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1976/01/02 HR10722 Social Security Act Appeals and Administrative Matters
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1976/01/02 HR10722 Social Security Act Appeals and Administrative Matters
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The original documents are located in Box 38, folder "1/2/76 HR10722 Social Security Act
Appeals and Administrative Matters" of the White House Records Office: Legislation Case
Files at the Gerald R. Ford Presidential Library.
Copyright Notice
The copyright law of the United States (Title 17, United States Code) governs the making of
photocopies or other reproductions of copyrighted material. Gerald R. Ford donated to the United
States of America his copyrights in all of his unpublished writings in National Archives collections.
Works prepared by U.S. Government employees as part of their official duties are in the public
domain. The copyrights to materials written by other individuals or organizations are presumed to
remain with them. If you think any of the information displayed in the PDF is subject to a valid
copyright claim, please contact the Gerald R. Ford Presidential Library.
Exact duplicates within this folder were not digitized.
signed 1/2/76
APPROVED
ACTION
THE WHITE HOUSE
Last Day: January 2
WASHINGTON
December 30, 1975
Posted 1/3/76
TOARNIVES
MEMORANDUM FOR
THE PRESIDENT
1/5/76
FROM:
JIM CANNON
SUBJECT:
H.R. 10727 - Social Security Act
Appeals and Administrative Matters
Attached for your consideration is H.R. 10727, sponsored
by Representative Burke and 12 others. The enrolled
bill would amend the Social Security Act in two
principal areas by modifying the social security
hearings and appeals process and altering the method
used by the Social Security Administration in reporting
annual earnings subject to social security taxes.
The bill would also make several changes in the Social
Security Act and Internal Revenue Code which would
affect limited groups of people, or change certain
SSA and IRS administrative procedures.
A detailed discussion of the provisions of the
enrolled bill and agency comments is provided in OMB's
enrolled bill report at Tab A.
The Civil Service Commission strongly opposes the
changes the enrolled bill would make in the SSI hearings
and appeals process and recommends that you veto the
legislation.
HEW, Max Friedersdorf, Counsel's Office (Lazarus), Bill
Seidman and I recommend that you sign the enrolled bill.
RECOMMENDATION
That you sign H.R. 10727 at Tab B.
Approve
Disapprove
SERVICE R. FORD LIBRARY
Digitized from Box 38 of the White House Records Office Legislation Case Files at the Gerald R. Ford Presidential Library
of The
THE
RESIDENT
EXECUTIVE OFFICE OF THE PRESIDENT
OFFICE
OFFICE OF MANAGEMENT AND BUDGET
SECUTIVE
STATE
WASHINGTON, D.C. 20503
DEC D C 1375
MEMORANDUM FOR THE PRESIDENT
Subject: Enrolled Bill H.R. 10727 - Social Security Act
Appeals and Administrative Matters
Sponsor - Rep. Burke (D) Massachusetts and 12 others
Last Day for Action
January 2, 1976 - Friday
Purpose
Makes changes in the Social Security Act hearings and appeals
process; provides for the annual reporting of wages; makes
certain other miscellaneous amendments.
Agency Recommendations
Office of Management and Budget
Approval
Department of Health, Education,
and Welfare
Approval
Department of Commerce
No objection
Department of the Interior
Approval of Sec. 10;
defers to HEW on
Secs. 1-9
Department of Labor
Defers to other
agencies
Department of the Treasury
Does not oppose
(informal)
Civil Service Commission
Disapproval (Veto
message attached)
Discussion
H.R. 10727 would amend the Social Security Act in two principal
areas: it would modify the social security hearings and appeals
process and it would significantly alter the method used by the
Social Security Administration (SSA) in reporting annual earnings
2
subject to social security taxes. H.R. 10727 would also make
certain other less important changes in the Social Security
Act and Internal Revenue Code which would basically affect
limited groups of people, or change certain SSA and IRS
administrative procedures.
Social Security Act hearings and appeals process. H.R. 10727
would make a number of procedural changes in the hearings and
appeals process for the purpose of improving the speed and
quality of adjudications under the Social Security Act.
Specifically, the bill would:
-- reduce from 6 months to 60 days the time limit within
which Medicare and Old Age Survivors and Disability Insurance
(OASDI) appeals may be taken.
-- increase from 30 to 60 days the time limit for filing
appeals in supplemental security income (SSI) cases, and
-- provide SSI claimants with the same rights to Adminis-
trative Procedure Act (APA) hearing and administrative and
judicial review processes as are currently available to OASDI
and Medicare claimants.
In its views letter, HEW states that these changes would provide
equal treatment for claimants under all three Social Security
Act programs, i.e., SSI, OASDI, and Medicare. HEW also notes
that the shorter time limit for requesting a hearing "could
reduce, in many cases, the need to develop new medical evidence
of disability," which is a major contributing factor to the
delay in processing hearing requests. The Department estimates
that the hearings and appeals provisions of H.R. 10727 could
result in "administrative savings as great as $15.9 million in
fiscal years 1977 through 1981.
The Civil Service Commission (CSC) strongly opposes the changes
in the SSI hearings and appeals process. CSC believes that
these changes will not achieve the goal of reducing the backlog
and speeding up the claims process, but rather will over-
judicialize the process, delay adjudication at the expense of
aged and needy claimants, and congest court calendars.
Use of SSI hearing examiners. Under present law, the 200 SSI
hearing examiners can hear only SSI cases. Administrative Law
Judges (ALJs) can hear cases under all three SSA benefit
programs-- OASDI, SSI, and Medicare.
3
H.R. 10727 would authorize the SSI hearing examiners also to
hear all three types of cases for a temporary period ending
December 31, 1978. Thus, this group of hearing officers
could be used to supplement Social Security's corps of 400+
regular ALJs in disposing of pending cases. They would be
treated during the temporary period as if they were ALJs
appointed under the APA with attendant special job protection
rights.
The enrolled bill also would repeal the present authority of
the Social Security Administration (SSA) to appoint SSI
hearing examiners without regard to APA requirements. The
result would be that starting in calendar year 1979, only
APA-qualified ALJs would be able to hear SSI cases.
The authorization for temporary use of SSI hearing examiners
to handle cases under all three benefit programs is designed
to reduce the SSA case backlog. Nearly 60% of SSI cases also
involve OASDI issues. HEW believes that its inability to make
full use of all hearing officers is one of the primary causes
of the present backlog.
The enrolled bill provision is a modification of an earlier
Administration proposal to permit present SSI examiners to
handle cases involving concurrent OASDI and SSI issues, but
not the more demanding Medicare cases, without changing their
status as hearing examiners. The Administration proposal was
so restricted because OASDI and SSI concurrent cases constitute
a significant portion of the backlog, and to prevent upgrading
the SSI examiners, now GS-13s, to GS-15. Such action would be
inevitable if they were assigned cases under all three programs,
since APA-qualified ALJs who hear all classes of cases are at
the GS-15 level. To prevent such upgrading under the bill,
both Committee reports make clear that GS-14 would be
appropriate for these employees during the next three years.
HEW, in its letter on the enrolled bill, states that these
sections would have a very beneficial impact on the social
security hearings backlog. The Department concurs with the
committee on grade level, and further states that it would not
be practicable to use the temporary ALJs for the more complex
Medicare cases. The Department strongly recommends enactment
of these provisions, stating that "it will enable SSA within
one year to reduce the backlog to manageable proportions
"
4
CSC, on the other hand, does not believe "any material
reduction in the agency's backlog of cases [is] likely to be
achieved by authorizing attorney-examiners, GS-13, who
handle SSI claims to adjudicate a wider range of cases
(those under Titles II and XVIII of the Social Security Act).
This authority, along with the full range of Administrative
Procedure Act protections (automatic within-grade increases,
absence of performance ratings, and freedom from removal by
the agency), proposed for personnel who have not established
their capacity under the Administrative Procedure Act to fill
such positions, could artificially inflate personnel costs
for resolving SSI claims
"
Annual reporting of Social Security wages. H.R. 10727 contains
an amendment which would enable SSA and the Internal Revenue
Service (IRS) to establish a cooperative arrangement for the
annual reporting and processing of wage reports required to
be filed by employers. The purpose of the amendment, as
stated by its sponsors, is to reduce the tax reporting burden
of some four million employers.
Under current law and Treasury Department regulations, employers
file with IRS quarterly tax returns containing summary wage and
tax liability information (on Form 941), and detailed quarterly
wage information on each employee subject to the social
security tax (on Form 941-A). The detailed 941-A forms are
then made available to SSA where they are processed to determine
workers' coverage under social security. Employers must also
file with IRS annual Federal income tax information and social
security information (on Form W-2) with respect to each of
their employees.
H.R. 10727 would make possible the elimination of quarterly
Federal reports on individual employee earnings by requiring
the Secretary of the Treasury to make available to HEW certain
tax return information and by authorizing the two Departments
to enter into an agreement by which HEW would process the tax
return information for IRS. The bill also specifies adminis-
trative cost assessment procedures to insure that each Department
reimburses the other for administrative expenses incurred on its
behalf. Finally, the bill would enable SSA to make adjustments
in the retirement test exempt amount and the contribution and
benefit base based upon annual wage data. Currently, such
adjustments are based on quarterly wage data because annual
wage information is not available to SSA. The bill would be
effective for statements reporting income after calendar year
1977.
5
Last year, the Secretaries of the Treasury and Health,
Education, and Welfare submitted to Congress a "combined
annual wage reporting report" which recommended legislation
to authorize annual reporting to SSA of annual wages,
including Social Security and IRS tax withholding information.
To accommodate the conversion to annual wage data, the report
recommended a method by which quarters of coverage would be
measured by annual earnings. A draft bill to implement the
report recommendations was submitted by HEW for OMB clearance
on December 11, 1975, and is currently in the clearance
process.
Unlike the HEW proposal, H.R. 10727 would not eliminate the
need to measure earned quarters of coverage based upon
quarterly wages. Although under the enrolled bill, employers
would no longer be required to file the 941-A quarterly form,
they would be required to include quarterly wage data for each
employee on the annual W-2 form submitted to IRS.
HEW, in its views letter, states that the annual reporting
system authorized by H.R. 10727 "would very significantly
increase the SSA workload and would have a substantial
adverse effect on the efficiency of the social security
program." HEW estimates that the new system could increase
its costs by $20-23 million in the first year (1978), and
that paperwork savings to employers under H.R. 10727 would
be considerably less than under the proposal currently under
review at OMB. HEW believes, however, that Congress intended
to permit some administrative flexibility in determining
quarterly wages and states that SSA is exploring possible ways
to implement the H.R. 10727 provision.
Labor states that a change to annual reporting could impact
heavily on the unemployment insurance system by putting
pressure on the States to eliminate their quarterly filing
requirements. According to Labor, the change "would
necessitate that the State UI systems switch to demand (request)
reporting at a total annual increase in cost of $45 million."
Treasury advises that it prefers the wage reporting proposal
developed jointly with HEW because that approach would not
require a quarterly breakdown of the earnings of each employee
and thus would involve less paperwork for employers. Never-
the less, Treasury does not oppose enactment of H.R. 10727.
6
West Virginia policemen and firemen. H.R. 10727 would permit
the State of West Virginia to modify its social security
coverage agreement to provide protection to certain policemen
and firemen who had erroneously paid social security taxes in
the belief that they were covered. The Social Security
Amendments of 1972 contained a similar provision under which
West Virginia had until 1974 to amend its social security
coverage agreement. The State, however, failed to make the
necessary amendments in the time allotted. H.R. 10727
therefore provides an extension, through 1977, of the time in
which the agreement may be changed. HEW has no objection to
this provision.
Deposit of Social Security contributions by State and local
governments. Another provision of H.R. 10727 would require
the Secretary of HEW to give notice at least eighteen months
in advance of any changes he proposes to make in the way in
which social security contributions are paid to SSA by State
and local governments.
Current HEW regulations require State and local governments
to deposit social security contributions by the middle of the
second month after the end of each quarter. However, HEW is
considering amending the regulations to require that deposits
be made more frequently in order to obtain higher interest
earnings for the social security trust funds. HEW states that
the advance notice which H.R. 10727 would require is no greater
than the advance notice the Department is already planning to
provide States, and therefore has no objection to this
provision.
SSI offset for Alaskan "Pioneers". The State of Alaska has a
"longevity bonus" program under which it pays citizens who are
65 years of age and who have resided in the State for more than
25 years a monthly payment of $100, irrespective of their other
income. The "longevity bonus" was designed to provide an
incentive for older people to continue to live in the State.
Under the demonstration project authority of the Social Security
Act, HEW has been excluding Alaskan longevity bonus payments
from determinations of income for purposes of SSI eligibility.
HEW states that it has no objection to making this income
disregard permanent "because we believe the Alaskan program
serves a legitimate state interest which would be defeated if
supplemental security income payments were reduced because of
them.' HEW estimates that the provision would cost no more
than $1 million annually.
7
We believe this provision is undesirable because of (1) the
capacity of the State to supplement SSI on the basis of need,
(2) the precedent for excluding other "special" income, (3)
the possible unconstitutionality of such residency benefits,
and (4) the added Federal SSI costs.
Virgin Islands quarterly tax collections. H.R. 10727 would
provide for quarterly, rather than annual, payments by the
U.S. Government to the government of the Virgin Islands of
amounts to match the internal revenue collections made with
respect to articles which are produced in the Virgin Islands
and transported to the United States. The Committee reports
on this provision state that the amendment would provide a
more even flow of revenues to the government of the
Virgin Islands and would offset a shortfall of $20 million
in fiscal year 1975 revenues caused by a depressed economy
and inflation.
Treasury and Interior have no objection to this provision.
Recommendations
HEW strongly supports the amendments to modify the Social
Security Act hearings and appeals process and recommends
approval of H.R. 10727. With respect to the wage reporting
amendment, HEW states, "Although we disapprove the hasty
manner in which section 8 was considered by the Congress
and the lack of any opportunity for us to present a more
viable alternative, we have no objection to enactment of
this provision."
CSC recommends that the bill be disapproved. The Commission
states:
"The measure will complicate the processing of claims
by the disabled, needy and aged through over-
judicialization; would artificially inflate personnel
cost for resolving these claims by personnel grand-
fathered into quasi-judicial positions with little,
if any, reduction in other cases for which a higher
grade level has been established for regular
Administrative Procedure Act personnel; and would
likely further congest court calendars by authorizing
more extensive judicial review of these claims."
8
Labor has grave concerns about the annual wage reporting
provision, as explained above, but states that since that
is only one aspect of the bill, the Department is not
recommending veto despite its opposition to the provision.
* * * * *
While we believe several provisions in H.R. 10727 are
undesirable, we do not believe they are sufficiently serious
to warrant a disapproval recommendation, and, accordingly,
recommend approval of the bill.
The amendments with respect to the social security hearings and
appeals process appear to provide a workable, if not perfect,
means for dealing with the current backlog of cases. The
hearing examiner provisions, in particular, are not far out of
line with the Administration's proposal. Moreover, the House
Ways and Means Committee has indicated that it intends to
consider the SSA appeals process in greater detail in the next
session. Amendments to these provisions can be considered
further, as necessary, in that context.
With respect to the wage reporting amendment, the delay in the
effective date until 1978 will provide the Administration with
sufficient time to submit any necessary amendments. In addi-
tion, the Chairman of the House Ways and Means Subcommittee on
Social Security gave public assurances during the House floor
debate that any such amendments will receive expeditious
consideration. To this end, we recommend that you direct the
principal agencies to conduct a study with recommendations to
you of how annual wage reporting would affect current programs
and operations, and what legislative changes to H.R. 10727
should be proposed. We are preparing letters to the agencies
to carry out this recommendation, and will forward them shortly
for your signature.
James m. Trey
Assistant Director for
Legislative Reference
Enclosures
HEALTH.
DEPARTMENT OF HEALTH, EDUCATION. AND WELFARE
U.S.A.
DEC 24 1975
The Honorable James T. Lynn
Director, Office of Management
and Budget
Washington, D. C. 20503
Dear Mr. Lynn:
This is in response to your request for a report on H.R. 10727,
an enrolled bill "To amend the Social Security Act to
expedite the holding of hearings under titles II, XVI, and
XVIII by establishing uniform review procedures under such
titles, and for other purposes."
In short, the Department recommends enactment of this bill.
The first five sections of the bill address one of the most
critical problems of the Social Security Administration (SSA) --
the large backlog of cases awaiting hearings--and we therefore
strongly support its enactment. The bill would permit, for
a period of three years, the Social Security Administration's
black lung Administrative Law Judges (ALJ's) and Supplemental
Security Income (SSI) hearing examiners to hear cases under
all titles of the Social Security Act. Limiting the black
lung ALJ's and hearing examiners to hearing cases under the
Federal Coal Mine Health and Safety Act and title XVI of the
Social Security Act, respectively, has been a primary cause
of the dramatic growth in the number of pending requests for
hearing in the past few years. We believe that enactment of
H.R. 10727 will improve our ability to deal with this backlog
on a timely basis.
