Social Security Administration Loses
Attorneys' Social Security Numbers
Applicants for Social Security disability benefits as well as attorneys say “if I ran my business the way the Social Security Administration runs its, I would be out of business!”
In defense of many employees of the Social Security Administration (SSA), there are good, helpful, courteous, enlightened, and compassionate people working in the Social Security Administration.
The Social Security Administration is essentially a big insurance company. It collects premiums in the form of payroll taxes (FICA), and it pays benefits (SSDI, and SSI, among others.)
Private insurance companies as well as the Social Security Administration do business with lawyers on a daily basis. However, the manner with which each organization conducts business differs in many respects. Of grave concern to many citizens is the security of protected information.
Attorneys represent people, (known as claimants) who are applying for Social Security disability benefits. Under SSA regulation an attorney may be paid for representing a claimant only if the SSA first approves the attorney fee. The SSA will only approve a fee if the claimant is awarded past due (retroactive) benefits. If the claimant is not awarded past due benefits, the attorney does not receive a fee. If the claimant is awarded benefits going forward, but no past due benefits, the attorney does not receive a fee.
All attorneys are paid the same amount for handling a claim for Social Security disability benefits. The amount an attorney is paid is the lesser of 25% of the claimant’s past due benefits up to a ceiling of $6,000.00. In order for an attorney to receive a $6,000.00 fee, the claimant must be awarded at least $24,000.00 in past due benefits. If however, the claimant received, e.g., $1,000.00 in past due benefits, the attorney would be entitled to only $250.00.
If an attorney chooses to receive direct payment, the Social Security Administration will withhold the attorney fee from the claimant’s past due benefits and send a check or process the fee for direct deposit to the attorney's bank account. For the privilege of receiving direct payment from the SSA, the attorney must pay the SSA 6.3% of his/her fee or $86.00 (whichever is less). The attorney must pay this fee to the SSA for every check the SSA sends to the attorney.
When a private insurance company awards a recovery for monetary damages, e.g., for a motor vehicle accident, the insurance company handles payment in a different manner than the SSA. The private insurer does not charge the attorney a fee to send the check to the attorney. In fact, the private insurer sends one check which includes the insured's recovery and the attorney fee.
For tax purposes, individuals and businesses must be identifiable to the Internal Revenue Service (IRS). When a private insurance company issues a check to an attorney, or other party, the insurance company must have some way of identifying the recipient of the funds.
To identify a business, the federal government assigns businesses which are formed as corporations or partnerships, or businesses which have employees, an Employer Identification Number (EIN). When, e.g., an insurance company sends a check to an attorney, the insurance company uses the attorney’s EIN to identify him/her/the firm as the recipient of the check. At the end of the year the insurance company issues IRS Form 1099 to the attorney. Form 1099 contains the total amount of money paid by the insurer to the attorney for that calendar year. The private insurance company also sends a copy of Form 1099 to the IRS which collects data about the earnings of all U.S. citizens and businesses.
A private insurance company does not require an attorney to reveal his/her Social Security number (SSN) in order to receive payment. In contrast every attorney who does business with the SSA must submit a form, SSA-1699. This form contains the attorney’s Social Security number. But wait, it gets worse; instead of SSA-1699 being the attorney’s one time “ticket” to business with the SSA, as would be the attorney’s W-9 submitted to a private insurer, the SSA requires all attorneys to submit another form, SSA-1695 every time the attorney is hired by someone applying for Social Security disability benefits.
But wait; it gets still worse. Attorney’s who own a law practice, which is not a partnership, or corporation are called sole proprietors. These attorneys receive “special” treatment. The SSA requires these attorneys to submit their own Social Security number on every SSA-1695 for every claim the attorney handles.
However, attorneys who work for a partnership or corporation are not required to submit an SSN on the 1695. These attorneys need only submit the EIN for the business. Recall, however, attorneys who are owners of a law practice which is not a corporation or partnership, but which does have employees, do have an EIN. But, the SSA will not accept the EIN of a sole proprietor for use on an SSA-1695.
