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beneficiaries lost nearly $17 a month. SSA or irs needs to contact about 2.5 million employers to try to determine whether SSA did not record some earnings for their employees. Further, although the actual number of individuals affected is unknown, GAO estimates that the records of 9.7 million individuals could have uncredited earnings.
This backlog of unreconciled employers' earnings reports resulted from SSA's failure to take action once irs said its resources precluded the reconciling of all reports. The contributing factors were SSA's organizational structure, which diffuses responsibility; the absence of leadership and a financial management focal point and perspective; and pressures to reduce staff.
SSA and IRS Have Not
SSA and its have not worked well together to resolve identified differ-
Contacts With Employers
SSA's contacts with employers to resolve the many report differences that its did not resolve resulted in recording about $3.6 billion in additional earnings for about 700,000 employees. However, about half the employers SSA attempted to contact did not respond to ssa's request for information. Further, neither Ssa nor irs has compiled sufficient data from contacts with employers to identify the causes of differences and the actions necessary to prevent or reduce future occurrences.
GAO, using a selection of current beneficiaries whom an SSA study had
SSA's Plans Do Not
SSA plans to contact employers to resolve 1 million of the backlogged earnings reports by the end of 1987. SSA also plans to exclude about 723,000 reports from review because it believes the earnings difference is too small to even try to resolve. Not investigating such reports, however, could mean the loss of about $9 in monthly benefits for low-income individuals. In addition, SSA's plans do not address how it will
deal with the remaining 1.7 million backlogged employer reports and the
Trust Funds Retain Tax
The differences in earnings recorded by the two agencies raise questions about the amount of tax revenue to which ssa is entitled. Since 1978, when the dual reporting system began, SSA has received tax revenues based on quarterly earnings reported to irs. Despite these interim transfers, the law requires the Secretary of Health and Human Services (HHS) to certify the earnings amounts SSA recorded because Social Security is entitled to retain tax revenues based on that amount only. The law does not specify a time by which earnings for a given year must be certified, and ssa has not certified any since 1978.
The absence of a high-level ssa focal point for financial management contributed to this matter's going unaddressed. As a result, SSA has recorded about $58.5 billion less in earnings than IRS as of March 1987; therefore, ssa may not have a legal basis for retaining a portion of the related tax money of $7.7 billion once it certifies the earnings it has
recorded. For 1978-82, years for which employers are no longer required to maintain wage data that could be needed for future reconciliation, SSA could have to return $2.8 billion to the Treasury, based on ssa's records as of March 1987.
The Congress should consider
requiring ssa and irs to submit a plan of action to appropriate congres-
GAO recommends that the Secretaries of his and the Treasury direct the
develop and pursue a strategy for examining the backlogged and newer
cases and report their plans to the Congress and • determine the major causes of recording differences in ssa and its earn
ings totals and take corrective action to prevent their occurrence or reduce their frequency.
GAO also makes a separate recommendation to the Secretary of his to direct the Commissioner of Social Security to require that the chief financial officer of ssa serve as a focal point for ensuring that the matters discussed in this report are addressed.
HHS and is generally agreed with gao's recommendations and said they would develop a plan to resolve the earnings crediting problem. His did not indicate when it would begin certifying earnings based on SSA records.