Currently, social security ALJ's meet qualifications set
forth under the Administrative Procedure Act and can hear
cases under the Old-Age Survivors, and Disability Insurance
(OASDI) program, the Hospital Insurance (Medicare) program,
and the Supplemental Security Income program. The SSI hearing
examiners, appointed by the Secretary under special authority
granted in title XVI of the Social Security Act, can only hear
SSI cases. Our inability to utilize these hearing examiners
to conduct other types of hearings, especially OASDI hearings,
has resulted in an inefficient and costly use of manpower
and thus is one of the primary causes for the large number
of pending requests for hearings. (As of December 6, 1975,
100, 163 hearings were pending.) H.R. 10727 would temporarily
eliminate this distinction among hearings officers by authorizing
the present SSI hearing examiners, through December 31, 1978,
to hear OASDI and Medicare cases as well as SSI cases. The
bill would thus give the Department the necessary temporary
The Honorable James T. Lynn
2
authority to utilize one corps of hearings officers to deal
quickly and directly with the hearings backlog. It would also
make the Administrative Procedure Act applicable to SSI
cases in the same way that it is now applicable to OASDI
and Medicare cases, thereby providing for consistent treatment
under all three programs. In this regard, we note that the
report of the Ways and Means Committee on the bill,
Report No. 94-679, makes clear that grade GS-14 would be an
appropriate classification for those holding authority provided
for by the bill, rather than GS-15. The necessity of
using these temporary ALJ's to deal with the current hearings
backlog will obviate our training them to handle the more
complex issues that arise in provider hearings under
title XVIII. In consequence, it will not be practicable
to use these ALJ's for these more demanding title XVIII
cases. Also, we are further considering whether it is
appropriate to authorize use of temporary hearing examiners
in any title XVIII case as proposed in the bill. We therefore
agree that a GS-14 grade would be appropriate.
H.R. 10727 would also reduce the time limit for the filing
of a request for a hearing of denied OASDI and most Medicare
claims from six months to sixty days, and it would increase
the time limit for SSI cases from thirty to sixty days.
This change would provide equal treatment for claimants
under all three programs. Also, the shorter time limit for
requesting a hearing would serve to reduce the degree of
change that can occur in the medical condition of a claimant
for disability benefits between his previous denial and the
date of his hearing; this could reduce, in many cases, the
need to develop new medical evidence of disability. This
medical development can be quite time-consuming and can
therefore be a major contributing factor to the delay in
the processing of hearing requests and disability claims,
which comprise a major portion of the hearings backlog.
The changes which would be made by these sections of
H.R. 10727 would have a very beneficial impact on the social
security hearings backlog. We anticipate that enactment of
H.R. 10727 will enable SSA within one year to reduce the
backlog to manageable proportions, so that a claimant's average
waiting time for a hearing will not exceed ninety days. Without
this bill, we anticipate that such a reduction will require
two years. The bill would entail no additional benefit payment
costs, and could cause administrative savings as great as
$16.4 million in fiscal years 1977 through 1981. Although we
The Honorable James T. Lynn
3
are reviewing the need for temporary ALJ's to participate in
title XVIII hearings, we strongly support sections one through
five of the enrolled bill.
Section 6 of the bill would enable the State of West Virginia
to modify its social security coverage agreement to provide
social security protection, retroactive and prospective,
to certain policemen and firemen. Social security
contributions had been paid erroneously with respect to
these policemen and firemen in the belief that they were
covered. The Social Security Amendments of 1972 contained
a similar provision under which West Virginia had until
1974 to amend its social security coverage agreement. The
State, however, failed to make the necessary amendments
in the time allotted, and section 6 therefore provides an
extension, through 1976, of the time in which the agreement
may be changed. The Department believes that equitable
considerations should prevail in this instance and we
therefore have no objection to this provision.
Section 7 of the bill would require the Secretary of Health,
Education, and Welfare to give notice at least eighteen
months in advance of any changes he proposes to make in the
regulations concerning the frequency of the payment of
social security contributions and the reporting of wages
covered by social security by the States.
Current regulations of the Department require that States
deposit social security contributions on or before the
fifteenth day of the second month after the end of each calendar
quarter. However, the Department is now considering amending the
regulations to require that deposits be made more frequently
to bring the State deposit requirements more in line with
those that now apply to private employers (such a change
would result in significantly higher interest earnings for
the social security trust funds) We have, however, been
assuring State social security administrators that we will
provide substantial lead time prior to instituting any changes
in deposit procedures. The advance notice which section 7
would require is no greater than the advance notice we are
planning to provide States, and we therefore have no objection
to this provision.
Section 8 of the bill would enable the Social Security
Administration (SSA) and Internal Revenue Service (IRS) to
The Honorable James T. Lynn
4
establish a cooperative arrangement for the annual reporting
and processing of wage reports required to be filed by
employers. We have no objection to this provision.
Under current law and Treasury Department regulations,
about four million employers file quarterly tax returns
(on Form 941) with the IRS containing summary wage and tax
liability information. Accompanying each quarterly Form 941
is a Schedule A (or a magnetic tape equivalent) containing
a detailed listing of quarterly wages paid to each employee
subject to tax under the Federal Insurance Contributions
Act (FICA). Schedules A, consisting of six million pages
and containing wage information on approximately 75 1/4 million
employees each quarter, are detached by IRS and forwarded
to SSA for processing. Wage data for certain other categories
of workers (household employees, agricultural employees,
State and local government employees and the self-employed)
are also reported on appropriate forms to IRS for transmitting
to SSA. In addition, SSA receives directly from about 4,000
employers quarterly wage information on magnetic tape covering
16 million employees. The quarterly wage information for
each employee is necessary to determine his eligibility for
and the amount of his social security benefits.
Under current law, employers must also file federal income
tax information (total annual compensation paid and federal
income tax withheld) and social security information (total
annual FICA wages and FICA withholding amounts) on form W-2
with respect to each of their employees. Approximately
160 million W-2 forms are filed annually.
Section 8 of the enrolled bill would make possible the
elimination of quarterly reports on the covered earnings of
individual employees by requiring the Secretary of the Treasury
to make available to the Secretary of Health, Education,
and Welfare certain tax return information and by authorizing
the two Secretaries to enter into an agreement by which the
Secretary of Health, Education, and Welfare would process the
information submitted in the returns. Section 8 also
specifies administrative cost assessment procedures to insure
that the Social Security trust funds and the general funds
of the Treasury bear their proper share of the costs of
processing the information. Finally, the bill would enable
The Honorable James T. Lynn
5
SSA to make adjustments in the retirement test exempt amount
and the contribution and benefit base based upon annual wage
data. Currently, such adjustments are based on quarterly
wage data because annual wage information is not available
to SSA.
The bill would not change the provisions of the social
security law which require the use of quarterly wage data
in determining whether a person has earned the quarters
of coverage necessary for eligibility for social security
benefits. Furthermore, the bill would have no effect on
the way in which the States report earnings to SSA. The
bill would be effective for statements reporting income
received after 1977.
Last year, pursuant to P.L. 93-490, the Secretaries of the
Treasury and Health, Education, and Welfare submitted to
Congress a "combined annual wage reporting report" which
recommended legislation to authorize the implementation of
a system of annual reporting of annual wages for social
security and income tax purposes. To accommodate the
conversion to annual wage data, the report recommended a
method by which quarters of coverage would be measured by
annual earnings. Conversion to this system would have
resulted in a substantial overall savings to the Federal
Government. A draft bill to implement the report recommendations
was submitted by this Department to the Office of Management
and Budget (OMB) for clearance on December 11, 1975. So far,
OMB has not cleared our bill for submission to Congress.
Unlike the Department's proposal, H.R. 10727 would not
eliminate the need to measure earned quarters of coverage based
upon quarterly wages. Thus, although under the bill employers
would no longer be required to file quarterly forms 941-A and
SSA would be able to obtain annually, and process for IRS, a
variation of the current W-2 forms, an additional mechanism
for determining quarterly wages would continue to be necessary.
The Senate Report accompanying H.R. 10727 (Rept. No. 94-550)
states that the single consolidated annual wage report for
each employee would show "both his total earnings for
the year and the quarterly breakdown of his social security
earnings.' (p. 9) However, in a colloquy on the House floor,
Congressman Burke, Chairman of the Social Security Subcommittee
of Ways and Means, agreed that the Secretary of Health, Education,
The Honorable James T. Lynn
6
and Welfare would have the discretion "to require a more
simplified version which might only necessitate a quarterly
checkoff for employees earning $50 or more in that quarter
without filing a detailed dollar amount for each quarter."
(Cong. Rec., December 19, 1975, p. H13065)
The annual reporting system authorized by H.R. 10727 would
very significantly increase the SSA workload and would have
a substantial adverse effect on the efficiency of the social
security program. The processing of annual reports which
include a quarterly breakdown of wages would require annually
an additional 1,120 man-years and the first-year administrative
costs to SSA would be $19.6 million. The Social Security
Administration is reviewing the feasibility of an annual
reporting system with a checkoff by each employer to indicate
the quarters in which an individual was paid at least $50,
the wage necessary per quarter to earn a quarter of coverage.
One aspect of this approach which we must examine is the
effect it will have on those individuals whose earnings
exceed $50 a quarter only by adding the wages paid by two
or more employers. The checkoff would not provide the
information necessary to make this calculation. The checkoff
system would require annually 855 man-years more than the
current system and the first-year administrative cost to
SSA would be $17.1 million. Maintaining the current
quarterly reporting system for State and local governments,
as the bill requires, would cost $3.8 million per year over
current costs and in addition to the first-year administrative
cost estimates provided above. Furthermore, paperwork savings
to employers under H.R. 10727 would be considerably less than
under the Department's proposal.
The Department advised members and staffs of the Senate
Finance Committee and House Ways and Means Committee of
our preference for the wage reporting proposal described in
the report to Congress on combined annual wage reporting
and of our great concern that the provisions in H.R. 10727
were added in haste without hearings and without considering
the administrative and cost implications of the proposal.
Although we disapprove the hasty manner in which section 8
was considered by the Congress and the lack of any opportunity
for us to present a more viable alternative, we have no
objection to enactment of this provision. The colloquy on
the House floor provides us with some administrative flexibility.
The Honorable James T. Lynn
7
Furthermore, the House amended the bill to postpone the
effective date of this provision from 1977 to 1978. The
maintenance of the current system for two years will provide
us with additional time to implement the annual reporting
system and to advise the Congress of any changes in the
law which could reduce the administrative cost of converting
to an annual wage reporting system. We have assurances,
confirmed on the House floor by Congressman Burke (Cong. Rec
December 19, 1975, p. H13065), that any additional changes
we propose will be given an expeditious hearing by the
appropriate subcommittees. We hope that OMB will complete
its review of our draft bill at an early date so that we
can submit it to the Congress.
Section 9 of the bill would require that in determining the
income of an individual for purposes of title XVI of the
Social Security Act, there be excluded any monthly or
periodic payments provided under a program established
prior to July 1, 1973, if such payments are made by the State
of residency of the individual and are based solely on the
age (65) and duration of residence in the State of the
individual.
Alaska is the only State which has a program meeting the
conditions specified in section 9. As a result of the high
cost of living in Alaska, many long-term residents of the
State have, in the past, moved to other areas of the country
upon retiring. Alaska therefore instituted a program of
payments to such individuals as an incentive to keep them
in Alaska. Under the demonstration project authority of
section 1115 of the Social Security Act, the Department has
been excluding Alaskan longevity payments from determinations
of income for purposes of title XVI. We have granted this
waiver in order to allow the State of Alaska to determine
if such payments provide an incentive which keeps retirees
in the State. We have no objection to making this income
disregard permanent because we believe the Alaskan program
serves a legitimate State interest which would be defeated
if supplemental security income payments were reduced
because of them.
Section 10 of the bill amends section 7652 of the Internal
Revenue Code and does not pertain to the programs of this
Department. We therefore defer to the Department of the
Treasury.
The Honorable James T. Lynn
8
On balance, because we do not object to any of the provisions
in the bill and strongly support sections one through five,
we urge that the enrolled bill be approved.
We have enclosed, for your information, cost estimates for
each provision of the bill.
Sincerely,
DanedWathap
Enclosure
COST ESTIMATES: H.R. 10727
1. SECTIONS 1 - 5: These sections will result in cost
savings as follows:
FY 1977
$2.816 million
FY 1978
$2.853 million
FY 1979
$3.358 million */
FY 1980
$3.620 million
FY 1981
$3.802 million
TOTAL $16.449 million
* / Substantial increase in cost avoidance because temporary
authority for SSI hearing examiners expires on
December 31, 1978. This expiration is 3/4 effective
in FY 1979 and fully effective in FY 1980 and 1981.
2. SECTION 6: no cost.
3. SECTION 7: no cost.
4. SECTION 8: will cost between $20.9 and $23.4 million
in the first year (1978).
5. SECTION 9: will cost no more than $1 million per year.
DEPARTMENT OF COMMERCE
THE UNDER SECRETARY OF COMMERCE
Washington, D.C. 20230
UNITED STATES OF AMERICA
DEC 24 1975
Honorable James T. Lynn
Director, Office of Management
and Budget
Washington, D.C. 20503
Attention: Assistant Director for
Legislative Reference
Dear Mr. Lynn:
This is in reply to your request for the views of this
Department concerning H.R. 10727, an enrolled enactment
"To amend the Social Security Act to expedite
the holding of hearings under titles II, XVI, and
XVIII by establishing uniform review procedures
under such titles, and for other purposes."
H.R. 10727 would amend the Social Security Act to make
certain changes in the provisions governing hearings
in connection with programs administered by the Social
Security Administration.
The bill would also make certain other changes, including
an amendment to reduce the tax reporting burdens of
employers by providing for annual rather than quarterly
reporting of social security wages.
This Department defers to other Departments more directly
concerned with administration and financing of Social
Security Administration programs. The Department supports
the amendment providing for annualized rather than quarterly
reporting of social security wages since such change should
yield a substantial savings of time and money to industry
and government alike. The Department interposes no objection
to enactment of H.R. 10727.
Enactment of this legislation will not involve the expenditure
of any funds by this Department.
Sincerely,
Janes Baker, Bah III
THE INTERIOR
United States Department of the Interior
OFFICE OF THE SECRETARY
March
1849
WASHINGTON, D.C. 20240
3,
DEC 2 3 1975
Dear Mr. Lynn:
This responds to your request for our views on the enrolled bill,
H.R. 10727, "To amend the Social Security Act to expedite the
holding of hearings under titles II, XVI, and XVIII by establishing
uniform review procedures under such titles, and for other purposes."
With respect to Sections 1 through 9 of the bill, we defer to the
views of the Department of Health, Education, and Welfare. With
respect to Section 10 of the bill, we recommend its approval by
the President.
Sections 1 through 9 of H.R. 10727 would expedite the holding of
hearings for social security claimants whose application for
benefits have been denied. The legislation is designed to clear
up a backlog of some 103,000 cases now awaiting hearing by making
certain changes in the hearings and appeals processes.
Section 10 of the enrolled bill provides for quarterly, rather
than annual, payments to the Government of the Virgin Islands of
amounts equal to internal revenue collections made with respect
to articles produced in the Virgin Islands and transported to the
United States.
Under current law (26 U.S.C. 7652 (b)), the United States Government
imposes upon articles coming into the United States from the Virgin
Islands, a tax equal to the internal revenue tax imposed in the
United States upon like articles of domestic manufacture. The
tax revenues are placed in a special matching fund in the U.S.
Treasury against which the Virgin Islands draws amounts equal to
the local revenue collected by the Virgin Islands Government.
During recent years the Virgin Islands Government has been eligible
to draw down the full amount of the fund which amounts to between
$16 million and $19 million annually.
The quarterly payment is particularly pressing for the Virgin
Islands at this time since the government faces a $20 million
deficit in fiscal year 1976. By law, deficit spending is
prohibited to the Government of the Virgin Islands. A number of
REVOLUTION
AMERICAN
BICENTENNIAL
1776-1976
factors have contributed to the deficit, including lower tourist
related revenues and lower income tax revenues due to the U.S.
tax cuts. There is currently no spending on capital improvements,
government employment has been frozen, schools are on double shift,
and it is reported likely that the hospitals will lose accreditation
due to inadequacies which would be brought about by further budget
cuts.
The change to quarterly payments will provide a short-range benefit
to the Government of the Virgin Islands and help alleviate current
fiscal problems.
Sincerely yours,
Resistant
Secretary of the Interior Hughes
Honorable James T. Lynn
Director
Office of Management and Budget
Washington, D. C. 20503
U.S. DEPARTMENT OF LABOR
OFFICE OF THE SECRETARY
WASHINGTON
24 1975
Honorable James T. Lynn
Director
Office of Management and Budget
Washington, D.C. 20503
Dear Mr. Lynn:
This is in response to your request for our views on
H.R. 10727, an enrolled bill. The bill would "amend the
Social Security Act to expedite the holding of hearings
under titles II, XVI, and XVIII by establishing uniform
review procedures under such titles and for other purposes."
