Federal Register / Vol. 62, No. 63 / Wednesday, April 2, 1997 / Rules and Regulations 15607

23SBREFA requires agencies to establish penalty

reduction policies for small entities, which the

Commission is doing in a companion release issued

today. Securities Act Rel. No. 7408 (Mar. 27, 1997).

24Securities Act Rel. No. 7342; 62 FR 4104 (Jan.

28, 1997) (codified at 17 CFR 202.8).

25The Commission generally will not publish or

make available materials:

(1) specifically authorized by executive order to

be kept secret or that are classified;

(2) related solely to internal personnel rules and

practices;

(3) specifically exempted from disclosure by

statute;

(4) containing privileged and confidential

personal financial information or disclosing trade

secrets;

(5) that are interagency or intra-agency

memoranda or communications, except those

which would routinely be made available in

litigation;

(6) that are records whose release would

constitute a clearly unwarranted invasion of

personal privacy;

(7) that are records compiled for law enforcement

purposes;

(8) contained in or related to any examination of

financial institutions; or

(9) that set forth geological or geophysical

information and data concerning wells.

17 CFR 200.80(b).

26The Public Reference Room charges for copies

of these materials.

27 5 U.S.C. 553.

28 5 U.S.C. 601–602.

and also will be referred to the Division

of Enforcement. Deficiency letters

describe problems found in an

examination, and direct the recipient to

correct the problems in a given period

of time.

The Division of Enforcement does not

provide any informal guidance to the

public as to compliance with the

securities laws. The Division

investigates possible violations of the

federal securities laws with a view

toward advising the Commission

whether civil or administrative action

should be initiated, and prosecutes any

such actions approved by the

Commission.23

III. Information Outside the Informal

Guidance Program

The Commission also provides

numerous sources for general

information that are outside the

informal guidance program. A brief

description of these follows.

A. Municipal Securities Ombudsman

The Municipal Securities

Ombudsman, in the Office of Municipal

Securities, assists municipal securities

issuers in obtaining information from

Commission staff. The telephone

number for the Municipal Securities

Ombudsman is 202–942–7300. The email address is oms@sec.gov.

B. Commission Web Site

The Commission maintains a site on

the World Wide Web at http://

www.sec.gov. This Web site contains

brochures, news, and information about

the Commission, including a list of

Commission Internet mailboxes at

htpp://www.sec.gov/asec/mailboxes.

The Commission also provides access to

its electronic filing database, known as

EDGAR, through the Web site. The

EDGAR database includes most recently

filed registration statements, periodic

reports and other disclosure documents

filed with the Commission. The Web

site also includes a page that contains

information of special interest to small

businesses, and a list of pending and

completed Commission rulemakings of

particular relevance to small businesses.

C. General Publications and Information

on Request

The Commission makes available a

variety of publications and resources for

information about the Commission and

the federal securities laws. On January

28, 1997, the Commission designated

many of these publications as small

business compliance guides and

described how to obtain these

materials.24

D. General Information, Filings and

Releases on Request

The Commission’s Office of

Investment Education and Assistance

produces educational material and

programs for the public that describe

preventive measures investors can take

to protect their investments from fraud

and abuse. Members of the public may

reach this office at the Commission’s

toll-free number, 800-SEC–0330, to

obtain information on topics of current

interest and to obtain specific

publications. Members of the public

also may telephone the Public Reference

Room at 202–942–8090, or write to the

Public Reference Room at the Securities

and Exchange Commission, 450 Fifth

Street, N.W., Washington D.C. 20549 to

obtain non-confidential documents from

the Commission.25 Information available

from the Public Reference Room

includes copies of Commission

opinions, statements of policy adopted

by the Commission, certain staff

manuals and instructions, indices of

opinions and statements of policy,

required filings with the Commission

that are not confidential, requests or

petitions for a change in Commission

rules, no-action and interpretive letters,

exemptions from Commission

regulation (when publicly available),

transcripts of public proceedings, and

Commission reports to Congress.26 Some

of these items also may be retrieved

from the Commission’s Web site.

IV. Regulatory Requirements

The Commission’s informal guidance

program is not an agency rule and,

therefore, the provisions of the

Administrative Procedure Act (‘‘APA’’)

regarding notice of proposed

rulemaking, opportunities for public

participation, and prior publication are

not applicable.27 Similarly, the

provisions of the Regulatory Flexibility

Act, which apply only when notice and

comment are required by the APA or

another statute, are not applicable.28

Dated: March 27, 1997.