Every time an SSA-1695 is sent to the SSA, a representative of the SSA is supposed to “process,” and then destroy the form, after which the SSA representative is required under SSA regulation, to send written acknowledgement to the attorney stating the 1695 was received, processed and destroyed. An attorney's SSA-1695 is NEVER to be placed in a claimant’s file.
Attorneys waste ridiculous amounts of time contacting the SSA to ascertain the status of submitted SSA-1695 forms. Particularly interesting is being told the form was not received, even though the form was sent to the SSA office in the same envelope as other forms which the SSA representative on the phone claims were received. Significant amounts of SSA employee hours are also wasted responding to attorney inquiries regarding the processing of SSA-1695 forms, as well as the whereabouts of correspondence acknowledging receipt of the forms. Additionally, time is spent by SSA employees contacting attorneys when a representative notices an SSA-1695 has not been received or processed for a specific claim.
This writer was told by an SSA representative the SSA has this policy regarding the SSA-1695 to ensure the IRS can keep track of what attorneys are paid.
The Social Security Administration cannot guarantee the safety and privacy of an attorney’s information. The SSA loses and misplaces attorneys’ and claimants’ documents on a regular basis. The policy requiring attorneys to submit SSN’s rather than EIN’s, amounts to nothing more than harassment of the profession.
Furthermore, correctly processing every SSA-1695 requires significant SSA employee hours. Instead of requiring the submission of an SSA-1695 for every claim, a requirement for a one time filing of SSA-1699 containing only the attorney’s EIN would provide the SSA with the identification it needs to track payments to each attorney and would allow yearly transmission by the SSA of payment amounts to the IRS.
Should the Social Security Administration need assistance planning, or implementing policy related to payment of attorney fees without subjecting attorneys to fraud due to identity theft, abuse due to harassment of the profession by the SSA, and waste related to the consumption of time spent on this superfluous task, the SSA may consult attorney groups and/or other members of the private sector who currently employ successful methods of payment, and transmission of information without jeopardizing security and privacy.
In defense of many employees of the Social Security Administration (SSA), there are good, helpful, courteous, enlightened, and compassionate people working in the Social Security Administration.
The Social Security Administration is essentially a big insurance company. It collects premiums in the form of payroll taxes (FICA), and it pays benefits (SSDI, and SSI, among others.)
Private insurance companies as well as the Social Security Administration do business with lawyers on a daily basis. However, the manner with which each organization conducts business differs in many respects. Of grave concern to many citizens is the security of protected information.
Attorneys represent people, (known as claimants) who are applying for Social Security disability benefits. Under SSA regulation an attorney may be paid for representing a claimant only if the SSA first approves the attorney fee. The SSA will only approve a fee if the claimant is awarded past due (retroactive) benefits. If the claimant is not awarded past due benefits, the attorney does not receive a fee. If the claimant is awarded benefits going forward, but no past due benefits, the attorney does not receive a fee.
All attorneys are paid the same amount for handling a claim for Social Security disability benefits. The amount an attorney is paid is the lesser of 25% of the claimant’s past due benefits up to a ceiling of $6,000.00. In order for an attorney to receive a $6,000.00 fee, the claimant must be awarded at least $24,000.00 in past due benefits. If however, the claimant received, e.g., $1,000.00 in past due benefits, the attorney would be entitled to only $250.00.
If an attorney chooses to receive direct payment, the Social Security Administration will withhold the attorney fee from the claimant’s past due benefits and send a check or process the fee for direct deposit to the attorney's bank account. For the privilege of receiving direct payment from the SSA, the attorney must pay the SSA 6.3% of his/her fee or $86.00 (whichever is less). The attorney must pay this fee to the SSA for every check the SSA sends to the attorney.
When a private insurance company awards a recovery for monetary damages, e.g., for a motor vehicle accident, the insurance company handles payment in a different manner than the SSA. The private insurer does not charge the attorney a fee to send the check to the attorney. In fact, the private insurer sends one check which includes the insured's recovery and the attorney fee.
For tax purposes, individuals and businesses must be identifiable to the Internal Revenue Service (IRS). When a private insurance company issues a check to an attorney, or other party, the insurance company must have some way of identifying the recipient of the funds.