In addition to expediting hearings (including HEW black
lung hearings), the bill would permit the Secretaries of
Health, Education and Welfare and of the Treasury to coop-
erate in switching from the present system of quarterly
reporting by employers of employee wages to an annual
reporting requirement.
Under present law, the Department of Health, Education and
Welfare could require by regulation an annual rather than
quarterly reporting of wages. However, legislation is nec-
essary in order for agreements to be made between HEW and
Treasury and in order to allow Treasury to provide certain
information to HEW. H.R. 10727 would authorize such joint
action. This would not be effective until the filing of
statements reporting income received after 1977.
A switch to annual reporting rather than quarterly would
impact heavily on the unemployment insurance system. Such
a change would put pressure on the States to eliminate
their quarterly filing requirements. This, in turn, would
necessitate that the State UI systems switch to demand
(request) reporting at a total annual increase in cost of
$45 million.
- 2 -
The Department of Labor has grave concerns about this part
of the bill. We are appreciative of the references in the
House floor discussion to further study of the issue prior
to the 1978 effective date. Hopefully some of the problems
of the UI system can be dealt with at that time.
In view of the fact that this provision is only one aspect
of the larger bill, we are not recommending veto despite
our opposition to the provision. We defer to other agencies
more concerned with respect to the principal provisions of
the bill. We would recommend, however, that in signing the
bill the President indicate there are problems with the
provision as it impacts on the UI system and that this
should be an important part of the further House study.
Sincerely,
Secretary of Labor
UNITED
STATES
CIVIL SERVICE COMMISSION
UNITED STATES CIVIL SERVICE COMMISSION
WASHINGTON, D.C. 20415
CHAIRMAN
December 24, 1975
Honorable James T. Lynn
Director
Office of Management and Budget
Executive Office of the President
Washington, D. C. 20503
Attn: James M. Frey, Assistant Director
for Legislative Reference
Dear Mr. Lynn:
This is in response to your request for a report on enrolled bill
H.R. 10727, "To amend the Social Security Act to expedite the holding
of hearings under titles II, XVI and XVIII by establishing uniform
review procedures under such titles, and for other purposes."
Among other things, the subject bill requires "on the record" determi-
nations in Supplemental Security Income (welfare) cases in line with
the formal adjudicatory provisions of the Administrative Procedure Act;
extends the time for filing requests for SSI hearings from 30 to 60
days; requires judicial review of the Secretary's factual determinations
in these cases; and converts the attorney-examiners who now hear these
cases to Administrative Procedure Act status and temporarily authorizes
them to hear the full range of cases coming before the Social Security
Administration. The bill also amends the reporting requirements in
respect to social security deductions by the nation's employers.
In the light of its responsibilities under the Administrative Procedure
Act, the provisions of H.R. 10727 are of serious concern to the Commis-
sion. In its opinion the goal sought by this legislation is not likely
to be achieved. To the contrary, the bill's effects, both immediate
and long-range, will over-judicialize the SSI claims process, delay the
adjudication of these cases, further tax over-burdened court calendars
and, by changing the status of attorney-examiners, will add several
million dollars to personnel costs.
Section (c)(1) formalizes the Supplemental Security Income claims proc-
ess by requiring that these cases be heard and decided in line with the
formal adjudicatory process of the Administrative Procedure Act. The
judicialization of a claims process does not effectively serve the aged
and needy claimants whose interests should be foremost and whose cases
should be disposed of in a non-legalistic, informal setting. Nor is
any material reduction in the agency's backlog of cases likely to be
-2-
achieved by authorizing attorney-examiners, GS-13, who handle SSI
claims to adjudicate a wider range of cases (those under Titles II and
XVIII of the Social Security Act). This authority, along with the full
range of Administrative Procedure Act protections (automatic within-
grade increases, absence of performance ratings, and freedom from
removal by the agency), proposed for personnel who have not established
their capacity under the Administrative Procedure Act to fill such posi-
tions, could artificially inflate personnel costs for resolving SSI
claims since the employees engaged in this work (which constitutes
close to 20 percent of the agency's case load) would have little, if
any, opportunity for adjudicating cases for which higher grade levels
have been established.
Further, in respect to judicial review, the legislation will place an
additional burden on the congested calendars of the courts. The bill
amends the current requirement which states that the Secretary's
findings of fact are final and non-reviewable and provides for
judicial review of these determinations.
Finally, despite the fact that the SSI examiners are currently serving
under appointments without time limits, the legislation - perhaps
because of a drafting error - provides that their "appointments shall
terminate" not later than December 31, 1978.
H.R. 10727 will not, in the opinion of the Commission, achieve its
purpose. The measure will complicate the processing of claims by the
disabled, needy and aged through over-judicialization; would artifi-
cially inflate personnel cost for resolving these claims by personnel
grandfathered into quasi-judicial positions with little, if any, reduc-
tion in other cases for which a higher grade level has been established
for regular Administrative Procedure Act personnel; and would likely
further congest court calendars by authorizing more extensive judicial
review of these claims. For these reasons, the Commission recommends
that the bill be disapproved.
By direction of the Commission.
Robirt Sincerely yours, Hampton
Robert E. Hampton
Chairman
THE WHITE HOUSE
ACTION MEMORANDUM
WASHINGTON
LOG NO.: 1552
Date:
Time:
December 29
1000 am
FOR ACTION: Sarah Massengale as cc (for information): Jack Marsh
Max Friedersdorf the
Jim Cavanaugh
Ken Lazarus
Wareen Hendriks
Dick Parsons
Bill Seidmanon
FROM THE STAFF SECRETARY
DUE: Date: December 30
Time: 500pm
SUBJECT:
H.R. 10727 - Social Security Act Appeals and
Administrative Matters
ACTION REQUESTED:
For Necessary Action
For Your Recommendations
Prepare Agenda and Brief
Draft Reply
X For Your Comments
Draft Remarks
REMARKS:
Please return to Judy Johnston, Ground Floor West Wing
PLEASE ATTACH THIS COPY TO MATERIAL SUBMITTED.
If you have any questions or if you anticipate a
delay in submitting the required material, please
K. R. COLE, JR.
telephone the Staff Secretary immediately.
For the President
TO THE HOUSE OF REPRESENTATIVES
I am returning today without my approval, H.R. 10727. Although I am
sympathetic to the purpose sought to be achieved by this measure, i.e.
the prompt resolution of claims, the adverse consequences which will
flow from certain provisions outweigh what little good may be achieved.
Our foremost concern should focus on the needs of the disabled, aged,
and needy citizens. These citizens who initiate claims for benefits
must travel through complicated and involved processes at various levels
within the Social Security Administration before final resolution of their
cases. Although extensive hearings have been held concerning the processing
of these cases, H.R. 10727 is barren of any real reforms or procedural
changes which would simplify and expedite the resolution of these cases.
The measure, at best, is palliative and the implementation of its provisions
would complicate rather than remedy.
A proper and wide-spread concern exists over the mounting number of undecided
cases at the several levels of review that exist within the agency. At each
of these levels the number of cases has been growing yearly and the resolution
of them slows. Despite this, the bill would further complicate the process by
over-judicializing the hearing and decisional procedures in respect to SSI claims;
would provide quasi-judicial status and other protections for personnel who have
not met merit standards under the Administrative Procedure Act; and in view of
the grade levels associated with regular Administrative Procedure Act status
could artificially inflate the personnel costs for those now utilized in
resolving Supplemental Security Income claims. Furthermore the measure would
exacerbate the heavily congested calendars of our courts by authorizing more
extensive judicial review of these claims.
Since I am unable to accept H.R. 10727 for these reasons, I urge the Congress
upon its return to submit a measure which will serve the interest of a large
number of our needy and disadvantaged citizens by simplifying and expediting
the procedures for resolving their claims for benefits.
EXECUTIVE OFFICE OF THE PRESIDENT
OFFICE OF MANAGEMENT AND BUDGET
12-29-15.m. 10
WASHINGTON, D.C. 20503
DECLARATIONS
MEMORANDUM FOR THE PRESIDENT
Subject: Enrolled Bill H.R. 10727 - Social Security Act
Appeals and Administrative Matters
Sponsor - Rep. Burke (D) Massachusetts and 12 others
Last Day for Action
January 2, 1976 - Friday
Purpose
Makes changes in the Social Security Act hearings and appeals
process; provides for the annual reporting of wages; makes
certain other miscellaneous amendments.
Agency Recommendations
Office of Management and Budget
Approval
Department of Health, Education,
and Welfare
Approval
Department of Commerce
No objection
Department of the Interior
Approval of Sec. 10;
defers to HEW on
Secs. 1-9
Department of Labor
Defers to other
agencies
Department of the Treasury
Does not oppose
(informal)
Civil Service Commission
Disapproval (Veto
message attached)
Discussion
H.R. 10727 would amend the Social Security Act in two principal
areas: it would modify the social security hearings and appeals
process and it would significantly alter the method used by the
Social Security Administration (SSA) in reporting annual earnings
Attached document was not scanned because it is duplicated elsewhere in the document
THE WHITE HOUSE
WASHINGTON
December 30, 1975
MEMORANDUM FOR:
JIM CAVANAUGH
FROM:
MAX L. FRIEDERSDORF W.G.
SUBJECT:
H.R. 10727 - Social Security Act Appeals
and Administrative Matters
The Office of Legislative Affairs concurs with the agencies
that the bill be signed.
Attachments
THE WHITE HOUSE
ACTION MEMORANDUM
WASHINGTON
LOG NO.: 1552
Date:
Time:
December 29
1000am
FOR ACTION:
Sarah Massengale
CC (for information):
Jack Marsh
Max Friedersdorf
Jim Cavanaugh
Ken Lazarus
Warren Hendriks
Dick Parsons
FROM THE STAFF SECRETARY
DUE: Date: December 30
Time: 500pm
SUBJECT:
H.R. 10727 - Social Security Act Appeals and
Administrative Matters
ACTION REQUESTED:
For Necessary Action
For Your Recommendations
Prepare Agenda and Brief
Draft Reply
X For Your Comments
Draft Remarks
REMARKS:
Please return to Judy Johnston, Ground Floor West Wing
No objection. -- Ken Lazarus 12/30/75
PLEASE ATTACH THIS COPY TO MATERIAL SUBMITTED.
If you have any questions or if you anticipate a
delay in submitting the required material, please
telephone the Staff Secretary immediately.
DEC 30 REC'D
THE WHITE HOUSE
ACTION MEMORANDUM
WASHINGTON
LOG NO.: 1552
Date:
Time:
December 29
1000am
FOR ACTION:
Sarah Massengale
CC (for information):
Jack Marsh
Max Friedersdorf
Jim Cavanaugh
Ken Lazarus
Warren Hendriks
Dick Parsons
Bill
Seldman
FROM THE STAFF SECRETARY
DUE: Date: December 30
Time: 500pm
SUBJECT:
H.R. 10727 - Social Security Act Appeals and
Administrative Matters
ACTION REQUESTED:
For Necessary Action
For Your Recommendations
Prepare Agenda and Brief
Draft Reply
X For Your Comments
Draft Remarks
REMARKS:
Please return to Judy Johnston, Ground Floor West Wing
approved two
PLEASE ATTACH THIS COPY TO MATERIAL SUBMITTED.
If you have any questions or if you anticipate a
delay in submitting the required material, please
telephone the Staff Secretary immediately.
Jim
94TH CONGRESS
HOUSE OF REPRESENTATIVES
~
REPORT
1st Session
No. 94-679
SOCIAL SECURITY HEARINGS AND APPEALS
NOVEMBER 20, 1975.-Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
Mr. ULLMAN, from the Committee on Ways and Means,
submitted the following
REPORT
[To accompany H.R. 10727]
The Committee on Ways and eMans, to whom was referred the bill
(H.R. 10727) to amend the Social Security Act to expedite the hold-
ing of hearings under titles II, XVI, and XVIII by establishing uni-
form review procedures under such titles, having considered the same,
report favorably thereon without amendment and recommend that
the bill do pass.
PURPOSE AND SCOPE
The purpose of H.R. 10727 is to expedite the holding of hearings for
social security claimants whose applications for benefits have been
denied. This is an emergency bill designed to take the most effective
action that can be taken immediately to help reduce the enormous
backlog of social security appeals cases new pending within the Social
Security Administration. At the present time, there are approximately
105,000 cases before the Bureau of Hearings and Appeals of the Social
Security Administration, including social security disability and re-
tirement cases, Supplemental Security Income (SSI) cases, Medi-
care cases, and black lung cases.
The appeals procedures under the SSI program (title XVI of the
Act) differ from those that apply to hearings conducted under the
Old-Age, Survivors and Disability Insurance program (title II) and
the Medicare program (title XVIII). In addition, SSI appeals are
heard by social security hearing examiners whose appointment is pro-
vided for in title XVI of the Act, while social security and medicare
appeals are heard by Administrative Law Judges appointed under
the Administrative Procedure Act.
H.R. 10727 would eliminate the distinctions between hearings under
title XVI and those that are conducted under title II and title XVIII
of the Act. The bill also provides for the more effective use of hear-
ing officers within the Social Security Administration by giving the
57-006 o
2
3
authority to persons who have been appointed as SSI hearing ex-
provided under the Social Security Act and the Administrative Pro-
aminers to hear cases under title II and title XVIII for a temporary
cedure Act.
period of time terminating December 31, 1978. They will, unlike cur-
The first provision of the bill would amend Section 1631 (c) of the
rent SSI hearing examiners, operate under the provisions of the Ad-
Social Security Act to provide the same rights to hearing and ad-
ministrative Procedure Act which are designed to assure independence
ministrative and judicial review with respect to claims under title
of hearings officers from agency control.
XVI (SSI) of the Act as to apply to title II (Social Security) and
title XVIII (Medicare) claims under Section 205 (b) and 205 (g)
GENERAL DISCUSSION
of the Act. This is necessary to override an interpretation of the Civil
Service Commission that the Administrative Procedure Act was not
Need for Legislation
applicable to SSI hearings and which required the appointment of
There is currently a tremendous backlog of hearings cases before
non-APA hearings officers who could not hear Social Security and
the Bureau of Hearings and Appeals and every Member of Congress
Medicare cases. This action greatly exacerbated the current hearing
has heard from constituents concerning cases where claimants have
crisis and the validity of the SSI hearings has been challenged in the
had to wait many months and even years for a hearing and decision
Courts as second class justice. The Committee bill will put this matter
in their case. Within recent months the Bureau of Hearings and Ap-
to rest by clearly providing on-the-record administrative hearings and
peals has made significant gains in increasing the productivity of
judicial review of a parallel nature for Social Security, SSI and Medi-
Administrative Law Judges (ALJs) with the result that the current
care claimants.
case backlog is being reduced by 1,000 cases a month. If the authority
The principal modifications to Section 1631 (c), which presently
in this bill is enacted it has been estimated that the hearing backlog
provides general authority to the Secretary to conduct hearings on
will be reduced by 3,000 a month SO that in 18 months cases can be
SSI appeals, would be:
adjudicated within 90 days.
(1) the specfic requirement that decisions after a hearing must
At the request of 73 Members of Congress, the Subcommittee on
be on the basis of evidence adduced at the hearing;
Social Security held extensive hearings on this subject in September
(2) an increase in the period during which requests for review
and October and heard from 43 witnesses including some of the fore-
must be filed from 30 days to 60 days;
most experts in administrative law and social security. The Subcom-
(3) the addition of specific authority for the Secretary to hold
mittee also heard from the various associations of hearing examiners
hearings and make findings of fact, administer oaths, examine
and Administrative Law Judges. Many suggestions were made for
witnesses and receive evidence; and authority to receive evidence
changes in the hearings procedures and the administration of the dis-
at a hearing even though inadmissible under the rules of evidence
ability programs ranging from minor amendments to massive struc-
applicable to court procedure;
tural changes.
(4) to make the final determinations of the Secretary subject
In this regard, the Committee recommends that the Social Security
to the "substantial evidence rule" upon judicial review by elimi-
Administration authorize the Center for Administrative Justice to
nating language presently in Section 1631 (c) (3) whch provides
make a study of the Social Security appeals procedures and make
that the determinations of the Secretary "as to any fact shall be
recommendations for any structural changes relating to improving
final and conclusive and not subject to review by any court".
both the speed and quality of Social Security adjudications. Although
The principal effect of this last modification is to apply the same
most witnesses appearing before the Subcommittee agreed that the
rules of judicial review of title XVI cases as apply to title II cases.
current appeals system under the Administrative Procedure Act is
By removing this language from title XVI, findings of fact of the
in the public interest, some witnesses, including the Civil Service
Secretary in SSI cases, if supported by substantial evidence, shall be
Commission, expressed a contrary view. Thus, the recommended study
conclusive as are such findings under title II. Your Committee believes
should address this broad issue together with such subjects as the
that both programs should be under the "substantial evidence rule",
appropriate qualifications, method of appointment, and position and
but that this should not be interpreted by the courts as a license to
grade classification of Social Security ALJs.
vary from strict adherence to its principles. With over 4,000 social
Although it intends to consider the appeals process in depth when
security disability cases now pending in the United States District
it takes up comprehensive Social Security legislation next session, the
Courts, and the possibility of a similar caseload developing in the SSI
Committee now recommends a relatively limited bill which could be
program, when its appeals are fully felt, the practice of certain courts
enacted into law this year. Additional amendments might have the
to make de novo factual determinations would result in very serious
effect of complicating and making the bill more subject to controversy.
problems for the federal judiciary and the social security program.
