.D. Ohio, C74-453 (3/30/76)
- The claimant, a 75-year-old self-employed attorney, had filed timely income tax returns based on a method which did not yield maximum creditable earnings. After becoming entitled to Social Security benefits, he filed amended tax returns in order to reflect maximum self-employment income which would result in a higher benefit rate. The amended returns covered a 5 year period, three of which were beyond the time limitation and thus barred to correction by section 205(c) of the Social Security Act. Held, after the time limitation following any year has expired, subject to very limited exceptions not pertinent here, the Secretary's records of self-employment income derived by an individual during any period of such shall be conclusive evidence as to the earnings of such individual, in accordance with section 205(c)(4)(A) of the Social Security Act, as amended.
BATTISTI, Chief Judge:
The plaintiff, a 75-year-old, self-employed attorney is seeking to have his record of self-employment earnings for the years 1966, 1967 and 1968, as maintained by the defendant Secretary of Health, Education and Welfare for the purpose of determining Social Security benefits, changed to reflect amendments to his income tax returns for those years which he filed in 1972. In essence, he challenges the Secretary's refusal to increase his monthly Social Security benefits on the basis of his amended reports of earnings. The plaintiff has exhausted the available administrative remedies and invokes the jurisdiction of this court pursuant to 42 U.S.C. § 405(g). The matter comes before the court on the cross motions for summary judgment.
The facts in the case are not in dispute and are set forth in detail in the opinion of the administrative judge. The case presents a single legal question: Do the records of the Secretary constitute conclusive proof as the earnings of an individual on which Social Security benefits will be determined once the three year, three month and 15 day "time limitation" for amendment set forth in 42 U.S.C. § 405(c)(1)(B) has expired?
The Secretary maintains that once the time limitation has passed in circumstances such as the case, 42 U.S.C. § 405(c)(4)(A)[1] makes his records conclusive on the issue of self-employment income derived by an individual for any particular period. The plaintiff candidly admits that "after considerable research there is little case law to support his position," but also asserts there is little case law contrary to his position. Accordingly, the plaintiff argues the facts. He points out that for the years in question his original report of self-employment income was based on a method of reporting which he was advised to follow by an Internal Revenue Service Agent. It is clear that this method resulted in less than the maximum self-employment income being credited to his Social Security earnings record. He claims that until 1972 he was not aware of his right to report his income in the fashion which he ultimately used in the amended returns with the resulting higher self-employment income figure. At that time he indicates that he was advised to file amended returns by a Social Security employee in the Cleveland area. He did so for the years 1966 through 1970[2] and I.R.S. accepted the additional Social Security tax proffered for all of these years.[3] In the face of clear statutory language against his position, the plaintiff argues that "justice, equity and fairness" should prohibit one government agency from accepting and retaining his money, while another government agency denies him the benefits he anticipated receiving in return.
Were this matter not plainly governed by a statutory provision, the plaintiff's equitable argument would have much appeal. However, Congress has acted with regard to this problem in a rational manner which it deemed necessary to the efficient administration of the Social Security system. It is unfortunate that the plaintiff's benefits are somewhat less than they might have been, but as one court noted when faced with a similar appeal:
- [T]he immensity of the problem of providing Social Security "called forth a highly complex and interrelated statutory structure." The mandate to the Secretary in 42 U.S.C. § 405(C)(2) to maintain HEW records of self-employment income was necessary for the determination in an orderly manner of the innumerable requests for insurance benefits. Congress recognized that a beginning and end of time for establishing eligibility was an essential part of that need by prescribing a "time limitation" within which changes and revisions in the Secretary's records might be made. . . . One need only be reasonable to foresee the disaster in HEW if there were not a reasonable time limitation for ending disputes about eligibility benefits. This being so, the question only whether the 3 year, 3 month, 15 day period is reasonable in relation to the purposes of the Act.
Lasch v. Richardson, 457 F.2d 435, 440 (7th Cir. 1972). (Citation omitted)
Further, it is significant to note that the plaintiff's filing of amended returns and payment of additional tax were self-initiated and voluntary acts. The plaintiff is an attorney and was advised by an accountant. Both individuals had constructive notice of the time limitation when the amended returns were filed. Viewed in this light, plaintiff's predication is seen as not wholly the product of two government bureaucracies at cross purposes.
There is no genuine issue as to any material fact, summary judgment is appropriate in this case. The court holds that the Secretary's reliance on 42 U.S.C. § 405(c)(4)(A) is well founded and orders judgment affirming the Secretary's decision.
IT IS SO ORDERED.
[1] Prior to the expiration of the time limitation following any year the Secretary may, if it is brought to his attention ant any entry of wages or self-employment income in his records for such year is erroneous or that any item of wages of self-employment income for such year has been omitted from such records, correct such entry or include such omitted item in his records, as the case may be. After the expiration of the time limitation following any year --
(A) the Secretary's record (with changes, if any, made pursuant to paragraph (5) of this subsection) of the amounts of wages paid to, and self-employment income derived by, an individual during any period in such year shall be conclusive for the purposes of this subchapter:
[2] Since the amended returns for 1969 and 1970 were filed within the applicable time limitation, the plaintiff's earnings record for those years has been corrected and there is no cause for dispute.
[3] The following are the additional amounts paid by the plaintiff with the filing of the amended returns for each year.
| 1966: | $126.13 |
| 1967: | $164.40 |
| 1968: | $414.20 |