By the Commission.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–8359 Filed 4–1–97; 8:45 am]

BILLING CODE 8010–01–P

SOCIAL SECURITY ADMINISTRATION

20 CFR Part 404

[Regulations No. 4]

RIN 0960–AE44

Federal Old-Age, Survivors and

Disability Insurance; Report of

Earnings Under the Social Security

Earnings Test

AGENCY: Social Security Administration.

ACTION: Final rule.

SUMMARY: This final rule amends our

regulations regarding reports of earnings

to the Social Security Administration

(SSA) required of beneficiaries who

work and earn more than the applicable

exempt amount. Beneficiaries under age

70, who work and earn more than the

applicable exempt amount, are required

by law to report their earnings to SSA

within three months and 15 days

following the close of their tax year

(usually April 15). As a result of our

ongoing efforts both to improve

customer service and to reduce the

public’s paperwork burden, we are

changing our regulations to state that we

can accept the W–2 report filed by the

employer with SSA, and/or the selfemployment income tax return filed by

the beneficiary with the Internal

Revenue Service (IRS), as the report of

earnings. We will use the information

(wages and net earnings from selfemployment) contained in those reports

together with other pertinent

information to adjust benefits under the

earnings test.

DATES: This final rule is effective April

2, 1997.
15608 Federal Register / Vol. 62, No. 63 / Wednesday, April 2, 1997 / Rules and Regulations

FOR FURTHER INFORMATION CONTACT:

Robert Augustine, Division of

Regulations and Rulings, Social Security

Administration, 6401 Security Blvd.,

Baltimore, MD 21235, (410) 966–5121.

For information on eligibility, claiming

benefits, or coverage of earnings, call

our national toll-free number, 1–800–

772–1213.

SUPPLEMENTARY INFORMATION: Under the

Social Security earnings test set out in

section 203 of the Social Security Act

(the Act), benefits are reduced if the

annual earnings of a beneficiary

(receiving other than disability benefits),

under age 70, exceed certain exempt

amounts. The exempt amounts are

established by law. Individuals who are

entitled to a monthly benefit (other than

a disability benefit) during the year and

who earn over the exempt amount are

required to file a report of earnings with

the SSA within three months and 15

days following the close of their tax year

(usually April 15). The reports may be

filed on a form prescribed by SSA, or in

person, or by telephone. The report may

be filed by someone other than the

beneficiary, provided the report

contains the required information.

Failure to file a report as required will

result in a monetary penalty, unless we

find that there was good cause for filing

late. There are 330,833 public reporting

burden hours associated with the

completion and filing of these annual

earnings reports.

Working beneficiaries are also

required to report their income to the

IRS during the same time period. SSA

receives and processes W–2 information

from employers. We also receive limited

information from IRS from individual

self-employment income tax returns that

are filed. Wages and net-earnings from

self-employment are ‘‘posted’’ to

individual earnings records as part of

our mission to maintain accurate

earnings records for benefit payment.

Until recently, we have been unable to

use the earnings information we receive

from W–2 forms and self-employment

tax returns as the annual report because

it took several years for SSA to receive

and process the earnings information

from the W–2 forms and the tax returns.

For that reason, we provided in

§ 404.452(b) of our regulations that the

filing of tax returns with the IRS was not

such a report as is required to be filed

for the annual earnings test, even where

the tax returns showed the same wages

and net earnings from self-employment

that must be reported to us for purposes

of the annual earnings test. Although

SSA was unable to use earnings

information from W–2 forms and selfemployment tax returns to adjust

benefits on a timely basis, we have

traditionally used this information as a

check to ensure beneficiary compliance

with the reporting requirements of the

annual earnings test.

Recent improvements in employer

reporting practices and in SSA’s Annual

Wage Reporting (AWR) process have

made it feasible and desirable for SSA

to change its process for obtaining

earnings information from working

beneficiaries. For the majority of

beneficiaries, information from the W–

2 report and/or the self-employment tax

return is now processed quickly enough

that it is sufficient to serve as the

‘‘annual report’’ without need for

further action by the beneficiary.

Therefore, as part of the ‘‘reinventing

government’’ initiative and in order to

reduce the reporting burden on the

public, improve customer service and

save administrative costs, we are

revising § 404.452 to state that the form

W–2 filed by the employer with SSA

and/or the self-employment income tax

return filed by beneficiaries with IRS

may serve as the annual report of

earnings. Because of this change, SSA

will no longer print and mail Annual

Report of Earnings forms. For most

beneficiaries, the process will be totally

automated, with SSA receiving and

processing earnings information

reported for tax purposes and using that

information in conjunction with other

relevant information to adjust the Social

Security benefits payable accordingly.