Provisions of the Bill
Your Committee bill would repeal section 1631 (d) (2) of the Social
The bill eliminates the distinction in the nature of hearings and
Security Act. This is the section of the law under which, pursuant to
hearing officers under the Social Security and SSI programs, thus
Civil Service Commission interpretation, non-APA hearing examiners
resulting in a common corps of hearing officers authorized to conduct
have been appointed. The continuation of this authority is inappropri-
hearings under both programs with common procedural safeguards
ate inasmuch as title XVI cases in the future will require APA hear-
4
5
ing officers. The Committee believes that an adequate supply of APA
To avoid any possible misinterpretation, the bill specifically pro-
hearing officers can be obtained from the current pool of SSI hearing
vides that the temporary hearing officers authorized to conduct hear-
examiners and Black Lung ALJs who meet or will meet the require-
ings under the bill would be subject to all the provisions of the Ad-
ments for regular appointments and through the on-going recruitment
ministrative Procedure Act that assure independence from agency
by the Civil Service Commission of ALJs in the private and govern-
control. These provisions would include: Subchapter II of chapter 5
mental sectors.
of title 5 of the United States Code (the substantive provisions relating
The Committee bill also grants authority for those SSI hearing
to APA adjudications) ; the second sentence of section 3105, of title
examiners (who have been appointed under section 1631 (d) (2)) to
5 U.S.C. (assignment of cases in rotation and the prohibition of
hear cases under titles II, XVI, and XVIII until December 31, 1978
assignment to duties inconsistent with their responsibilities as hear-
as temporary Administrative Law Judges if the Secretary of HEW
ing officers) ; and the deeming of them as hearing examiners appointed
finds it will promote the achievement of the objectives of these titles.
under section 3105 SO that, among other things, they would be exempt
It is the Committee's understanding that the Secretary will make this
from agency performance rating requirements (5 U.S.C. 4301 (2) (E))
finding as to all SSI hearing examiners who have been appointed. The
and agency determination of performance acceptability for in-grade
Committee also understands that now virtually all the temporary
increases (5 U.S.C. 5335 (a) (3) (B)) and making Civil Service respon-
Black Lung judges hold SSI hearing examiner appointments and this
sible for determining their pay levels (5 U.S.C. 5362), removal for
would provide the Bureau of Hearings and Appeals the 200 judges it
cause (5 U.S.C. 7521), and general administration (5 U.S.C. 1305).
needs to reduce the backlog. Furthermore, by the end of 1978, all SSI
The Committee is unaware of any prejudicial "agency control" exer-
examiners will have acquired sufficient adjudication experience to
cised by HEW under the parallel provisions it has established for SSI
meet the experience requirement for appointment as regular ALJs.
hearing examiners. However, the specific application of these pro-
They would, as they met the experience requirement, be afforded the
visions of the APA, together with the provisions of the bill applving
opportunity to be placed on the register for regular ALJ appointment
the same procedural safeguards to review proceedings under title XVI
on a merit basis under the regular Civil Service procedures.
as apply under title II, will eliminate the possibility of the courts deter-
It is hoped that these requirements and procedures will be applied
mining that SSI review procedures do not comply with the Adminis-
in a manner to effectively serve the needs of the Social Security Act
trative Procedure Act or due process.
programs. The Committee is not convinced that these needs have been
Moreover. the specific enumeration of these provisions of the APA
adequately served in the past by the Office of Administrative Law
as applicable to the temporary ALJs should not be interpreted to
Judges, Civil Service Commission. The performance of this office in
make these adversary proceedings or otherwise "judicialize" proce-
overruling the administering agency (HEW) in its legal opinion that
dures under title II. XVI. and XVIII. The enumeration of these pro-
SSI was under the APA and in downgrading title II social security
visions also should in no way suggest that they are not applicable to
adjudications as bearing "little resemblance to the full-blown adver-
the regular Social Security ALJs. Your Committee and the Depart-
sarial proceedings conducted by Administrative Law Judges, under
ment of HEW consistently over the years have declared that the lan-
the Administrative Procedure Act, in regulatory agencies" does not
guage in title II (and under the provisions of this bill, title XVI) of
reflect the will of Congress.
the Social Security Act call for "on-the-record" hearings which invoke
The Office of Administrative Law Judges should be mindful of its
the provisions of the Administrative Procedure Act.
ministerial responsibilities in supplying registers from which ade-
Although the bill is silent on the grade level of temporary ALJs,
quate numbers of ALJs can be hired by HEW to adjudicate social
the Administration's proposal made at the hearing before the Sub-
security claims. There are indications that in the past these registers
committee envisioned a GS-14 for such officers who would have been
have not been supplied with the speed and with the number of candi-
allowed to hear concurrent cases (applications for SSI and Social
dates thereon which HEW needed to get better control over the hear-
Security) in addition to those solely for SSI benefits. Your Com-
ings backlog. In evaluating current SSI hearings examiners for regu-
mittee's bill authorizes broader authority for these temporary ALJs
lar ALJ appointments great weight should be given to experience in
SO that the Bureau of Hearings and Appeals will have the maximum
actually adjudicating Social Security and Black Lung cases and road-
amount of flexibility in eliminating the appeals backlog. These tem-
blocks should not be created in unduly lengthy and bureaucratic ap-
porary ALJs, therefore, would also be able to hear Social Security
pointment procedures. Recent statistics show that of the 55 applica-
and Medicare cases. For these reasons and also because the Black
tions of SSI hearing examiners for the regular ALJ registers which
Lung ALJs who will be included in the temporary corps have already
have been acted upon by the Civil Service Commission, only 5 hearing
been classified at the GS-14 level, the Committee believes that GS-14
examiners have been found eligible. This suggests to the Committee
would be an appropriate classification for those holding authority
that the Office of Administrative Law Judges is applying its stand-
provided for by the bill. The fact that the Committee does not suggest
ards unrealistically. Now that a majority of the ALJ corps in the
or mandate by law a GS-15 for these individuals does not indicate
Federal Government are working under Social Security Act pro-
that it believes that a lower grade is appropriate for regular Social
grams, the Civil Service Commission should reexamine its ALJ ap-
Security AL.Js. In fact, the Committee was not impressed with the
pointment standards to assure that they are relevant to the positions
rationale of the Civil Service Commission which emphasized the non-
that have to be filled.
adversary aspect of the Social Security hearing in justifying the dif-
6
7
ferential in grade level between regulatory agency ALJs (GS-16) and
In compliance with clause 2(1) (3) (B) of rule XI of the Rules of
the Social Security ALJs (GS-15).
the House of Representatives your committee states that this bill will
The final provision in the bill will reduce the period for which
involve no new budgetary authority or new or increased tax expendi-
Social Security and Medicare appeals may be taken at both the re-
tures.
consideration and hearing level from six months to 60 days.
With respect to clause 2(1) (3) (C) and clause 2(1) (3) (D) of rule
The Committee believes that a 6-month time period is unnecessarily
XI of the Rules of the House of Representatives your committee ad-
long for a claimant to appeal a title II or title XVIII decision of his
vises that no estimate or comparison has been submitted to your com-
claim. In fact, because a mandatory reconsideration has been adopted
mittee by the Director of the Congressional Budget Office relative
administratively under this authority, a double period may result. An
to H.R. 10727, nor have any oversight findings or recommendations
individual whose claim has been initially denied has a full six months
been submitted to your committee by the Committee on Government
to decide whether to request a reconsideration and then another 6
Operations with respect to the subject matter contained in the bill.
months to decide whether to appeal to an Administrative Law Judge.
In compliance with clause 2(1) (4) of rule XI of the Rules of the
More than 65 percent of the hearings requested are filed within 60
House of Representatives your committee states that this bill would
days after the claimants receive notification that their reconsideration
not have any inflationary impact on prices and costs in the operation
had not resulted in the decision being overturned. If the time limit was
of the national economy.
reduced to 60 days, there may be a decrease in the number of hearing
In compliance with clause 7 of rule XIII of the Rules of the House
requests filed. Those individuals who have not filed for review within
of Representatives, the following statement is made relative to the
60 days may file a new application for benefits on the basis of new
cost of the bill: Your Committee estimates that there will be no addi-
evidence or changed condition which in most instances can be adjudi-
tional program costs and possibly a slight savings in administrative
cated more speedily at the initial determination level. Also, reducing
costs this fiscal year and each of the following five fiscal years, as a
the time limit would result in a reduction in administrative costs and,
result of the enactment of this legislation. The Department of HEW
perhaps most importantly would be beneficial in that less case devel-
agrees with the Committee's estimate.
opment would be needed at the hearing level. This situation has played
a major role in delaying decisions in appealed cases. Often hearings
SECTION-BY-SECTION ANALYSIS OF H.R. 10727
filed in the 4th, 5th, or 6th months following the reconsideration deter-
mination are virtually new cases and call for extensive medical and
Section 1 of the bill would revise Section 1631 (c) of the Social
vocational development which takes the ALJ away from his primary
Security Act to provide to an applicant for benefits under title XVI
role of deciding cases. In order to assure that the rights of individuals
of that Act the same rights to administrative and judicial review that
are not adversely affected, your Committee has instructed the Social
Section 205 (b) of that Act provides with respect to claims for benefits
Security Administration to undertake an extensive public information
under titles II and XVIII of the Social Security Act.
program which will advise social security applicants of the shortened
The principal modifications to Section 1631 (c)-which provides
length of time for filing an appeal.
general authority to the Secretary of Health, Education, and Welfare
Extending the time limit for requesting SSI hearings would make
to conduct hearings-would be:
the limit generally consistent with the time limit applicable to Social
(1) to include a specific requirement that decisions after a
Security, Black Lung, and most Medicare claims and would be bene-
hearing must be on the basis of evidence adduced at the hearing;
ficial from a procedural and administrative standpoint particularly in
(2) to make the final determination of the Secretary subject to
concurrent benefit cases. The Social Security Administration informed
the substantial evidence rule upon judicial review; the provision
the Committee that currently it is granting many waivers for late
in current law (Sec. 1631 (c) (3)) which provides that the deter-
filing of SSI appeals, and extending the present 30 day period will
minations of the Secretary "as to any fact shall be final and
give more reality to present procedures.
conclusive and not subject to review by any court" would be
repealed;
OTHER MATTERS REQUIRED To BE DISCUSSED UNDER HOUSE RULES
(3) to increase the period during which requests for review
may be filed from 30 days to 60 days;
In compliance with clause 2(1) (2) (B) of rule XI of the Rules of
(4) to provide specific authority for the Secretary to hold
the House of Representatives, the following statement is made rela-
hearings and make findings of fact, administer oaths, examine
tive to the vote by your committee on the motion to report the bill.
witnesses and receive evidence; and
The bill was ordered reported by a unanimous voice vote.
(5) to authorize the Secretary to receive evidence at a hearing
In compliance with clause 2(1) (3) (A) of rule XI of the Rules of
even though inadmissible under the rules of evidence applicable
the House of Representatives, the following statement is made rela-
to court procedure.
tive to oversight findings by your committee. As a result of hearings
Section 2 would repeal Section 1631 (d) (2), thus terminating the
conducted in September and October of this year by the Subcommittee
authority of the Secretary of Health, Education, and Welfare to
on Social Security your committee concluded that it would be desir-
appoint individuals as hearing examiners to conduct hearings under
able to enact legislation to expedite the holding of hearings for social
title XVI.
security claimants as is provided in H.R. 10727.
8
9
Section 3 would authorize individuals who were appointed under
Secretary has rendered, he shall give such applicant and such other
Section 1631 (d) (2) of the Social Security Act prior to enactment of
individual reasonable notice and opportunity for a hearing with re-
the bill to conduct hearings under titles II (Social Security), XVI
spect to such decision, and, if a hearing is held, shall, on the basis of
(SSI) and XVIII (Medicare) of the Social Security Act when the
evidence adduced at the hearing, affirm, modify, or reverse his findings
Secretary of Health, Education, and Welfare finds that it will pro-
of fact and such decision. Any such request with respect to such de-
mote the achievement of the objectives of those titles and notwith-
cision must be filed within [such period after such decision as may be
standing the fact that these individuals were not appointed as
prescribed in regulations of the Secretary, except that the period SO
Administrative Law Judges under the Administrative Procedure Act
prescribed may not be less than six months after notice of such de-
(5 U.S.C. section 3105). The appointments made prior to enactment
cision is mailed to] sixty days after notice of such decision is received
under Section 1631 (d) (2) may be continued until December 31, 1978.
by the individual making such request. The Secretary is further au-
Until such date these individuals shall be deemed hearing examiners
thorized, on his own motion, to hold such hearings and to conduct
(ALJs) appointed under such section 3105 of title V and subject to
such investigations and other proceedings as he may deem necessary
subchapter II of Chapter 5 of such title, to the second sentence of such
or proper for the administration of this title. In the course of any
section 3105, and to all of the other provisions of such title 5 which
hearing, investigation, or other proceeding, he may administer oaths
apply to hearing examiners appointed under such section 3105.
and affirmations, examine witnesses, and receive evidence. Evidence
Section 4 would amend Section 205 (b) of the Social Security Act
may be received at any hearing before the Secretary even though in-
to specify that a request for a hearing under title II may not be filed
admissable under rules of evidence applicable to court procedure.
later than sixty days after an individual receives notice of an adverse
decision with respect to his rights to benefits. Under existing law,
such requests may be filed within such time period as the Secretary
TITLE XVI-SUPPLEMENTAL SECURITY INCOME FOR
specifies by regulation but the period cannot be less than six months
THE AGED, BLIND, AND DISABLED
after notice is mailed.
Section 5 would provide that the provisions of the bill take effect
on enactment, except that the provisions which would reduce the pe-
PART B-PROCEDURAL AND GENERAL PROVISIONS PAYMENTS AND
riod in which a request for a hearing may be filed would be effective
PROCEDURES
only with respect to an adverse decision notice of which is received
on or after the date of enactment.
PAYMENT OF BENEFITS
CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED
SEC. 1631. (a) (1)
*
In compliance with clause 3 of rule XIII of the Rules of the House
of Representatives, changes in existing law made by the bill, as re-
Hearings and Review
ported, are shown as follows (existing law proposed to be omitted is
enclosed in black brackets, new matter is printed in italic, existing law
(c) (1) The Secretary is directed to make findings of fact, and deci-
in which no change is proposed is shown in roman)
sions as to the rights of any individual applying for payment under
this title. The Secretary shall provide reasonable notice and oppor-
SOCIAL SECURITY ACT
tunity for a hearing to any individual who is or claims to be an eligible
individual or eligible spouse and is in disagreement with any deter-
mination under this title with respect to eligibility of such individual
TITLE II-FEDERAL OLD-AGE, SURVIVORS, AND
for benefits, or the amount of such individual's benefits, if such individ-
DISABILITY INSURANCE BENEFITS
ual requests a hearing on the matter in disagreement within [thirty]
sixty days after notice of such determination is received, and, if a
hearing is held, shall, on the basis of evidence adduced at the hearing,
affirm, modify, or reverse his findings of fact and such decision. The
EVIDENCE, PROCEDURE, AND CERTIFICATION FOR PAYMENT
Secretary is further authorized, on his own motion, to hold such hear-
ings and to conduct such investigations and other proceedings as he
SEC. 205. (a)
*
may deem necessary or proper for the administration of this title. In
*
the course of any hearing, investigation, or other proceeding, he may
(b) The Secretary is directed to make findings of fact, and decisions
administer oaths and affirmations, examine witnesses, and receive evi-
as to the rights of any individual applying for a payment under this
dence. Evidence may be received at any hearing before the Secretary
title. Upon request by any such individual or upon request by a wife,
even though inadmissible under the rules of evidence applicable to
divorced wife, widow, surviving divorced wife, surviving divorced
court procedure.
mother, husband, widower, child, or parent who makes a showing in
(2) Determination on the basis of such hearing, except to the extent
writing that his or her rights may be prejudiced by any decision the
that the matter in disagreement involves [the existence of a disability
10
(within the meaning of section 1614(a) (3)) shall be made within
ninety days after the individual requests the hearing as provided in
paragraph (1).
