Registration Requirements for Representatives to Receive Direct Payment of Approved Fees and Forms 1099-MISC

Yes; beginning January 1, 2007, the requirements a representative must meet for the Social Security Administration (SSA) to pay all or part of an approved fee directly to the representative from a claimant’s past-due benefits change.

• Before the change is effective, SSA pays all or part of the fee we approve to the representative from the claimant’s past-due benefits if the representative is an attorney or a non-attorney participant in SSA’s direct fee payment demonstration project. SSA also pays all or part of the fee a Federal court approves directly to an attorney from a claimant’s past-due benefits.

• When the change is effective, for SSA to make direct payment to an otherwise eligible attorney or non-attorney representative whom the claimant appointed after December 31, 2006, or to an attorney for whom a Federal court approves a fee after December 31, 2006, the representative must have registered to receive direct payment by doing both of the following:

• Submitting a completed Form SSA-1699, Request for Appointed Representative’s Direct Payment Information, online or by sending or delivering a completed paper form to the local Social Security office. This is a one-time submission. However, a representative must update the information maintained if his or her personal, professional, or business affiliation information changes because SSA’s automated claims systems use the information on the Appointed Representative Database to issue notices and fee payments.

AND

• Submitting a completed Form-SSA-1695, Identifying Information for Possible Direct Payment of Authorized Fees, in each instance of representation by sending or delivering a completed paper form to the local Social Security Office. This means that the representative must provide the SSA-1695 each time:
• he or she is appointed to represent a claimant before SSA; or
• a Federal court approves a fee, if the attorney did not register when the claim was pending before SSA.
  

SSA must expand the information a representative provides in order to receive direct fee payment for two reasons.

• Sections 6041(a) and 6045(f) of the Internal Revenue Code (IRC), as implemented by 26 CFR 1.6041-1, require SSA to issue a Form 1099-MISC to each representative who receives, by direct payment from SSA, aggregate fees of $600 or more in a calendar year.

• The Debt Collection Improvement Act of 1996 (DCIA), Pub. L. No. 104-134, mandates that each federal agency require persons “doing business with that agency” to provide the agency with his or her taxpayer identification number (TIN). 31 U.S.C. 7701. Under DCIA, a person is considered to be doing business with an agency if the person is assessed a fee by the agency. Because SSA is required by sections 206(d) and 1631(d)(2)(C) of the Social Security Act to assess a fee on attorneys and eligible non-attorneys each time that SSA directly pays representational fees to them, SSA is doing business with representatives whom we directly pay. The DCIA also requires that, when a federal agency disburses money, it must include the TIN on each certified voucher submitted to a disbursing official. For individuals, the TIN is generally the SSN. 26 U.S.C. 6109. This means that, when SSA certifies for direct payment or directly pays a fee to a representative, SSA must include the representative’s SSN on the payment voucher it submits to the Department of the Treasury.

To comply with these requirements, SSA requires that the representative provide us with his or her SSN before we implement a favorable administrative determination or decision, or before we act on a Federal court’s fee approval, as a condition for SSA to directly pay a fee or a portion of the fee to the representative from a claimant’s past-due benefits.

To afford a smooth transition, the additional requirements apply:

• For direct payment of an authorized fee for services provided before SSA, when the claimant signed an appointment of representative (SSA-1696-U4 or equivalent written statement) after December 31, 2006. When the claimant signed the appointment before January 1, 2007 and SSA effectuates the favorable determination or decision that yields past-due benefits after 2006, SSA will make direct payment if the criteria in effect before 2007 are met.

• For direct payment of an authorized fee for services provided before a Federal court, when the court authorized the fee after December 31, 2006. When the Federal court authorized the fee before January 1, 2007, SSA will make direct payment if the criteria in effect before 2007 are met.

An attorney or a non-attorney participating in the direct payment demonstration project may complete and file the SSA-1699 now, even if he or she is not representing a claimant at this time. A non-attorney who has applied to participate, but has not yet been found eligible, should register on receiving notice that SSA has determined he or she is eligible to participate in the demonstration project.

The Form SSA-1695, Identifying Information for Possible Direct Payment of Authorized Fees, is now available for use. The completed paper form should be sent or delivered to the local Social Security Office. In order to receive direct payment, an attorney or a non-attorney who is participating in the direct payment demonstration project may complete the SSA-1695 each time he or she is appointed to represent a claimant before SSA. An attorney who did not register when the claim was pending before SSA should complete the SSA- 1695 and submit it to the local Social Security Office each time the Federal court approves a fee.

Law firms, partnerships, corporations, and multi-member LLCs/LLPs (LLC–Limited Liability Company, LLP–Limited Liability Partnership) that have attorneys or non-attorney representatives or both as partners or employees may register voluntarily, in anticipation of receiving Forms 1099-MISC. The firm or other business entity may file a Form SSA-1694, Request for Business Entity Taxpayer Information, online or by sending or delivering a completed paper form to the local Social Security office.

Generally, pursuant to section 6041 of the IRC, SSA is required to issue a Form 1099-MISC to each representative who receives aggregate fees of $600 or more in a calendar year, with the total fee payments reflected in box 7 (non-employee compensation). However, the Internal Revenue Service (IRS) has provided SSA with special procedures for those situations where SSA makes payments to representatives who are employees or partners in a firm. Specifically, if SSA learns that a representative is acting as an employee or partner in a firm (therefore, the fee payments are income to the firm) and the firm has provided SSA with the name, address, and employer identification number of the firm (via the Form SSA-1694 registration process for firms), then SSA should issue two Forms 1099-MISC. Pursuant to section 6041 of the IRC, SSA should issue a Form 1099-MISC to the firm with aggregate payments made to the firm's associates in box 7 (non-employee compensation). In addition, pursuant to section 6045(f) of the IRC, SSA should also issue a Form 1099-MISC to each of the individual representatives (i.e., employees or partners) reporting their individual aggregate payments in box 14 (gross proceeds paid to an attorney).

Section 406 of Public Law 106-170, the Ticket to Work and Work Incentives Improvement Act of 1999, established an assessment for the services required by SSA to determine and certify payments to representatives under the section 206(d) of the Social Security Act. This assessment is currently deducted from each fee payment to representatives. However, pursuant to 1.6041-1(f) of the IRC regulations, the IRS considers the gross amount (before the assessment) as the amount that should be reported on the Form 1099-MISC. The aggregate assessments may be taken as a business expense as appropriate.

Direct deposit of fee payments for both title II claims and title XVI claims is available for representatives who have completed both steps in the registration process and requested fee payment by electronic fund transfer.

Key events are listed below by month.

In its Federal Register notice published October 2, 2006 (71 Fed. Reg. 58043), SSA announced the new registration requirements for representatives to receive direct payment of fees approved for services provided before the Social Security Administration or a Federal Court and Forms 1099–MISC.

Federal Register/Vol.71, No. 190/Monday, October 2, 2006/Notices
    [View .pdf version ]   [View .txt version ]

The fact sheet , entitled [ “ New Registration Requirements for Direct Payment to Representatives ” ] is available in both electronic and paper format. Information on how to order multiple copies can be found on the Social Security Online [publications website] .