Certain situations will require more

information than is contained on the

form W–2 and self-employment income

tax return. When these situations occur,

a beneficiary will still have to contact

SSA to provide the information in order

to ensure the correct amount of benefits

are paid, unless the information was

otherwise provided to us. In addition,

some beneficiaries may wish to file a

report directly with SSA, in order to

have their benefits adjusted sooner.

(Most adjustments now occur during the

period February through May, based on

reports filed directly with us, but would

take place June through October if based

on reports filed through IRS). In these

instances, we will accept a report of

earnings in writing, in person, or over

the telephone, from beneficiaries who

still need or wish to file a report.

For example, under IRS regulations,

wages are reported on forms W–2 for the

year in which they are paid. Under the

Social Security earnings test, wages are

counted for the year in which services

are performed. Therefore, if the form W–

2 shows wages that were earned in a

year or years prior to the year for which

the report is made, e.g., deferred

compensation, the beneficiary will need

to report to us the correct amount of

earnings for the year reported.

There is a similar provision for the

self-employed (applicable to years after

the initial year of entitlement) that may

require contact when no services have

been performed in the year for which

net earnings from self-employment are

reported. Furthermore, in the year in

which the monthly earnings test applies

(frequently the year of retirement), a

beneficiary who has not already done so

will need to provide monthly earnings

information to SSA that cannot be

discerned from the form W–2 or the selfemployment income tax return.

Additional examples of situations

where other pertinent information must

be provided are:

• The beneficiary earned wages above

the exempt amount and also had a net

loss from self-employment;

• There were wages reported on a W–

2 that will be included on a selfemployment tax return (e.g., ministers

and certain church workers);

• The beneficiary is self-employed

and reports earnings on a fiscal year

basis which is not the calendar year;

• The beneficiary had Federal

agricultural program payments or

income from carry-over crops that is

included on the SE return;

• The beneficiary estimated earnings

over the exempt amount and some

benefits were withheld, but there were

no earnings for the year, i.e., no wages

reported, no self-employment.

SSA already has methods of collecting

some of the supplemental information

needed to correctly adjust benefits

under the earnings test when that

information is needed. Much of the

information can be gathered in the

initial claims process. We also work

with employers and payroll groups to

have them report directly to us certain

payments that should not be counted

under the earnings test. We will

continue to use these methods as well

as develop other means to obtain

supplemental information needed to

correctly adjust benefits without a

separate report of earnings from the

beneficiary. We will provide an

explanation of the process during the

claims interview, and we will provide

written information through our public

information materials that will allow

beneficiaries to understand what

earnings should be counted under the

earnings test and the situations in which

we would need additional information.

When we adjust benefits based on the

earnings posted to the beneficiary’s

record, we will, in our notice to the

beneficiary, provide full information

regarding the earnings that we used and

the situations in which those earnings
Federal Register / Vol. 62, No. 63 / Wednesday, April 2, 1997 / Rules and Regulations 15609

may not be correct. This will ensure that

beneficiaries have full knowledge of our

actions. Our notice will also tell

beneficiaries how to obtain a

reconsideration of our determination if

they feel we were wrong, and will

advise them of their responsibility to

give us any further information that

could be pertinent to their benefit

adjustment.

It should be noted that we are not

revising our regulations regarding

extension of time for filing a report

(§ 404.452(f)). The deadline for filing

employer reports (W–2 forms) is well

within the timeframes for required

annual reports. In relying on these, as

well as the SE tax return information,

SSA will assume that posted earnings

are based on timely filed reports.

However, when a beneficiary requests

an extension of time from IRS for filing

a self-employment tax return, the

beneficiary must either file a timely

report of earnings with SSA, or request

an extension of time for filing such a

report from SSA. An extension granted

by IRS will not be considered an

extension of time granted by SSA.

This change in our rules will result in

improved service to our beneficiaries.

First, this final rule will reduce the

burden associated with the double filing

of information with both SSA and IRS.

Second, SSA will be able to shift

resources devoted to the solicitation and

processing of reports from beneficiaries

under the current annual report process

to other priority workloads, such as

processing claims for benefits and

responding to telephone inquiries.

Finally, this rule supports the

President’s request in his remarks on

May 22, 1995 on signing the Paperwork

Reduction Act of 1995, that agencies

review their regulations with the goal of

reducing by half the frequency of

reports required from citizens. This final

rule will eliminate the annual report of

earnings form and the need for most

working beneficiaries to file a separate

report of earnings with SSA, resulting in

a savings of up to 330,833 public burden

hours each year.