(3) The final determination of the Secretary after a hearing under
paragraph (1) shall be subject to judicial review as provided in sec-
tion 205 (g) to the same extent as the Secretary's final determinations
under section 205[; except that the determination of the Secretary
after such hearing as to any fact shall be final and conclusive and not
subject to review by any court].
Procedures; Prohibitions of Assignments; Representation of
Claimants
(d) (1) The provisions of section 207 and subsections (a), (d), (e),
and (f) of section 205 shall apply with respect to this part to the
same extent as they apply in the case of title II.
(2) To the extent the Secretary finds it will promote the achieve-
ment of the objectives of this title, qualified persons may be appointed
to serve as hearing examiners in hearings under subsection (c) with-
out meeting the specific standards prescribed for hearing examiners
by or under subchapter II of chapter 5 of title 5, United States Code.]
(3) (2) The Secretary may prescribe rules and regulations govern-
ing the recognition of agents or other persons, other than attorneys, as
hereinafter provided, representing claimants before the Secretary
under this title, and may require of such agents or other persons, before
being recognized as representatives of claimants, that they shall show
that they are of good character and in good repute, possessed of the
necessary qualifications to enable them to render such claimants valu-
able service, and otherwise competent to advise and assist such claim-
ants in the presentation of their cases. An attorney in good standing
who is admitted to practice before the highest court of the State,
Territory, District, or insular possession of his residence or before the
Supreme Court of the United States or the inferior Federal courts,
shall be entitled to represent claimants before the Secretary. The Sec-
retary may, after due notice and opportunity for hearing, suspend or
prohibit from further practice before him any such person, agent, or
attorney who refuses to comply with the Secretary's rules and regula-
tions or who violates any provision of this paragraph for which a
penalty is prescribed. The Secretary may, by rule and regulation,
prescribe the maximum fees which may be charged for services per-
formed in connection with any claim before the Secretary under this
title, and any agreement in violation of such rules and regulations
shall be void. Any person who shall, with intent to defraud, in any
manner willfully and knowingly deceive, mislead, or threaten any
claimant or prospective claimant or beneficiary under this title by
word, circular, letter, or advertisement, or who shall knowingly charge
or collect directly or indirectly any fee in excess of the maximum fee,
or make any agreement directly or indirectly to charge or collect any
fee in excess of the maximum fee, prescribed by the Secretary, shall be
deemed guilty of a misdemeanor and, upon conviction thereof, shall
for each offense be punished by a fine not exceeding $500 or by im-
prisonment not exceeding one year, or both.
Calendar No. 529
94TH CONGRESS
SENATE
REPORT
1st Session
No. 94-550
SOCIAL SECURITY APPEALS AND ADMINISTRATION
DECEMBER 12, 1975.-Ordered to be printed
MR. LONG, from the Committee on Finance,
submitted the following
REPORT
[To accompany H.R. 10727]
The Committee on Finance, to which was referred the bill (H.R.
10727) to amend the Social Security Act to expedite the holding of
hearings under titles II, XVI, and XVIII by establishing uniform
review procedures under such titles, having considered the same, re-
ports favorably thereon with an amendment and an amendment to the
title and recommends that the bill as amended do pass.
I. SUMMARY OF THE BILL
The bill as passed by the House of Representatives made certain
modifications in the provisions of the Social Security Act dealing with
the appeals process under programs administered by the Social Se-
curity Administration. The committee modified the effective date of
one of the provisions in the House bill and added to the bill a number
of amendments as described below.
SOCIAL SECURITY HEARINGS AND APPEALS
The programs administered by the Social Security Administration
presently have a huge backlog of some 103,000 cases awaiting a hear-
ing. The committee bill would attempt to alleviate this problem by
making certain changes in the social security hearings and appeals
processes. The bill would make the provisions of law governing hear-
ings and judicial review under the supplemental security income
(SSI) program virtually identical to those of the social security cash
benefit and medicare programs. It would permit the Social Security
Administration to use existing SSI hearing examiners to also hear
57-010
2
3
social security and medicare cases between now and the end of 1978.
II. GENERAL EXPLANATION OF THE BILL
In addition, the bill would change the time in which a person could
request a hearing after a claim had been disallowed. For both social
A. SOCIAL SECURITY HEARINGS AND APPEALS
security cases and SSI cases, the time would be 60 days-an increase
NEED FOR LEGISLATION
from 30 days for SSI claims and a decrease from 6 months for social
security claims. The bill as passed by the House and as approved by
The programs administered by the Social Security Administration
the committee is effective on enactment except that the effective date
now have a huge backlog of some 103,000 cases awaiting hearing. Half
of the reduction in the time for filing a request for hearings in social
of all hearings take more than seven months to process, and the aver-
security cases would be March 1, 1976.
age processing time from initial application to hearing decision is
some 20 months. A major barrier to reducing the backlog is the in-
POLICEMEN AND FIREMEN IN WEST VIRGINIA
ability to use the hearing examiners appointed for the supplemental
The Social Security Amendments of 1972 included a provision which
security income program for cases involving eligibility under Title
II of the Social Security Act. Although the major factor in both SSI
allowed the State of West Virginia to modify its social security cov-
and title II hearings is the title II definition of disability, the Civil
erage agreements SO as to provide social security protection to certain
Service Commission overruled the Department of Health, Education,
policemen and firemen who had erroneously paid social security taxes
in the belief that they were covered. Under the 1972 amendments,
and Welfare and refused to allow that agency to employ administra-
tive law judges to conduct SSI hearings.
the State of West Virginia had to amend its agreement with the
Within recent months the Social Security Administration Bureau
Social Security Administration before 1974. The State, however, has
not made the necessary amendment in its agreement, and the com-
of Hearings and Appeals has made significant gains in increasing the
productivity of administrative law judges (ALJs) with the result that
mittee bill provides an extension through 1977 of the time in which
the current case backlog is being reduced by 1.000 cases a month. If
the agreement may be changed.
the authority in this bill is enacted it has been estimated that the hear-
ing backlog will be reduced by 3,000 a month so that in 18 months cases
DEPOSIT OF SOCIAL SECURITY CONTRIBUTIONS BY STATE AND LOCAL
can be adjudicated within 90 days.
GOVERNMENTS
While the committee thus expects that this bill will significantly
Under the committee bill, the Secretary of Health, Education, and
alleviate the current crisis situation with respect to social security
Welfare would be required to give notice at least 18 months in advance
hearings, it is aware that suggestions have been made for more basic
of any changes he proposes to make in the way in which social secu-
structural changes in the hearings procedures and the administration
rity contributions are paid by State and local governments. This would
of the disability programs. The committee notes that the report of the
assure that States would be given ample leadtime to implement any
House of Representatives on this bill indicates an intent to undertake
changes and would also give Congress an opportunity to review any
comprehensive social security legislation in 1976 in connection with
changes which the Secretary might propose.
which such changes could be considered. The House report also rec-
ommends that the Social Security Administration authorize the Center
ANNUAL REPORTING OF SOCIAL SECURITY WAGES
for Administrative Justice to make a study of the social security
appeals procedures and make recommendations for any structural
The committee bill includes a provision which is designed to reduce
changes relating to improving both the speed and quality of social
the tax reporting burdens of the nation's employers. Under the pro-
security adjudications. This study would address the issue of whether
vision, the Secretaries of the Treasury and of Health, Education, and
the current appeals system under the Administrative Procedure Act
Welfare would be given the authority needed to exchange informa-
(APA) is in the public interest together with such subjects as the
tion SO that social security reports of individual earnings could be
appropriate qualifications, method of appointment, and position and
made once each year rather than once each quarter.
grade classification of social security ALJs.
The provision would not affect the responsibility of employers for
collection and payment of social security taxes nor would it change
CONFORMING SSI AND SOCIAL SECURITY APPEALS PROCEDURES
the requirements as to when these payments are due. It would not
have any effect on the way in which State and local Governments
(Section 1 of the Bill)
pay or report social security contributions to the Social Security Ad-
ministration. Payments by both private employers and State and local
The first provision of the bill would amend Section 1631 (c) of the
Government units would continue to be made in the same way that
Social Security Act to provide the same rights to hearing and admin-
istrative and judicial review with respect to claims under title XVI
they are made under existing law.
(Supplemental Security Income) of the Act as apply to title II
5
hearing officers can be obtained from the current pool of SSI hearing
4
examiners and Black Lung ALJs who meet, or will meet, the require-
ments for regular appointments and through the on-going recruitment
(social security) and title XVIII (medicare) claims under section
by the Civil Service Commission of ALJs in the private and govern-
205 (b) and 205 (g) of the Act. This is necessary to override an inter-
mental sectors.
pretation of the Civil Service Commission that the Administrative
Procedure Act was not applicable to SSI hearings and which required
USE OF SSI HEARING EXAMINERS FOR SOCIAL SECURITY AND MEDICARE CASES
the appointment of non-APA hearings officers who could not hear
social security and medicare cases. This action greatly exacerbated the
(Section 3 of the Bill)
current hearing crisis and the validity of SSI hearings has been chal-
lenged in the courts as second class justice. The committee bill will
The committee bill also grants authority for those SSI hearing
put this matter to rest by clearly providing on-the-record administra-
examiners (who have been appointed under section 1631 (d) (2) to hear
tive hearings and judicial review of a parallel nature for social secu-
cases under titles II, XVI, and XVIII until December 31, 1978
rity, SSI, and medicare claimants.
as temporary administrative law judges if the Secretary of HEW
The principal modifications to section 1631 (c), which now provides
finds it will promote the achievement of the objectives of these titles.
general authority to the Secretary of Health, Education, and Welfare
It is the committee's understanding that the Secretary will make this
to conduct hearings on SSI appeals, would be
finding as to all SSI hearing examiners who have been appointed. The
(1) the specific requirement that decisions after a hearing must
committee also understands that now virtually all the temporary
be on the basis of evidence adduced at the hearing;
Black Lung judges hold SSI hearing examiner appointments and this
(2) an increase in the period during which requests for review
would provide the Bureau of Hearings and Appeals the 200 judges it
must be filed from 30 days to 60 days;
needs to reduce the backlog. Furthermore, by the end of 1978, all SSI
(3) the addition of specific authority for the Secretary to hold
examiners will have acquired sufficient adjudicative experience to
hearings and make findings of fact, administer oaths, examine
meet the experience requirement for appointment as regular ALJs.
witnesses and receive evidence; and authority to receive evidence
They would, as they met the experience requirement, be afforded the
at a hearing even though inadmissible under the rules of evidence
opportunity to be placed on the register for regular ALJ appointment
applicable to court procedure;
on a merit basis under the regular Civil Service procedures.
(4) to make the final determinations of the Secretary subject
It is hoped that these requirements and procedures will be applied
to the "substantial evidence rule" upon judicial review by elimi-
in a manner to effectively serve the needs of the Social Security Act
nating language now in section 1631 (c) (3) which provides that
programs. The performance of the Civil Service Commission Office of
the determinations of the Secretary "as to any fact shall be final
Administrative Law Judges in overruling the administering agency
and conclusive and not subject to review by any court".
(HEW) in its legal opinion that SSI was under the APA does not
The principal effect of this last modification is to apply the same
reflect the will of Congress.
rules of judicial review to title XVI cases as apply to title II cases.
The Office of Administrative Law Judges should be mindful of its
By removing this language from title XVI, findings of fact of the
ministerial responsibilities in supplying registers from which adequate
Secretary in SSI cases, if supported by substantial evidence, shall be
numbers of ALJs can be hired by HEW to adjudicate social security
conclusive as are such findings under title II. The committee believes
claims. There are indications that in the past these registers have not
that both programs should be under the "substantial evidence rule",
been supplied with the speed and with the number of candidates
but that this should not be interpreted by the courts as a license to
thereon which HEW needed to get better control over the hearings
vary from strict adherence to its principles. With over 4,000 social
backlog. In evaluating current SSI hearings examiners for regular
security disability cases now pending in the United States District
ALJ appointments great weight should be given to experience in ac-
Courts, and the possibility of a similar caseload developing in the SSI
tually adjudicating social security and Black Lung cases and road-
program, when its appeals are fully felt, making de novo factual deter-
blocks should not be created through unduly lengthy and bureaucratic
minations at the judicial level could result in very serious problems
appointment procedures.
for the federal judiciary and the social security program.
To avoid any possible misinterpretation, the bill specifically pro-
vides that the temporary hearing officers authorized to conduct hear-
REPEAL OF SPECIAL APPOINTMENT AUTHORITY
ings under the bill would be subject to all the provisions of the Ad-
ministrative Procedure Act that assure independence from agency
(Section 2 of the Bill)
control. These provisions would include: Subchapter II of chapter 5
of title 5 of the United States Code he substantive provisions relating
The committee bill would repeal section 1631 (d) (2) of the Social
to APA adjudications) the second ntence of section 3105, of title
Security Act.
5 U.S.C. (assignment of cases in romation and the prohibition of
This is the section of the law under which, pursuant to Civil Serv-
assignment to duties inconsistent with their responsibilities as hear-
ice Commission interpretation, non-APA hearing examiners have been
appointed. The continuation of this authority is inappropriate inas-
much as title XVI cases in the future will require APA hearing
officers. The committee believes that an adequate supply of APA
6
7
ing officers) ; and the deeming of them as hearing examiners appointed
the time limit would result in a reduction in administrative costs and,
under section 3105 SO that, among other things, they would be exempt
perhaps most importantly would be beneficial in that less case devel-
from agency performance rating requirements (5 U.S.C. 4301 (2) (E))
opment would be needed at the hearing level. The need for additional
and agency determination of performance acceptability for in-grade
development has played a major role in delaying decisions in appealed
increases (5 U.S.C. 5335 (a) (3) (B)) and making Civil Service respon-
cases. Often hearings filed in the 4th, 5th, or 6th months following
sible for determining their pay levels (5 U.S.C. 5362), removal for
the reconsideration determination are virtually new cases and call
cause (5 U.S.C. 7521), and general administration (5 U.S.C. 1305).
for extensive medical and vocational development which takes the
The committee is unaware of any prejudicial "agency control" exer-
ALJ away from his primary role of deciding cases.
cised by HEW under the parallel provisions it has established for SSI
In order to assure that the rights of individuals are not adversely
hearing examiners. However, the specific application of these pro-
affected, the committee has provided that this change not be effective
visions of the APA, together with the provisions of the bill applying
until March 1, 1976. This will allow the Social Security Administra-
the same procedural safeguards to review proceedings under title XVI
tion time to advise social security applicants of the shortened length
as apply under title II, should eliminate the possibility of the courts
of time for filing an appeal.
determining that SSI review procedures do not comply with the
Administrative Procedure Act or due process.
B. WEST VIRGINIA POLICEMEN AND FIREMEN
Moreover, the specific enumeration of these provisions of the APA
as applicable to the temporary ALJs should not be interpreted to
(Section 6 of the Bill)
make these adversary proceedings or otherwise "judicialize" proce-
The committee has been informed that certain policemen and fire-
dures under title II, XVI, and XVIII. The enumeration of these pro-
men in West Virginia have been paying social security contributions
visions also should in no way suggest that they are not applicable to
but that the Social Security Administration ruled (and the courts
the regular Social Security ALJs. The committee and the Depart-
have agreed) that the law does not provide for this coverage. Under
ment of HEW consistently over the years have declared that the lan-
the law, policemen in West Virginia are not allowed coverage if they
guage in title II (and under the provisions of this bill, title XVI) of
are also covered under a State or local retirement program and fire-
the Social Security Act call for "on-the-record" hearings which invoke
men under a State or local retirement program are not allowed cov-
the provisions of the Administrative Procedure Act.
erage unless certain specified conditions are met. The laws of West
Although the bill is silent on the grade level of temporary Adminis-
trative Law Judges, the committee notes that the report on this legisla-
Virginia require certain local governments to provide a retirement
tion received from the Department indicates agreement with the view
program for their employees, including policemen and firemen, but
expressed in the report of the House of Representatives on the bill
some of the local governments have not provided the programs and
instead have relied on social security coverage to provide retirement,
that a grade level of GS-14 would be appropriate.
disability, and survivor insurance for their employees. Because this
coverage for policemen and firemen, but not for other employees has
REDUCTION OF APPEAL PERIOD FOR SOCIAL SECURITY CLAIMS
been determined to be in conflict with the present law, the committee
(Section 4 of the Bill)
bill includes a provision which will permit the State of West Virginia
to modify its social security coverage agreements to provide retro-
The Committee bill would reduce the period within which social
active coverage for the policemen and firemen who have paid social
security and medicare appeals may be taken at both the reconsideration
security contributions in the past and to continue this coverage in the
and hearing level from six months to 60 days.
future for those police and fire departments affected.