To identify a business, the federal government assigns businesses which are formed as corporations or partnerships, or businesses which have employees, an Employer Identification Number (EIN). When, e.g., an insurance company sends a check to an attorney, the insurance company uses the attorney’s EIN to identify him/her/the firm as the recipient of the check. At the end of the year the insurance company issues IRS Form 1099 to the attorney. Form 1099 contains the total amount of money paid by the insurer to the attorney for that calendar year. The private insurance company also sends a copy of Form 1099 to the IRS which collects data about the earnings of all U.S. citizens and businesses.
A private insurance company does not require an attorney to reveal his/her Social Security number (SSN) in order to receive payment. In contrast every attorney who does business with the SSA must submit a form, SSA-1699. This form contains the attorney’s Social Security number. But wait, it gets worse; instead of SSA-1699 being the attorney’s one time “ticket” to business with the SSA, as would be the attorney’s W-9 submitted to a private insurer, the SSA requires all attorneys to submit another form, SSA-1695 every time the attorney is hired by someone applying for Social Security disability benefits.
But wait; it gets still worse. Attorney’s who own a law practice, which is not a partnership, or corporation are called sole proprietors. These attorneys receive “special” treatment. The SSA requires these attorneys to submit their own Social Security number on every SSA-1695 for every claim the attorney handles.
However, attorneys who work for a partnership or corporation are not required to submit an SSN on the 1695. These attorneys need only submit the EIN for the business. Recall, however, attorneys who are owners of a law practice which is not a corporation or partnership, but which does have employees, do have an EIN. But, the SSA will not accept the EIN of a sole proprietor for use on an SSA-1695.
Every time an SSA-1695 is sent to the SSA, a representative of the SSA is supposed to “process,” and then destroy the form, after which the SSA representative is required under SSA regulation, to send written acknowledgement to the attorney stating the 1695 was received, processed and destroyed. An attorney's SSA-1695 is NEVER to be placed in a claimant’s file.
Attorneys waste ridiculous amounts of time contacting the SSA to ascertain the status of submitted SSA-1695 forms. Particularly interesting is being told the form was not received, even though the form was sent to the SSA office in the same envelope as other forms which the SSA representative on the phone claims were received. Significant amounts of SSA employee hours are also wasted responding to attorney inquiries regarding the processing of SSA-1695 forms, as well as the whereabouts of correspondence acknowledging receipt of the forms. Additionally, time is spent by SSA employees contacting attorneys when a representative notices an SSA-1695 has not been received or processed for a specific claim.
This writer was told by an SSA representative the SSA has this policy regarding the SSA-1695 to ensure the IRS can keep track of what attorneys are paid.
- If this explanation is true, why don’t private insurers require doctors and lawyers who are not incorporated to submit SSN’s rather than EIN’s in order for these professionals to received payment?
- How can private insurers pay doctors and lawyers using only the professionals’ EIN while the Social Security Administration cannot?
- Why is it that the SSA sends each attorney a 1099 for the year, which it then transmits to the IRS, but can’t do business with attorneys without subjecting attorneys to identity theft?
- Could it be the SSA is singling out the legal profession for “special” treatment?
The Social Security Administration cannot guarantee the safety and privacy of an attorney’s information. The SSA loses and misplaces attorneys’ and claimants’ documents on a regular basis. The policy requiring attorneys to submit SSN’s rather than EIN’s, amounts to nothing more than harassment of the profession.
Furthermore, correctly processing every SSA-1695 requires significant SSA employee hours. Instead of requiring the submission of an SSA-1695 for every claim, a requirement for a one time filing of SSA-1699 containing only the attorney’s EIN would provide the SSA with the identification it needs to track payments to each attorney and would allow yearly transmission by the SSA of payment amounts to the IRS.
Should the Social Security Administration need assistance planning, or implementing policy related to payment of attorney fees without subjecting attorneys to fraud due to identity theft, abuse due to harassment of the profession by the SSA, and waste related to the consumption of time spent on this superfluous task, the SSA may consult attorney groups and/or other members of the private sector who currently employ successful methods of payment, and transmission of information without jeopardizing security and privacy.