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Now on p. 41.

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We would like to take this opportunity to reiterate some facts that were expressed in previous correspondence with GAO during the investigation which resulted in this draft report. We are not aware of any indication of an intent on the part of Congress, either in statute or legislative history, to impose on the IRS the responsibility for ensuring the accuracy of individual wage records maintained by SSA or for ensuring the proper crediting of the Social Security trust funds. The law appears to specifically contemplate that IRS and SSA would divide responsibility for reconciliation of missing and discrepant wage reports in a manner that would provide each agency with the information it requires. We believe that the current cooperative agreement fulfills the intent of Public Law 94-202.

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Comments From the Internal Revenue Service

Now on pp. 43 and 46.

Now on pp. 33-34.

IRS COMMENTS ON GAO DRAFT REPORT ENTITLED
"SOCIAL SECURITY: MORE MUST BE DONE TO
CREDIT EARNINGS TO WORKERS' ACCOUNTS"

Recommend that the Commissioner of Internal Revenue and the
Commissioner of Social Security work together to:

Recommendation: Revise the SSA-IRS interagency agreement to
specify what will be reconciled, and who will perform and
complete the reconciliation.

Comment: We agree with GAO and will work with SSA to review the agreement and refine it as appropriate.

Recommendation: Develop and pursue a strategy for working the backlogged and newer cases, which emphasizes contacting employers (1) who have multiple years of earnings differences and (2) for which the IRS record retention period (4 years) has already lapsed or will soon lapse.

Comment: We agree with GAO and will support SSA, as practical, in their initiatives to reconcile the wage reports. Recommendation: Develop and submit a plan of action by September 30, 1987, to the congressional committees who have oversight and resource responsibilities for these agencies, speficying (1) a time-phased schedule for eliminating the backlog and resolving new discrepancies and (2) any additional resources that will be required.

Comment: We will work with SSA to accomplish this by December 31, 1987, as noted on page 48 of the report, which we believe is a more realistic deadline.

Recommendation: Determine the major causes that result in SSA's and IRS recording different earnings totals, and take corrective action to prevent their occurrence or reduce their frequency.

Comment: We will pursue this recommendation with SSA. Recommend that the Commissioner of Internal Revenue:

Recommendation: Reassess the decision to further delay providing earnings information to SSA for the self-employed individuals whose 1979 self-employed earnings data SSA needs to ensure the accuracy of benefit payments.

Comment: We will look at the feasibility of this recommendation. However, as the report notes (page 34) on March 25, 1987, we indicated to GAO that the earliest we could commit to this work would be sometime in late 1988. While we agree that this is an important concern, our computer resources will be concentrated on implementing the significant changes required by the Tax Reform Act of 1986.

Appendix III

SSA Response to GAO Inquiry of June 11, 1986

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SSA Response to GAO Inquiry of June
11, 1986

RESPONSE OF THE SOCIAL SECURITY ADMINISTRATION TO THE GENERAL
ACCOUNTING OFFICE LETTER OF INQUIRY ON THE INTERNAL REVENUE
SERVICE AND SOCIAL SECURITY ADMINISTRATION RECONCILIATION OF
WAGE REPORTS

General

This letter of inquiry raises many complex issues related to the reconciliation of wage reports and the impact of reconciliation (or the lack of reconciliation) on individual earnings records and trust fund accounting. The involvement of the General Accounting Office (GAO) in these issues should serve as a catalyst to hasten the resolution of problems inherent in this system that is jointly run yet separat ly funded.

The Social Security Administration (SSA) is committed to the reconciliation of wage reports. We have negotiated in good faith with the Internal Revenue Service (IRS) over the years to establish a workable process and to minimize any adverse impact on Social Security earnings records and trust funds. As our comments below indicate, our concerns for the growing number of missing and discrepant wage reports accumulating since 1978 (the start of annual wage reporting) has recently prompted SSA to assume an expanded role in the reconciliation process. We believe that the reconciliation process can and must be stabilized. We will continue to work toward that end.

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