The committee believes that a 6-month time period is unnecessarily
A similar provision was included in the Social Security Amend-
long for a claimant to appeal a title II or title XVIII decision on his
ments of 1972 but the State did not make the necessary modifications
claim. In fact, because a mandatory reconsideration has been adopted
in its social security coverage agreements within the time limits speci-
administratively under this authority, a double period may result. An
fied in that legislation. The present bill will extend the time when such
individual whose claim has been initially denied has a full six months
a change may be made to 1977.
to decide whether to request a reconsideration and then another 6
months to decide whether to appeal to an administrative law judge.
C. DEPOSIT OF SOCIAL SECURITY CONTRIBUTIONS BY STATE AND LOCAL
More than 65 percent of the hearings requested are filed within 60
GOVERNMENTS
days after the claimants receive notification that their reconsideration
had not resulted in the decision being overturned. If the time limit is
(Section 7 of the Bill)
reduced to 60 days, there may be a decrease in the number of hearing
Employees of State and local governments are not mandatorily
requests filed. Those individuals who do not file for review within
covered under the social security program. Under legislation enacted
60 days may file a new application for benefits on the basis of new
in 1950, however, States are permitted on a voluntary basis to enter
evidence or changed condition which in most instances can be adjudi-
into agreements with the Department of Health, Education, and Wel-
cated more speedily at the initial determination level. Also, reducing
fare for the coverage under the program of State and local employees.
8
The extent of such coverage varies from State to State and the agree-
9
ments under which each State covers certain of its employees and the
employees of political subdivisions are quite complex. Under these
D. ANNUAL REPORTING OF SOCIAL SECURITY WAGES
coverage agreements, States are required to pay to the Social Security
Administration contributions which are the equivalent of the social
(Section 8 of the Bill)
security taxes which the Internal Revenue Service collects from pri-
vate employers.
The committee added a provision to the House-passed bill which
The Social Security Act provides that, insofar as practicable. the
is designed to reduce the tax reporting burden of the Nation's em-
Social Security Administration should require States to deposit these
ployers. Under the committee provision, the Secretaries of the Treasury
contributions in a manner consistent with the requirements for deposit-
and of Health, Education, and Welfare would be provided with the
ing social security taxes imposed on private employers. Up to the
authority they need to exchange information on a basis which would
present, however, the requirements imposed upon the States with
make it possible to change social security tax reporting from a quar-
respect to the frequency of deposit have been quite different from the
terly basis to an annual basis. The committee provision originated in
requirements imposed upon private employers. Large private employ-
the recommendations of several Governmental study groups and its
ers are required to deposit social security taxes withheld as often as
adoption would conclude approximately two decades of study and
weekly, and moderate-sized employers must make these deposits
negotiation between the two departments involved.
monthly. Quarterly deposits are permitted for employers with quite
Under existing Treasury department regulations, employers are re-
small payrolls. In the case of State and local Government employees,
quired to submit quarterly reports of the wages paid to their em-
however, the present regulations of the Department of Health, Educa-
ployees which are subject to social security taxes. These reports, on
tion, and Welfare require that deposits be made by the middle of the
Treasury Form 941-A, must list each employee by name, social
second month after the end of each quarter.
security account number, and total wages paid to the employee with
The Social Security Administration has indicated that it is consider-
respect to which social security taxes are payable. The preparation
ing the promulgation of a regulation which would require the States
and filing of this quarterly report involves considerable effort and
to deposit social security contributions more frequently. The agency
expense on the part of employers particularly in the case of small
believes that such a change would result in significantly higher interest
and medium-sized companies which do not have the advantage of
earnings for the social security trust funds and that the change would
computerized payroll systems. An April 17, 1973 report issued by
be consistent with the provision of law requiring that the State proce-
the Select Committee on Small Business stated that its Subcommittee
dures be comparable with the procedures used by private employers.
on Government Regulation had found studies indicating that the
State social security administrators have expressed doubts that such
annual cost to small employers of submitting this form might total
a change is, in fact, practicable since many local governments have
as much as $235 million (Senate Report No. 93-125, p. 49).
relatively unsophisticated accounting arrangements. Moreover, the
The committee provision would make possible the elimination of
argument is made that such a change represents a unilateral revocation
quarterly reports by changing certain technical requirements of the
of the voluntary agreements under which the State coverage was estab-
social security program which currently depend on data from the
lished many years ago.
Form 941-A and by providing the Internal Revenue Service and the
The Committee is advised that the Social Security Administration
Social Security Administration authority which would enable them to
and the State social security administrators are jointly undertaking a
enter into an agreement for cooperative processing of a revised annual
study designed to develop more adequate information as to the actual
wage reporting form (i.e. Form W-2) in a manner which will most
implications of a change in existing deposit procedures. To assure that
effectively and efficiently provide each agency with the information it
this information will be available before any change is made and to
requires. Thus, in place of the present requirement that each employer
assure that no change in deposit procedures will be abruptly instituted,
submit 5 reports per year with respect to each employee (4 quarterly
the committee bill would prohibit the Department of Health, Educa-
reports on Form 941-A and 1 annual report on Form W-2), the com-
tion, and Welfare from making any significant changes in the deposit
mittee provision makes possible a revision in Treasury Department
requirements without allowing lead time of at least 18 months from
regulations to permit employers to file a single consolidated annual
the time of publication in the Federal Register of the final regulations
wage report for each employee which will show both his total earnings
making such a change.
for the year and the quarterly breakdown of his social security
The committee believes that this amendment will permit the De-
earnings.
partment to develop whatever proposal with respect to the deposit of
The present Form 941-A provides for wage information used by the
State and local contributions it may feel is justified on the basis of in-
Social Security Administration as the source of data for computing the
formation obtained from the current study while at the same time
automatic increases in the amount of annual earnings subject to social
assuring that Congress will have adequate notice of any such proposed
security taxes (the social security "wage base") and in the amount of
change and will be able to enact further legislation as may appear
annual earnings which a beneficiary may have without any reduction in
appropriate.
his social security benefits (the "exempt amount.") Under existing
law, whenever an increase in the cost of living triggers an automatic
S. Rept. 94-550-75-2
10
11
social security benefit increase, the Secretary of Health, Education,
In addition, the committee amendment provides that the amend-
and Welfare is required to promulgate regulations increasing the wage
ment would have no effect on the way in which State and local govern-
base and the exempt amount.
ments report earnings to the Social Security Administration. The situ-
Under current law these increases are based on the percentage rise
ation with respect to State and local government employment covered
in the average amount of taxable wages up to the first quarter of the
by social security is different than the situation with respect to private
year in which the determination of the amount of the increase is made,
employment, and the procedures for reporting wages are governed by
and the increases become effective as of the start of the following year.
agreements between the States and the Secretary of Health, Educa-
If employee wages are reported annually rather than quarterly, how-
tion, and Welfare. A wide variety of patterns exists with respect to
ever, the necessary data to compute the increase in wage base and
the types of State and local employment which are or are not covered
exempt amount would not be available until well after the beginning
under a multiplicity of agreements between the States and the Federal
of the year in which the increases are to be effective. The committee
government and, in turn, between the States and local governmental
provision, therefore, moves back by one year the base period to be
entities. The existing reporting procedures, therefore, serve not only
used for determining the amount of increases in taxable wages SO that
the requirements of the Social Security Administration but also the
the Secretary of Health, Education, and Welfare will have sufficient
requirements of the State agencies which are responsible for co-
time to make his determinations on the basis of an annual wage report.
ordinating the activities with respect to social security of the various
(However, no change is made in the benefit increase provisions of
governmental employers within each State. Accordingly, the Com-
present law.) Thus, for example, the increase in the wage base and
mittee bill would not authorize the Secretary of Health, Education, and
exempt amount which is to be effective as of January 1, 1977 would be
Welfare to modify the regulations and procedures with respect to the
computed according to the growth rate in average taxable wages from
reporting of social security wages in the case of State and local em-
the first quarter of 1974 to the first quarter of 1975 rather than ac-
ployees except to the extent that modifications may be agreed upon
cording to the growth rate from the first quarter of 1975 to the first
between him and the States involved.
quarter of 1976.
Current law bases the automatic increases in the wage base and
III. COST OF CARRYING OUT THE BILL
exempt amount on the rise in average taxable wages from the first
quarter of one year to the first quarter of the next year rather than on
In compliance with section of the Legislative Reorganiza-
the annual increase in wage levels generally because the Social Security
tion Act of 1970, the following statement is made relative to the costs
Administration doés not now receive the information necessary to
to be incurred in carrying out the bill.
make a determination based on average annual wages in all employ-
The committee estimates that this legislation would have virtually
ment. When the revised reporting regulations made possible by the
no impact on Federal expenditures. The provision authorizing certain
committee provision are implemented, this information will become
coverage for West Virginia policemen and firemen could have a negli-
available. Accordingly, the committee bill provides that, starting
gible impact on social security benefit payments. The provisions relat-
in 1978, determinations as to the amount of future automatic increases
ing to the social security hearing process, according to estimates re-
in the annual amount of earnings subject to social security taxes and
ceived from the Department of Health, Education, and Welfare,
in the amount of annual earnings a beneficiary can have without
would not affect benefit costs but could reduce administrative ex-
reduction in benefits will be based on the growth from year to year
penses by $16.3 million in fiscal years 1977 through 1981. The other
in average annual wages in all employment rather than on the growth
provisions of the bill have no cost impact.
of the amount of wages subject to social security taxes in the first
quarter of each year. As a practical matter, it is estimated that there
IV. VOTE OF THE COMMITTEE IN REPORTING THE BILL
will be negligible impact on the way in which the automatic increase
In compliance with section 133 of the Legislative Reorganization
provisions will operate, since the annual rate of growth is approxi-
Act of 1946, the following statement is made relative to the vote by
mately the same for average first quarter taxable wages, average
the committee to report the bill. The bill was ordered reported by
annual wages in employment covered by social security, and average
voice vote.
annual wages in the national economy.
The committee provision would not affect the responsibility of
V. CHANGES IN EXISTING LAW MADE BY THE BILL,
employers for the collection and payment of social security taxes nor
would it alter in any way the requirements as to the dates on which
AS REPORTED
payments of these taxes are due. The provisison would make no change
In compliance with subsection (4) of Rule XXIX of the Standing
in the amount of work required in order to qualify for social security
Rules of the Senate, changes in existing law made by the bill, as
benefits and no change would be made in the way benefits are com-
puted. Moreover, it would not have any impact on the financial status
reported, are shown as follows (existing law proposed to be omitted
of the social security program.
13
12
(j) the amounts estimated by him and the Secretary of Health,
is enclosed in black brackets, new matter is printed in italic, existing
Education, and Welfare which will be expended, out of moneys
appropriated from the general fund in the Treasury, during a
law in which no change is proposed is shown in roman)
three-month period by the Department of Health, Education, and
TITLE II-FEDERAL OLD-AGE, SURVIVORS, AND DIS-
Welfare and the Treasury Department for the administration of
titles II, XVI and XVIII of this Act and subchapter E of chap-
ABILITY INSURANCE BENEFITS
ter 1 and subchapter A of chapter 9 of the Internal Revenue Code
of 1939, and chapters 2 and 21 of the Internal Revenue Code of
FEDERAL OLD-AGE AND SURVIVORS INSURANCE TRUST FUND AND FEDERAL
1954, less.
DISABILITY INSURANCE TRUST FUND
(x) the amounts estimated (pursuant to the method prescribed
by the Board of Trustees under paragraph (4) of this subsection)
SEC. 201. (a)
by the Secretary of Health, Education, and Welfare which will
be expended, out of moneys made available for expenditures from
(g) (1) (A) [There are authorized to be made available for expendi-
the Trust Funds, during such three-month period to cover the cost
ture, out of any or all of the Trust Funds (which for purposes of this
of carrying out the functions of the Department of Health, Edu-
paragraph shall include also the Federal Hospital Insurance Trust
cation, and Welfare specified in section 232, which relate to the
Fund and the Federal Supplementary Medical Insurance Trust Fund
administration of provisions of the Internal Revenue Code of
established by title XVIII), such amounts as the Congress may deem
1954 other than those referred to in clause (i).
appropriate to pay the costs of the part of the administration of this
Such payments shall be carried into the Treasury as the net amount of
title, title XVI and title XVIII for which the Secretary of Health,
repayments due the general fund account for reimbursement of ex-
Education, and Welfare is responsible. During each fiscal year or after
penses incurred in connection with the administration of titles II, XVI,
the close of such fiscal year (or at both times), the Secretary of Health,
and XVIII of this Act and subchapter E of chapter 1 and subchapter
Education, and Welfare shall analyze the costs of administration of
A of chapter 9 of the Internal Revenue Code of 1939, and chapters 2
this title, title XVI and title XVIII during the appropriate part or
and 21 of the Internal Revenue Code of 1954. A final accounting of
all of such fiscal year in order to determine the portion of such costs
such payments for any fiscal year shall be made at the earliest prac-
which should be borne by each of the Trust Funds and (with respect
ticable date after the close thereof. There are hereby authorized to be
to title XVI) by the general revenues of the United States and shall
made available for expenditure, out of any or all of the Trust Funds,
certify to the Managing Trustee the amount, if any, which should be
such amounts as the Congress may deem appropriate to pay the costs
transferred among such Trust Funds in order to assure that (after
of the part of the administration of this title, title XVI and title
appropriations made pursuant to section 1601, and repayment to the
XVIII for which the Secretary of Health, Education, and Welfare is
Trust Funds from amounts so appropriated) each of the Trust Funds
responsible and of carrying out the functions of the Department of
and the general revenues of the United States bears its proper share
Health, Education, and Welfare, specified in section 232, which relate
of the costs incurred during such fiscal year for the part of the ad-
to the administration of provisions of the Internal Revenue Code of
ministration of this title, title XVI, and title XVIII for which the
1954 other than those referred to in clause (i) of the first sentence of
Secretary of Health, Education, and Welfare is responsible. The
this subparagraph.
Managing Trustee is authorized and directed to transfer any such
(B) After the close of each fiscal year the Secretary of Health, Edu-
amount (determined under the preceding sentence) among such Trust
cation, and Welfare shall determine the portion of the costs, incurred
Funds in accordance with any certification SO made.
during such fiscal year, of administration of this title, title XVI, and
[(B) The Managing Trustee is directed to pay from the Trust Funds
title XVIII and of carrying out the functions of the Department of
into the Treasury the amounts estimated by him which will be ex-
Health, Education, and Welfare, specified in section 232, which relate
pended, out of moneys appropriated from the general funds in the
to the administration of provisions of the Internal Revenue Code of
Treasury, during each calendar quarter by the Treasury Department
for the part of the administration of this title and title XVIII for
1954 (other than those referred to in clause (i) of the first sentence
which the Treasury Department is responsible and for the administra-
of subparagraph (A)), which should have been borne by the general
tion of chapters 2 and 21 of the Internal Revenue Code of 1954. Such
fund in the Treasury and the portion of such costs which should have
payments shall be covered into the Treasury as repayment to the
been borne by each of the Trust Funds; except that the determination
account for reimbursement of expenses incurred in connection with
of the amounts to be borne by the general fund in the Treasury with
such administration of this title and title XVIII and chapters 2 and
respect to expenditures incurred in carrying out such functions speci-
21 of the Internal Revenue Code of 1954.]
fied in section 232 shall be made pursuant to the method prescribed by
The Managing Trustee of the Trust Funds (which for purposes of
the Board of Trustees under paragraph (4) of this subsection. After
this paragraph shall include also the Federal Hospital Insurance
such determination has been made, the Secretary of Health, Education,
Trust Fund and the Federal Supplementary Medical Insurance Trust
and Welfare shall certify to the Managing Trustee the amounts, if any,
Fund established by title XVIII) is directed to pay from the Trust
which should be transferred from one to any of the other of such Trust
Funds into the Treasury-
14
15
Funds, and the amounts, if any, which should be transferred between
REDUCTION OF INSURANCE BENEFITS
the Trust Funds (or one of the Trust Funds) and the general fund in
the Treasury, in order to insure that each of the Trust Funds and the
MAXIMUM BENEFITS
general fund in the Treasury have borne their proper share of the costs,
incurred during such fiscal year, for the part of the administration of
SEC. 203. (a)
*
*
this title, title XVI, and title XVIII for which the Secretary of
*
Health, Education, and Welfare is responsible and of carrying out
the functions of the Department of Health, Education, and Welfare,
(f) For purposes of subsection (b)
(1)
*
*
specified in section 232, which relate to the administration of provi-
sions of the Internal Revenue Code of 1954 (other than those referred
*
*
*
to in clause (i) of the first sentence of subparagraph (A)). The Man-
(8) (A) Whenever the Secretary pursuant to section 215 (i) in-
aging Trustee is authorized and directed to transfer any such amounts
ceases benefits effective with the month of June following a cost-of-
in accordance with any certification so made.".