We are also revising paragraphs (a)(1)

and (a)(2) of § 404.452 by changing age

72 to age 70. These revisions reflect the

statutory change in the Social Security

Amendments of 1977 that reduced from

age 72 to 70, the age at which

beneficiaries become exempt from the

annual earnings test. This change was

originally scheduled to take effect in

1982 but, due to a provision in the

Omnibus Budget Reconciliation Act of

1981, it did not become effective until

1983. Since the statutory provisions

were self-implementing, we exempted

working beneficiaries age 70 and over

from the annual earnings test beginning

in 1983. However, we have not

previously updated this regulation to

take account of this statutory change.

This regulation was published in the

Federal Register (62 FR 349) as a notice

of proposed rulemaking (NPRM) on

January 3, 1997. Interested parties were

given 30 days to submit comments. No

public comments were received. We are,

therefore, publishing this final rule with

no changes from the proposed rule.

Regulatory Procedures

Pursuant to section 702(a)(5) of the

Act, 42 U.S.C. 902(a)(5), as amended by

section 102 of Public Law 103–296, SSA

follows the Administrative Procedure

Act (APA) rulemaking procedures

specified in 5 U.S.C. 553 in the

development of its regulations. The

APA provides in 5 U.S.C. 553(d)(1) for

an exception to the requirement for a

30-day delay in the effective date of a

substantive rule if the rule grants or

recognizes an exemption or relieves a

restriction. As indicated above, this

final rule will eliminate the annual

report of earnings form and exempt

most working beneficiaries from the

requirement to file a separate report of

earnings with SSA. This will result in

a savings of up to 330,833 public

reporting burden hours each year and,

by allowing us to divert scarce resources

to other priority workloads, enable us to

provide better overall service to the

public. In light of these considerations,

we find that it is in the public interest

to make this rule effective upon

publication.

Executive Order 12866

The Office of Management and Budget

(OMB) has reviewed this rule and

determined that it meets the criteria for

a significant regulatory action within

the meaning of Executive Order 12866.

As indicated earlier in this preamble,

failure to file a timely report of earnings

will result in a monetary penalty, unless

we find that there was good cause for

filing late. Since, for most beneficiaries,

the W–2 and/or self-employment tax

return information will be considered

the annual report of earnings required

by section 203(f) of the Act, we

anticipate that there will be very few

penalties imposed on beneficiaries for

failing to report their earnings. The loss

of penalty dollars is estimated to be

$60–75 million for the 5-year period of

fiscal years 1997 through 2001.

However, we believe that the loss of

penalty income should not be given

undue consideration because this

income results from beneficiaries’

failure to timely report their earnings to

SSA. It has always been the goal of SSA

to achieve maximum reporting

compliance and if this goal was

achieved, there would be no penalties

imposed. Furthermore, we believe that

the loss of penalty revenue is more than

offset by the benefits that both the

public and SSA will realize under this

rule. These benefits include the fact that

up to 1.3 million beneficiaries will no

longer be required to complete the

annual report of earnings forms

resulting in a reduction in the public

reporting burden of up to 330,833 hours.

In addition, this initiative will shift the

annual report workload from SSA’s

peak workload period (January through

March) until later in the year and thus,

will allow SSA to divert scarce

resources to other priority workloads,

such as processing claims for benefits

and responding to telephone inquiries,

resulting in better overall service to the

public.

Administrative savings for this

initiative are estimated to be 540

workyears and $23.2 million for fiscal

years 1997 through 2001.

Regulatory Flexibility Act

We certify that this final rule will not

have a significant economic impact on

a substantial number of small entities

since it affects only individuals.

Therefore, a regulatory flexibility

analysis as provided in Public Law 96–

354, the Regulatory Flexibility Act, is

not required.

Paperwork Reduction Act

This final regulation will impose no

new reporting or recordkeeping

requirements requiring OMB clearance.

As indicated in the NPRM, we estimate

that this new Annual Report of Earnings

process will reduce the annual public

reporting burden by up to 330,833

hours. This is the annual reporting

burden associated with the completion

and filing of forms SSA–777 and SSA–

7770 (OMB Control Number 0960–

0057). Although this final regulation

will eliminate those forms, SSA will

continue to collect earnings

information, through a number of other

collection instruments already approved

by OMB. In most cases, we will obtain

this information through forms W–2 and

schedule SEs approved for use by IRS.

In those cases where additional

information is required, we expect to

obtain that information during the

initial claims interview through forms

approved for use by SSA (primarily the

SSA–1 (Application for Retirement

Benefits; OMB Approval Number 0960–

0007) and the SSA–795 (Statement of

Claimant or Other Person; OMB

Approval Number 0960–0045)). In

addition, OMB has approved a new
15610 Federal Register / Vol. 62, No. 63 / Wednesday, April 2, 1997 / Rules and Regulations

form, SSA–131, OMB Number 0960–

0566, to collect the additional

information needed to correctly adjust

benefits in special wage payment

situations.

