not worked outside her home or in her husband's business prior to his death. The trucking operation as it exists today was described as a small business utilizing approximately eight trucks and employing five to seven drivers. Plaintiff testified that she continued to perform the duties described above until she was assured that her son could carry on the business without her assistance. She stated that her activities in connection with the business since 1971 have been insubstantial. She stated that she prepares the payroll, which takes one-half hour bi-weekly, that she pays some of the bills, which takes two to three hours per month, and that she signs the annual contract. She stated that she does nothing more in connection with the operation of the business. Plaintiff testified that it was her son who determined that the net profits would accrue to plaintiff, in order to provide her with an income and to help support plaintiff's disabled daughter, hence the net income of the business is kept by her, while her son is paid bi-weekly according to a standard union wage rate. She further stated that she had considered her business relationship with her son as a "partnership," admittedly without any formal agreement. She considers herself retired from the operation of the business, particularly since her disabled daughter's injury which occurred approximately in August 1971. Plaintiff testified that, although in her opinion she had not been rendering substantial services to the business since before August 1971, she did not apply for retirement insurance benefits until August 1972, because she mistakenly thought that her high income from the business would prevent her from realizing benefits, that she did not realize prior to that time that the touchstone of eligibility for benefits as applied to her was the substantiality of her services to the company. VI Plaintiff's son, J. Kenneth Torrance, testified at the hearing that he worked for his father in the trucking business and that he knew the method of operation, except for the paper work, at the time of his father's death. He stated that plaintiff took over the business in her name, but that her role was centered on the clerical matters and that he did the hauling, negotiating of the contract, and hiring. He also stated that he did some of the paper work, such as the final billing and typing. He stated that, while he did not put any of his own money into the business at this time, neither had plaintiff, that is, any investment into the business came as a result of the conduct of the business itself. Mr. Torrance testified that before 1971, in addition to making up payrolls and paying all the bills, plaintiff "totalled the slips," which apparently refers to recording the items hauled in order to calculate the tonnage hauled and hence the amount to be billed. He stated that this procedure took approximately an hour per day, that is, assuming that the "slips" for a particular day were received on time. He further stated that until 1968 or 1969, his name was not on the company checks, therefore he had to have plaintiff write a check for everything that had to be paid or purchased in line with the business. When asked how many hours per month plaintiff spent involved in the operations of the company, he indicated in a conjecturing fashion approximately twenty hours per month, but then he finally stated that he "really" did not know. Mr. Torrance stated that the driver-employees came under the jurisdiction of the United Mine Workers in February 1971 thus the company's billing was changed from tonnage to hourly records, eliminating the necessity for keeping and totalling "slips." He said this means that he now does most of the record keeping. He further cited as examples of differences between what plaintiff did before 1971 and after, the fact that she no longer had anything to do with purchasing equipment, and his practice of now writing some of the checks for the company's bills and necessities. He stated that plaintiff was not required to remain at home in order to provide any services to the company and that she does not stand watch over the trucks parked on her property. He also stated that, in his opinion, the company-related activities of plaintiff had decreased over the years, initially after the settling of his father's estate, then again after the 1971 change-over to a different billing system. He stated that, in his opinion, plaintiff currently works less than fifteen hours a month in connection with company matters, that she only handles the payroll and some billing, and, confusingly, he agreed that these activities amount to four hours per month maximum. He stated that, in his opinion, she only does this in order to have something to do occasionally. The testimony of the long-time employee of the company, Gilliam King, is of little assistance. He stated that his contacts were with plaintiff's son, that he did not know who handled the responsibilities for billing, etc., that all he was certain of was that plaintiff signed the payroll checks from 1961 to date. He stated repeatedly that he was never at a vantage point which would permit him to testify to the extent of plaintiff's role in the company's operation. VII The relevant portions of plaintiff's statement on her August 15, 1972 application for retirement benefits merit citation: ... I own six trucks. . . . These trucks are parked and stored on My services consist of: I pay all bills and make up checks and pay all men for their services. My son drives a truck, keeps the time for the men, sends billing to the company and types and prepares all the reports. I sign all checks. I hire an accountant... . My son may make a bank deposit occasionally but most times I make it. I have between 6 and 7 full time truck drivers or helpers. Kenneth arranges for repairs and maintenance of the trucks. He makes decisions as to purchase and sale of trucks and equipment. Kenneth's name is on my business checking account and he is permitted to sign checks if I am not available. All men check with either my son or U. S. Steel as to needs of their services. . . . I do not average any more than 4 to 5 hours a week on the business . . . . My son Kenneth is paid the same wages daily as my other employees.... Kenneth assigns all work. I feel he spends 5 to 6 hours weekly in operating my business over and above his regular driving job. Total 48 hours. Kenneth recommends employees to me and we discuss the workers and I have the final authority of hiring, firing or rejecting. The court notes that this statement differs substantially from the testimony elicited at the hearing concerning plaintiff's services from the middle, if not the beginning of 1971. Indeed, the court must conclude that substantial confusion surrounds the character of plaintiff's services to the company upon an attempted reconciliation of the hearing testimony and the statements appearing