living computation quarter he shall also determine and publish in
(2) The Managing Trustee is directed to pay from time to time
the Federal Register on or before November 1 of the calendar year
from the Trust Funds into the Treasury the amount estimated by him
in which such quarter occurs a new exempt amount which shall be
as taxes imposed under section 3101 (a) which are subject to refund
effective (unless such new exempt amount is prevented from becom-
under section 6413(c) of the Internal Revenue Code of 1954 with re-
ing effective by subparagraph (C) of this paragraph) with respect
spect to wages (as defined in section 1426 of the Internal Revenue Code
to any individual's taxable year which ends after the calendar year
of 1939 and section 3121 of the Internal Revenue Code of 1954) paid
in which such benefit increase is effective (or, in the case of an indi-
after December 31, 1950. Such taxes shall be determined on the basis
vidual who dies during the calendar year after the calendar year in
of the records of wages established and maintained by the Secretary
which the benefit increase is effective, with respect to such individual's
of Health, Education, and Welfare in accordance with the wages re-
taxable year which ends, upon his death, during such year).
ported to the Commissioner of Internal Revenue pursuant to section
(B) The exempt amount for each month of a particular taxable
1420(c) of the Internal Revenue Code of 1939 and to the Secretary of
year shall be whichever of the following is the larger-
the Treasury or his delegate pursuant to subtitle F of the Internal
(i) the exempt amount which was in effect with respect to
Revenue Code of 1954, and the Secretary shall furnish the Managing
months in the taxable year in which the determination under
Trustee such information as may be required by the Trustee for such
subparagraph (A) was made, or
purpose. The payments by the Managing Trustee shall be covered into
(ii) the product of the exempt amount described in clause (i)
the Treasury as repayments to the account for refunding internal
and the ratio of (I) the average of the [taxable] wages of all
revenue collections. Payments pursuant to the first sentence of this
employees as reported to the Secretary of the Treasury for [the
paragraph shall be made from the Federal Old-Age and Survivors
first calendar quarter of the calendar year preceding the calen-
Insurance Trust Fund and the Federal Disability Insurance Trust
dar year in which the determination under subparagraph (A)
Fund in the ratio in which amounts were appropriated to such Trust
was made to (II) the average of the [taxable] wages of all em-
Funds under clause (3) of subsection (a) of this section and clause (1)
ployees as reported to the Secretary of the Treasury for the first
of subsection (b) of this section.
calendar quarter of 1973] calendar year 1973, or, if later, the
(3) Repayments made under paragraph (1) or (2) shall not be
[first calendar quarter of calendar year preceding the most re-
available for expenditures but shall be carried to the surplus fund of
cent calendar year in which an increase in the contribution and
the Treasury. If it subsequently appears that the estimates under either
benefit base was enacted or a determination resulting in such an
such paragraph in any particular period were too high or too low, ap-
increase was made under section 230(a), with such product, if
propriate adjustments shall be made by the Managing Trustee in fu-
not a multiple of $10, being rounded to the next higher multiple
ture payments.
of $10 where such product is a multiple of $5 but not of $10 and
(4) The Board of Trustees shall prescribe before January 1, 1981,
to the nearest multiple of $10 in any other case.
the method of determining the costs which should be borne by the
For purpose of this clause (ii), the average of the wages for the
general fund in the Treasury of carrying out the functions of the
calendar year 1977 (or any prior calendar year) shall, in the case
Department of Health, Education, and Welfare, specified in section
of determinations made under subparagraph (A) prior to De-
232, which relate to the administration of provisions of the Internal
cember 31, 1978, be deemed to be an amount equal to 400 per
Revenue Code of 1954 (other than those referred to in clause (i) of
centrum of the amount of the average of the taxable wages of all
the first sentence of paragraph (1) (A)). If at any time or times there-
employees as reported to the Secretary for the first calendar
after the Boards of Trustees of such Trust Funds deem such action
quarter of such calendar year.
advisable they may modify the method 80 determined.
16
EVIDENCE, PROCEDURE, AND CERTIFICATION FOR PAYMENT
17
SEC. 205. (a)
*
*
*
*
were reported to the Secretary for the first calendar quarter of the
(b) The Secretary is directed to make findings of fact, and decisions
calendar year before the calendar year in which such redetermination
as to the rights of any individual applying for a payment under this
is made, to (ii) the average of the taxable wages of such persons re-
title. Upon request by any such individual or upon request by a wife,
ported to the Secretary for the first calendar quarter of the taxable
divorced wife, widow, surviving divorced wife, surviving divorced
year before the calendar year in which the reduction was first com-
mother, husband, widower, child, or parent who makes a showing in
puted (but not counting any reduction made in benefits for a previous
writing that his or her rights may be prejudiced by any decision the
period of disability). Any amount determined under the preceding
Secretary has rendered, he shall give such applicant and such other
sentence which is not a multiple of $1 shall be reduced to the next
individual reasonable notice and opportunity for a hearing with re-
lower multiple of $1.
spect to such decision, and, if a hearing is held, shall, on the basis of
evidence adduced at the hearing, affirm, modify, or reverse his findings
of fact and such decision. Any such request with respect to such de-
ADJUSTMENT OF THE CONTRIBUTION AND BENEFIT BASE
cision must be filed within [such period after such decision as may be
prescribed in regulations of the Secretary, except that the period SO
SEC. 230. (a) Whenever the Secretary pursuant to section 215(i)
prescribed, may not be less than six months after notice of such de-
increases benefits effective with the June following a cost-of-living
cision is mailed to sixty days after notice of such decision is received
computation quarter, he shall also determine and publish in the
by the individual making such request. The Secretary is further au-
Federal Register on or before November 1 of the calendar year in
thorized, on his own motion, to hold such hearings and to conduct
which such quarter occurs the contribution and benefit base de-
such investigations and other proceedings as he may deem necessary
termined under subsection (b) which shall be effective with respect
or proper for the administration of this title. In the course of any
to remuneration paid after the calendar year in which such quarter
hearing, investigation, or other proceeding, he may administer oaths
occurs and taxable years beginning after such year.
and affirmations, examine witnesses, and receive evidence. Evidence
(b) The amount of such contribution and benefit base shall be the
may be received at any hearing before the Secretary even though in-
amount of the contribution and benefit base in effect in the year in
admissable under rules of evidence applicable to the court procedure.
which the determination is made or, if larger, the product of-
*
(1) the contribution and benefit base which was in effect with
respect to remuneration paid in (and taxable years beginning in)
REDUCTION OF BENEFITS BASED ON DISABILITY ON ACCOUNT OF RECEIPT OF
the calendar year in which the determination under subsection
WORKMEN'S COMPENSATION
(a) with respect to such particular calendar year was made, and
*
*
(2) the ratio of (A) the average of the [taxable] wages of all
SEC. 224. (a)
employees as reported to the Secretary of the Treasury for the
*
*
first calendar quarter of the calendar year preceding the cal-
(f) (1) In the second calendar year after the year in which reduction
endar year in which the determination under subsection (a) with
under this section in the total of an individual's benefits under section
respect to such particular calendar year was made to the latest
223 and any benefits under section 202 based on his wages and self-
of (B) the average of the [taxable] wages of all employees as
employment income was first required (in a continuous period of
reported to the Secretary of the Treasury for the first calendar
months), and in each third year thereafter, the Secretary shall re-
quarter of 1973 or the first calendar quarter of for the calendar
determine the amount of such benefits which are still subject to reduc-
year 1973 or, if later, the calendar year preceding the most recent
tion under this section; but such redetermination shall not result in
calendar year in which an increase in the contribution and bene-
any decrease in the total amount of benefits payable under this title on
fit base was enacted or a determination resulting in such an
the basis of such individual's wages and self-employment income. Such
increase was made under subsection (a).
redetermined benefit shall be determined as of, and shall become effec-
with such product, if not a multiple of $300, being rounded to the
tive with, the January following the year in which such redetermina-
next higher multiple of $300 where such product is a multiple of $150
tion was made.
but not of $300 and to the nearest multiple of $300 in any other case.
(2) In making the redetermination required by paragraph (1), the
For purposes of this subsection, the average of the wages for the cal-
individual's average current earnings (as defined in subsection (a))
endar year 1977 (or any prior calendar year) shall in the case of deter-
shall be deemed to be the product of his average current earnings as
minations made under subsection (a) prior to December 31, 1978, be
initially determined under subsection (a) and the ratio of (i) the
deemed to be an amount equal to 400 per centum of the amount of the
average of the taxable wages of all persons for whom taxable wages
average of the taxable wages of all employees as reported to the Sec-
retary for the first calendar quarter of such calendar year.
*
*
18
19
PROCESSING OF TAX DATA
administer oaths and affirmations, examine witnesses, and receive evi-
SEC. 232. The Secretary of the Treasury shall make available infor-
dence. Evidence may be received at any hearing before the Secretary
mation returns filed pursuant to part III of subchapter A of chapter
even though inadmissable under the rules of evidence applicable to
61 of subtitle F of the Internal Revenue Code of 1954, to the Secretary
court procedure.
for the purposes of this title and title XI. The Secretary and the Sec-
(2) Determination on the basis of such hearing, except to the extent
retary of the Treasury are authorized to enter into an agreement for
that the matter in disagreement involves the existence of a disability
the processing by the Secretary of information contained in returns
(within the meaning of section 1614 (a) (3) shall be made within
filed pursuant to part III of subchapter A of chapter 61 of subtitle F
ninety days after the individual requests the hearing as provided in
of the Internal Revenue Code of 1954. Notwithstanding the provisions
paragraph (1).
of section 6103 (a) of the Internal Revenue Code of 1954, the Secretary
(3) The final determination of the Secretary after a hearing under
of the Treasury shall make available to the Secretary such documents
paragraph (1) shall be subject to judicial review as provided in sec-
as may be agreed upon as being necessary for purposes of such process-
tion 205 (g) to the same extent as the Secretary's final determinations
ing. The Secretary shall process any withholding tax statements or
under section 205 [; except that the determination of the Secretary
other documents made available to him by the Secretary of the Treas-
after such hearing as to any fact shall be final and conclusive and not
ury pursuant to this section. Any agreement made pursuant to this
subject to review by any court
section shall remain in full force and effect until modified or otherwise
changed by mutual agreement of the Secretary and the Secretary of
Procedures; Prohibitions of Assignments; Representation of
the Treasury.
Claimants
(d) (1) The provisions of section 207 and subsections (a), (d), (e),
and (f) of section 205 shall apply with respect to this part to the
TITLE XVI-SUPPLEMENTAL SECURITY 'OME FOR
same extent as they apply in the case of title II.
THE AGED, BLIND, AND DISABLE
(2) To the extent the Secretary finds it will promote the achieve-
ment of the objectives of this title, qualified persons may be appointed
to serve as hearing examiners in hearings under subsection (c) with-
out meeting the specific standards prescribed for hearing examiners
PART B-PROCEDURAL AND GENERAL PROVISIONS PAYMENTS AND
by or under subchapter II of chapter 5 of title 5, United States Code.
PROCEDURES
((3) (2) The Secretary may prescribe rules and regulations govern-
ing the recognition of agents or other persons, other than attorneys, as
PAYMENT OF BENEFITS
hereinafter provided, representing claimants before the Secretary
under this title, and may require of such agents or other persons, before
SEC. 1631. (a) (1)
being recognized as representatives of claimants, that they shall show
that they are of good character and in good repute, possessed of the
necessary qualifications to enable them to render such claimants valu-
able service, and otherwise competent to advise and assist such claim-
Hearings and Review
ants in the presentation of their cases. An attorney in good standing
who is admitted to practice before the highest court of the State,
(c) (1) The Secretary is directed to make findings of fact, and deci-
Territory, District, or insular possession of his residence or before the
sions as to the rights of any individual applying for payment under
Supreme Court of the United States or the inferior Federal courts,
this title. The Secretary shall provide reasonable notice and oppor-
shall be entitled to represent claimants before the Secretary. The Sec-
tunity for a hearing to any individual who is or claims to be an eligible
retary may, after due notice and opportunity for hearing, suspend or
individual or eligible spouse and is in disagreement with any deter-
prohibit from further practice before him any such person, agent, or
mination under this title with respect to eligibility of such individual
attorney who refuses to comply with the Secretary's rules and regula-
for benefits, or the amount of such individual's benefits, if such individ-
tions or who violates any provision of this paragraph for which a
ual requests a hearing on the matter in disagreement within [thirty]
penalty is prescribed. The Secretary may, by rule and regulation,
sixty days after notice of such determination is received, and, if a
prescribe the maximum fees which may be charged for services per-
hearing is held, shall, on the basis of evidence adduced at the hearing,
formed in connection with any claim before the Secretary under this
affirm, modify, or reverse his findings of fact and such decision. The
title. and any agreement in violation of such rules and regulations
Secretary is further authorized, on his own motion, to hold such hear-
shall be void. Any person who shall, with intent to defraud, in any
ings and to conduct such investigations and other proceedings as he
manner willfully and knowingly deceive, mislead, or threaten any
may deem necessary or proper for the administration of this title. In
claimant or prospective claimant or beneficiary under this title by
the course of any hearing, investigation, or other proceeding, he may
word, circular, letter, or advertisement, or who shall knowingly charge
20
or collect directly or indirectly any fee in excess of the maximum fee,
or make any agreement directly or indirectly to charge or collect any
fee in excess of the maximum fee, prescribed by the Secretary, shall be
deemed guilty of a misdemeanor and, upon conviction thereof, shall
for each offense be punished by a fine not exceeding $500 or by im-
prisonment not exceeding one year, or both.
*
*
*
*
*
*
*
INTERNAL REVENUE CODE OF 1954
*
*
*
*
*
*
*
SUBTITLE F-PROCEDURE AND ADMINISTRATION
*
*
*
*
*
*
*
CHAPTER 61-INFORMATION AND RETURNS
*
*
*
*
*
*
*
SUBCHAPTER B-MISCELLANEOUS PROVISIONS
*
*
*
*
*
*
*
SEC. 6103. PUBLICITY OF RETURNS AND DISCLOSURE OF INFORMATION AS
TO PERSONS FILING INCOME Tax RETURNS
(a) ***
*
*
*
*
*
*
*
(f) ***
(g) DISCLOSURE OF INFORMATION TO SECRETARY OF HEALTH, EDUCA-
TION, AND WELFARE.-The Secretary or his delegate is authorized to
make available to the Secretary of Health, Education, and Welfare in-
formation returns filed pursuant to part III of subchapter A of chap-
ter 61 of subtitle F for the purpose of carrying out, in accordance with
an agreement entered into pursuant to section 232 of the Social Secu-
rity Act, an effective information return processing program.
*
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*
*
*
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*
H. R. 10727
Rinety-fourth Congress of the United States of America
AT THE FIRST SESSION
Begun and held at the City of Washington on Tuesday, the fourteenth day of January,
one thousand nine hundred and seventy-five
An Art
To amend the Social Security Act to expedite the holding of hearings under titles
II, XVI, and XVIII by establishing uniform review procedures under such
titles, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled, That section 1631 (c)
of the Social Security Act is amended to read as follows:
"HEARINGS AND REVIEW
"(c) (1) The Secretary is directed to make findings of fact, and
decisions as to the rights of any individual applying for payment
under this title. The Secretary shall provide reasonable notice and
opportunity for a hearing to any individual who is or claims to be
an eligible individual or eligible spouse and is in disagreement with
any determination under this title with respect to eligibility of such
individual for benefits, or the amount of such individual's benefits, if
such individual requests a hearing on the matter in disagreement
within sixty days after notice of such determination is received, and,
if a hearing is held, shall, on the basis of evidence adduced at the
hearing affirm, modify, or reverse his findings of fact and such deci-
sion. The Secretary is further authorized, on his own motion, to hold
such hearings and to conduct such investigations and other proceedings
as he may deem necessary or proper for the administration of this title.
In the course of any hearing, investigation, or other proceeding, he
may administer oaths and affirmations, examine witnesses, and receive
evidence. Evidence may be received at any hearing before the Secretary
even though inadmissible under the rules of evidence applicable to
court procedure.
(2) Determination on the basis of such hearing, except to the
extent that the matter in disagreement involves a disability (within
the meaning of section 1614(a) (3)), shall be made within ninety days
after the individual requests the hearing as provided in paragraph (1).
(3) The final determination of the Secretary after a hearing under
paragraph (1) shall be subject to judicial review as provided in section
205 (g) to the same extent as the Secretary's final determinations under
section 205.".
SEC. 2. Section 1631(d) of the Social Security Act is amended by
striking out paragraph (2), and by redesignating paragraph (3) as
paragraph (2).
SEC. 3. The persons appointed under section 1631 (d) (2) of the
Social Security Act (as in effect prior to the enactment of this Act)
to serve as hearing examiners in hearings under section 1631 (c) of
such Act may conduct hearings under titles II, XVI, and XVIII of
the Social Security Act if the Secretary of Health, Education, and
Welfare finds it will promote the achievement of the objectives of
such titles, notwithstanding the fact that their appointments were
made without meeting the requirements for hearing examiners
appointed under section 3105 of title 5, United States Code; but their
appointments shall terminate not later than at the close of the period
ending December 31, 1978, and during that period they shall be deemed
H. R. 10727-2
to be hearing examiners appointed under such section 3105 and sub-
ject as such to subchapter II of chapter 5 of title 5, United States
Code, to the second sentence of such section 3105, and to all of the
other provisions of such title 5 which apply to hearing examiners
appointed under such section 3105.
SEC. 4. The third sentence of section 205 (b) of the Social Security
Act is amended to read as follows: "Any such request with respect to
such a decision must be filed within sixty days after notice of such
decision is received by the individual making such request.".
SEC. 5. The amendments made by the first two sections of this Act,
and the provisions of section 3, shall take effect on the date of the
enactment of this Act. The amendment made by section 4 of this Act
shall apply with respect to any decision or determination of which
notice is received, by the individual requesting the hearing involved,
after February 29, 1976. The amendment made by the first section of
this Act, to the extent that it changes the period within which hear-
ings must be requested, shall apply with respect to any decision or
determination of which notice is received, by the individual requesting
the hearing involved, on or after the date of the enactment of this Act.
SEC. 6. (a) Notwithstanding the provisions of subsection (d) (5) (A)
of section 218 of the Social Security Act and the references thereto in
subsections (d) (1) and (d) (3) of such section 218, the agreement with
the State of West Virginia heretofore entered into pursuant to such
section 218 may, at any time prior to 1977, be modified pursuant to
subsection (c) (4) of such section 218 SO as to apply to services per-
formed in policemen's or firemen's positions covered by a retirement
system on the date of the enactment of this Act by individuals as
employees of any class III or class IV municipal corporation (as
defined in or under the laws of the State) if the State of West Virginia
has at any time prior to the date of the enactment of this Act paid to
the Secretary of the Treasury, with respect to any of the services per-
formed in such positions by individuals as employees of such municipal
corporation, the sums prescribed pursuant to subsection (e) (1) of such
section 218. For purposes of this subsection, a retirement system which
covers positions of policemen or firemen, or both, and other positions,
shall, if the State of West Virginia SO desires, be deemed to be a sepa-
rate retirement system with respect to the positions of such policemen
or firemen, or both, as the case may be.
(b) Notwithstanding the provisions of subsection (f) of section 218
of the Social Security Act, any modification in the agreement with the
State of West Virginia under subsection (a) of this section, to the
extent it involves services performed by individuals as employees of
any class III or class IV municipal corporation, may be made effective
with respect to-
(1) all services performed by such individual. in any police-
men's or firemen's position to which the modification relates, on
or after the date of the enactment of this Act; and
(2) all services performed by such individual in such a position
before such date of enactment with respect to which the State
of West Virginia has paid to the Secretary of the Treasury the
sums prescribed pursuant to subsection (e) (1) of such section 218
at the time or times established pursuant to such subsection
(e) (1), if and to the extent that-
(A) no refund of the sums SO paid has been obtained, or
(B) a refund of part or all of the sums SO paid has been
obtained but the State of West Virginia repays to the Secre-
tary of the Treasury the amount of such refund within ninety
H. R. 10727-3
days after the date that the modification is agreed to by the
State and the Secretary of Health, Education, and Welfare.
SEC. 7. Notwithstanding any other provision of law, no regulation
and no modification of any regulation, promulgated by the Secretary
of Health, Education, and Welfare, after the date of enactment of this
Act, shall become effective prior to the end of the eighteen-month
period which begins with the first day of the first calendar month
which begins after the date on which such regulation or modification
of a regulation is published in the Federal Register, if and insofar as
such regulation or modification of a regulation pertains, directly or
indirectly, to the frequency or due dates for payments and reports
required under section 218(e) of the Social Security Act.
SEC. 8. (a) This section may be cited as the "Combined Old-Age,
Survivors, and Disability Insurance-Income Tax Reporting Amend-
ments of 1975".
(b) Title II of the Social Security Act is amended by adding after
section 231 the following section:
"PROCESSING OF TAX DATA
"SEC. 232. The Secretary of the Treasury shall make available infor-
mation returns filed pursuant to part III of subchapter A of chapter 61
of subtitle F of the Internal Revenue Code of 1954, to the Secretary
for the purposes of this title and title XI. The Secretary and the Sec-
retary of the Treasury are authorized to enter into an agreement for
the processing by the Secretary of information contained in returns
filed pursuant to part III of subchapter A of chapter 61 of subtitle F
of the Internal Revenue Code of 1954. Notwithstanding the provisions
of section 6103 (a) of the Internal Revenue Code of 1954, the Secretary
of the Treasury shall make available to the Secretary such documents
as may be agreed upon as being necessary for purposes of such proc-
essing. The Secretary shall process any withholding tax statements or
other documents made available to him by the Secretary of the Treas-
ury pursuant to this section. Any agreement made pursuant to this
section shall remain in full force and effect until modified or otherwise
changed by mutual agreement of the Secretary and the Secretary of
the Treasury.".
(c) Section 232 of the Social Security Act, as added by subsection
(b) of this section, shall be effective with respect to statements report-
ing income received after 1977.
(d) (1) Section 201 (g) (1) of such Act is amended to read as
follows:
"(g) (1) (A) The Managing Trustee of the Trust Funds (which for
purposes of this paragraph shall include also the Federal Hospital
Insurance Trust Fund and the Federal Supplementary Medical Insur-
ance Trust Fund established by title XVIII) is directed to pay from
the Trust Funds into the Treasury-
(i) the amounts estimated by him and the Secretary of Health,
Education, and Welfare which will be expended, out of moneys
appropriated from the general fund in the Treasury, during a
three-month period by the Department of Health, Education, and
Welfare and the Treasury Department for the administration of
titles II, XVI, and XVIII of this Act and subchapter E of chap-
ter 1 and subchapter A of chapter 9 of the Internal Revenue Code
of 1939, and chapters 2 and 21 of the Internal Revenue Code of
1954, less
CORRECTED SHEET
H. R. 10727-4
'(ii) the amounts estimated (pursuant to the method pre-
scribed by the Board of Trustees under paragraph (4) of this
subsection) by the Secretary of Health, Education, and Welfare
which will be expended, out of moneys made available for expend-
itures from the Trust Funds, during such three-month period
to cover the cost of carrying out the functions of the Department
of Health, Education, and Welfare, specified in section 232, which
relate to the administration of provisions of the Internal Revenue
Code of 1954 other than those referred to in clause (i).
Such payments shall be carried into the Treasury as the net amount of
repayments due the general fund account for reimbursement of
expenses incurred in connection with the administration of titles II,
XVI, and XVIII of this Act and subchapter E of chapter 1 and sub-
chapter A of chapter 9 of the Internal Revenue Code of 1939, and
chapters 2 and 21 of the Internal Revenue Code of 1954. A final
accounting of such payments for any fiscal year shall be made at the
earliest practicable date after the close thereof. There are hereby
authorized to be made available for expenditure, out of any or all of
the Trust Funds, such amounts as the Congress may deem appropriate
to pay the costs of the part of the administration of this title, title
XVI, and title XVIII for which the Secretary of Health, Education,
and Welfare is responsible and of carrying out the functions of the
Department of Health, Education, and Welfare, specified in section
232, which relate to the administration of provisions of the Internal
Revenue Code of 1954 other than those referred to in clause (i) of the
first sentence of this subparagraph.
'(B) After the close of each fiscal year the Secretary of Health,
Education, and Welfare shall determine the portion of the costs,
incurred during such fiscal year, of administration of this title, title
XVI, and title XVIII and of carrying out the functions of the Depart-
ment of Health, Education, and Welfare, specified in section 232, which
relate to the administration of provisions of the Internal Revenue Code
of 1954 (other than those referred to in clauses (i) of the first sentence
of subparagraph (A)), which should have been borne by the general
fund in the Treasury and the portion of such costs which should have
been borne by each of the Trust Funds; except that the determination
of the amounts to be borne by the general fund in the Treasury with
respect to expenditures incurred in carrying out such functions speci-
fied in section 232 shall be made pursuant to the method prescribed
by the Board of Trustees under paragraph (4) of this subsection. A fter
such determination has been made, the Secretary of Health, Education,
and Welfare shall certify to the Managing Trustee the amounts, if any,
which should be transferred from one to any of the other of such Trust
Funds and the amounts, if any, which should be transferred between
the Trust Funds (or one of the Trust Funds) and the general fund
in the Treasury, in order to insure that each of the Trust Funds and
the general fund in the Treasury have borne their proper share of
the costs, incurred during such fiscal year, for the part of the admin-
istration of this title, title XVI, and title XVIII for which the Secre-
tary of Health, Education, and Welfare is responsible and of carrying
out the functions of the Department of Health, Education, and
Welfare, specified in section 232, which relate to the administration of
provisions of the Internal Revenue Code of 1954 (other than those
referred to in clause (i) of the first sentence of subparagraph (A)).
The Managing Trustee is authorized and directed to transfer any such
amounts in accordance with any certification SO made."
CORRECTED
SHEET
H. R. 10727-5
(2) Subsection (g) of such section is further amended by adding at
the end thereof the following new paragraph:
'(4) The Board of Trustees shall prescribe before January 1, 1981,
the method of determining the costs which should be borne by the gen-
eral fund in the Treasury of carrying out the functions of the Depart-
ment of Health, Education, and Welfare, specified in section 232,
which relate to the administration of provisions of the Internal
Revenue Code of 1954 (other than those referred to in clause (i) of
the first sentence of paragraph (1) (A)). If at any time or times
thereafter the Boards of Trustees of such Trust Funds deem such
action advisable they may modify the method SO determined.".
(e) Any persons the Board of Trustees finds necessary to employ to
assist it in performing its functions under section 201 (g) (4) of the
Social Security Act may be appointed without regard to the civil
service or classification laws, shall be compensated, while SO employed
at rates fixed by the Board of Trustees, but not exceeding $100 per day,
and, while away from their homes or regular places of business, they
may be allowed traveling expenses, including per diem in lieu of sub-
sistence, as authorized by law for persons in the Government service
employed intermittently.
(f) The Secretary shall not make any estimates pursuant to section
201 (g) (1) (A) (ii) of the Social Security Act before the Board of
Trustees prescribes the method of determining costs as provided in
section 201 (g) (4) of such Act. The determinations pursuant to section
201 (g) (1) (B) of the Social Security Act with respect to the carrying
out of the functions of the Department of Health, Education, and Wel-
fare specified in section 232 of such Act, which relate to the administra-
tion of provisions of the Internal Revenue Code of 1954 (other than
those referred to in clause (i) of the first sentence of section 201 (g) (1)
(A) of the Social Security Act), during fiscal years ending before the
Board of Trustees prescribes the method of making such determina-
tions, shall be made after the Board of Trustees has prescribed such
method. The Secretary of Health, Education, and Welfare shall certify
to the Managing Trustee the amounts that should be transferred from
the general fund in the Treasury to the Trust Funds (as referred to
in section 201 (g) (1) (A) of the Social Security Act) to insure that the
general fund in the Treasury bears its proper share of the costs of
carrying out such functions in such fiscal years. The Managing Trustee
is authorized and directed to transfer any such amounts in accordance
with any certification SO made.
(g) Section 6103 of the Internal Revenue Code of 1954 is amended
by adding at the end thereof the following new subsection:
'(g) DISCLOSURE OF INFORMATION TO SECRETARY OF HEALTH, EDUCA-
TION, AND WELFARE.-The Secretary or his delegate is authorized to
make available to the Secretary of Health, Education, and Welfare
information returns filed pursuant to part III of subchapter A of
chapter 61 of subtitle F for the purpose of carrying out, in accordance
with an agreement entered into pursuant to section 232 of the Social
Security Act, an effective information return processing program.".
(h) (1) Section 230(b) (2) of the Social Security Act is amended to
read as follows:
(2) the ratio of (A) the average of the wages of all employees
as reported to the Secretary of the Treasury for the calendar
year preceding the calendar year in which the determination
under subsection (a) with respect to such particular calendar
H. R. 10727-6
year was made to (B) the average of the wages of all employees
as reported to the Secretary of the Treasury for the calendar year
1973 or, if later, the calendar year preceding the most recent calen-
dar year in which an increase in the contribution and benefit base
was enacted or a determination resulting in such an increase was
made under subsection (a),"
(2) Section 230(b) of such Act is further amended by adding at
the end thereof the following new sentence: "For purposes of this
subsection, the average of the wages for the calendar year 1978 (or
any prior calendar year) shall, in the case of determinations made
under subsection (a) prior to December 31, 1979, be deemed to be an
amount equal to 400 per centum of the amount of the average of the
taxable wages of all employees as reported to the Secretary for the
first calendar quarter of such calendar year."
(i) (1) Section 203 (f) (8) (B) (ii) of the Social Security Act as
amended-
(A) in clause (I) thereof, by striking out "taxable wages of all
employees as reported to the Secretary for the first calendar quar-
ter of the calendar year", and inserting in lieu thereof "wages of
all employees as reported to the Secretary of the Treasury for
the calendar year preceding the calendar year", and
(B) in clause (II) thereof, by striking out "taxable wages of
all employees as reported to the Secretary for the first calendar
quarter of 1973, or, if later, the first calendar quarter of the most
recent calendar year", and inserting in lieu thereof "wages of all
employees as reported to the Secretary of the Treasury for the
calendar year 1973, or, if later, the calendar year preceding the
most recent calendar year".
(2) Section 203 (f) (8) (B) (ii) of such Act is further amended by
adding at the end thereof the following new sentence "For purposes
of this clause (ii), the average of the wages for the calendar year 1978
(or any prior calendar year) shall, in the case of determinations made
under subparagraph (A) prior to December 31, 1979, be deemed to be
an amount equal to 400 per centum of the amount of the average of the
taxable wages of all employees as reported to the Secretary for the
first calendar quarter of such calendar year.".
(j) Section 224 (f) (2) of the Social Security Act is amended, in the
first sentence thereof, by-
(1) inserting "before the calendar year" immediately after
"calendar year", and
(2) inserting "before the calendar year" immediately after
"taxable year".
(k) Notwithstanding the provisions of section 218(i) of the Social
Security Act, nothing contained in the amendments made by the pre-
ceding provisions of this section shall be construed to authorize or
require the Secretary, in promulgating regulations or amendments
thereto under such section 218(i), substantially to modify the pro-
cedures, as in effect on December 1, 1975, for the reporting by States to
the Secretary of the wages of individuals covered by social security
pursuant to Federal-State agreements entered into pursuant to sec-
tion 218 of the Social Security Act.
SEC. 9. Section 1612(b) (2) of the Social Security Act (as enacted by
section 301 of the Social Security Amendments of 1972) is amended
(1) by inserting (A) immediately after (2), and (2) by adding at the
end thereof the following new subparagraph:
SHEET
H. R. 10727-7
"(B) Monthly (or other periodic) payments received by any indi-
vidual, under a program established prior to July 1, 1973, if such pay-
ments are made by the State of which the individual receiving such
payments is a resident, and if eligibility of any individual for such
payments is not based on need and is based solely on attainment of age
65 and duration of residence in such State by such individual.".
SEC. 10. (a) Section 7652(b) (3) of the Internal Revenue Code of
1954 is amended—
(1) by striking out the first sentence and inserting in lieu
thereof the following: "Beginning with the calendar quarter end-
ing September 30, 1975, and quarterly thereafter, the Secretary or
his delegate shall determine the amount of all taxes imposed by,
and collected during the quarter under, the internal revenue laws
of the United States on articles produced in the Virgin Islands and
transported to the United States.";
(2) by amending the first sentence of subparagraph (A) to read
as follows: "There shall be transferred and paid over, as soon as
practicable after the close of the quarter, to the Government of the
Virgin Islands from the amounts SO determined a sum equal to the
total amount of the revenue collected by the Government of the
Virgin Islands during the quarter, as certified by the Government
Comptroller of the Virgin Islands."; and
(3) by amending the sentence immediately following subpara-
graph (C) by striking out "at the beginning" and inserting in lieu
thereof the following: "with respect to the four calendar quarters
immediately preceding the beginning".
(b) The amendments made by paragraphs (1) and (2) of subsection
(a) shall apply with respect to all taxes imposed by, and collected after
June 30, 1975, under, the internal revenue laws of the United States on
articles produced in the Virgin Islands and transported to the United
States.
Speaker of the House of Representatives.
Vice President of the United States and
President of the Senate.
December 22, 1975
Dear Mr. Director:
The following bills were received at the White
House on December 22nd:
H.J. Res.
749
M.R. 83041
H.R. 11184
H.R. 4016
H.R. 9968
S.J. Bes. 157
H.R. 4287
H.R. 10035
S. 95
H.R. 4573
H.R. 10284
S. 322
H.R. 5900
H.R. 10355
8. 1469
H.R. 6673
H.R. 10727 S. 2327
Please let the President have reports and
recommendations as to the approval of these bills
as soon as possible.
Sincerely,
Robert D. Linder
Chief Executive Clerk
The Honorable James T. Lynn
Director
Office of Management and Budget
Washington, D. C.