on the various applications and reports which comprise this record. VIII Plaintiff's council attempts to justify the inconsistencies between the hearing testimony and plaintiff's statements on her applications by suggesting that all the evidence supports the notion that plaintiff gradually withdrew from the operations of the company. For example, counsel urges that the four-to-five hours per week plaintiff cited in her application as time devoted to company business is not inconsistent with the two-to-three hours per week plaintiff testified to at the hearing, precisely because plaintiff gradually withdrew from the company. Unfortunately, counsel's argument does not take into consideration that the statement as to services of four-to-five hours per week was made one year after the time period to which plaintiff ascribed services of only two-to-three hours per week at the hearing. While this court, following a de novo examination of the evidence possibily might have concluded that plaintiff had succeeded in rebutting the presumption set forth in section 205(f) (4) (A) of the Act, 42 U. S. C. § 405(f) (4) (A), that a person is engaged in self-employment until he establishes that he rendered no substantial services to any trade or business, it cannot conclude upon the evidence before it that the decision of the Secretary is not supported by substantial evidence. Accordingly, the Secretary's decision denying plaintiff's claim for social security benefits as determined by the administrative law judge must be affirmed. Evidence SECTION 205(c) (4) (A) (42 U.S.C. 405(c) (4) (A)) CONCLUSIVENESS OF EARNINGS RECORD AFTER EXPIRATION OF TIME LIMITATION-SELF-EMPLOYMENT INCOME 20 CFR 404.804 Ascherman v. Mathews, USDC, N.D. Ohio, C74-453 (3/30/76) SSR 76-32c The claimant, a 75-year-old self-employed attorney, had filed timely income tax returns based on a method which did not yield maximum creditable earnings. After becoming entitled to Social Security benefits, he filed amended tax returns in order to reflect maximum self-employment income which would result in a higher benefit rate. The amended returns covered a 5 year period, three of which were beyond the time limitation and thus barred to correction by section 205(c) of the Social Security Act. Held, after the time limitation following any year has expired, subject to very limited exceptions not pertinent here, the Secretary's records of self-employment income derived by an individual during any period of such year shall be conclusive evidence as to the earnings of such individual, in accordance with section 205(c) (4) (A) of the Social Security Act, as amended. BATTISTI, Chief Judge: The plaintiff, a 75-year-old, self-employed attorney is seeking to have his record of self-employment earnings for the years 1966, 1967 and 1968, as maintained by the defendant Secretary of Health, Education and Welfare for the purpose of determining Social Security benefits, changed to reflect amendments to his income tax returns for those years which he filed in 1972. In essence, he challenges the Secretary's refusal to increase his monthly Social Security benefits on the basis of his amended reports of earnings. The plaintiff has exhausted the available administrative remedies and invokes the jurisdiction of this court pursuant to 42 U.S.C. § 405(g). The matter comes before the court on the cross motions for summary judgment. The facts in the case are not in dispute and are set forth in detail in the opinion of the administrative judge. The case presents a single legal question: Do the records of the Secretary constitute conclusive proof as to the earnings of an individual on which Social Security benefits will be determined once the three year, three month and 15 day "time limitation" for amendment set forth in 42 U.S.C. § 405(c) (1) (B) has expired? The Secretary maintains that once the time limitation has passed in circumstances such as this case, 42 U.S.C. § 405(c) (4) (A)' makes his records conclusive on the issue of self-employment income derived by an individual for any particular period. The plaintiff candidly admits that "after considerable research there is little case law to support his position," but also asserts there is little case law contrary to his position. Accordingly, the plaintiff argues the facts. He points out that for the years in question his original report of self-employment income was based on a method of reporting which he was advised to follow by an Internal Revenue Service Agent. It is clear that this method resulted in less than the maximum self-employment income being credited to his Social Security earnings record. He claims that until 1972 he was not aware of his right to report his income in the fashion which he ultimately used in the amended returns with the resulting higher self-employment income figure. At that time he indicates that he was advised to file amended returns by a Social Security employee in the Cleveland area. He did so for the years 1966 through 19702 and I.R.S. accepted the additional Social Security tax proffered for all of these years. In the face of clear statutory language against his position, the plaintiff argues that "justice, equity and fairness" should prohibit one government agency from accepting and retaining his money, while another government agency denies him the benefits he anticipated receiving in return. Were this matter not plainly governed by a statutory provision, the plaintiff's equitable argument would have much appeal. However, Congress has acted with regard to this problem in a rational manner which it deemed necessary to the efficient administration of the Social Security system. It is unfortunate that the plaintiff's benefits are somewhat less than they might have been, but as one court noted when faced with a similar appeal: [T]he immensity of the problem of providing Social Security Prior to the expiration of the time limitation following any year the Secretary may, if it is brought to his attention that any entry of wages or self-employment income in his records for such year is erroneous or that any item of wages or self-employment income for such year has been omitted from such records, correct such entry or include such omitted item in his records, as the case may be. After the expiration of the time limitation following any year (A) the Secretary's record (with changes, if any, made pursuant to paragraph (5) of this subsection) of the amounts of wages paid to, and self-employment income derived by, an individual during any period in such year shall be conclusive for the purposes of this subchapter: 'Since the amended returns for 1969 and 1970 were filed within the applicable time limitation, the plaintiff's earnings record for those years has been corrected and there is no cause for dispute. 'The following are the additional amounts paid by the plaintiff with the filing of the amended returns for each year. 1966: $126.13 |