(Catalog of Federal Domestic Assistance

Program Nos. 96.001 Social Security—

Disability Insurance; 96.002 Social

Security—Retirement Insurance; 96.004

Social Security—Survivors Insurance)

List of Subjects in 20 CFR Part 404

Administrative practice and

procedure, Blind, Disability benefits,

Old-Age, Survivors and Disability

Insurance, Reporting and recordkeeping

requirements, Social security.

Dated: March 10, 1997.

John J. Callahan,

Acting Commissioner of Social Security.

For the reasons set out in the

preamble, part 404 of chapter III of title

20 of the Code of Federal Regulations is

amended as follows:

PART 404—FEDERAL OLD-AGE,

SURVIVORS AND DISABILITY

INSURANCE

1. The authority citation for subpart E

of part 404 continues to read as follows:

Authority: Secs. 202, 203, 204 (a) and (e),

205 (a) and (c), 222(b), 223(e), 224, 225, and

702(a)(5) of the Social Security Act (42 U.S.C.

402, 403, 404 (a) and (e), 405 (a) and (c),

422(b), 423(e), 424a, 425, and 902(a)(5)).

2. Section 404.452 is amended by

revising paragraphs (a)(1) and (a)(2),

revising the last sentence of paragraph

(b), and revising paragraph (d) to read as

follows:

§ 404.452 Reports to Social Security

Administration of earnings; wages; net

earnings from self-employment.

(a) * * *

(1) The individual attained the age of

70 in or before the first month of

entitlement to benefits in the taxable

year, or

(2) The individual’s benefit payments

were suspended under the provisions

described in § 404.456 for all months in

a taxable year in which the individual

was entitled to benefits and was under

age 70.

(b) * * * The filing of an income tax

return or a form W–2 with the Internal

Revenue Service may serve as the report

required to be filed under the provisions

of this section where the income tax

return or form W–2 shows the same

wages and net earnings from selfemployment that must be reported to

the Administration under this section.

* * * * *

(d) Information to be provided to us.

The report should show the name and

social security claim number of the

beneficiary about whom the report is

made; identify the taxable year for

which the report is made; show the total

amount of wages for which the

beneficiary rendered services during the

taxable year (if applicable), the amount

of net earnings from self-employment

for such year (if applicable); and show

the name and address of the individual

making the report. To overcome the

presumption that the beneficiary

rendered services for wages exceeding

the allowable amount and rendered

substantial services in self-employment

in each month (see § 404.435), we must

also be told the specific months in

which the beneficiary did not render

services in employment for wages of

more than the allowable amount (as

described in § 404.435) and did not

render substantial services in selfemployment (as described in §§ 404.446

and 404.447).

* * * * *

[FR Doc. 97–8271 Filed 4–1–97; 8:45 am]

BILLING CODE 4190–29–P

DEPARTMENT OF THE INTERIOR

Bureau of Indian Affairs

25 CFR Part 12

RIN 1076–AD56

Indian Country Law Enforcement

AGENCY: Bureau of Indian Affairs,

Interior.

ACTION: Final rule.

SUMMARY: The Bureau of Indian Affairs

is establishing standards for Bureau of

Indian Affairs (BIA) and tribal law

enforcement programs receiving Federal

funding or performing duties using a

Federal law enforcement commission.

These regulations will ensure that law

enforcement, crime prevention and

recidivism reduction programs are

implemented and maintained in a

constitutionally sound manner and

comply with the Indian Law

Enforcement Reform Act of 1990, Public

Law 101–379 (25 U.S.C. 2801 et seq.).

EFFECTIVE DATE: These regulations take

effect on May 2, 1997.

FOR FURTHER INFORMATION CONTACT: The

Director, Office of Law Enforcement

Services at (505) 248–7937.

SUPPLEMENTARY INFORMATION: The

authority to issue rules and regulations

is vested in the Secretary of the Interior

by 5 U.S.C. 301 and sections 463 and

465 of the Revised Statutes, 25 U.S.C. 2

and 9.

Indian Police and Detention

Standards regulations were published in

1975 and 1976, respectively, and have

not been updated. See 25 CFR Part 12.

In 1990, the Indian Law Enforcement

Reform Act (Pub. L. 101–379, 25 U.S.C.

2801 et seq.) specified changes for the

Bureau of Indian Affairs and tribal law

enforcement and detention programs to

be implemented as rules by the

Secretary of the Interior who was given

the overall responsibility for providing

or assisting in the provision of law

enforcement services in Indian country

as defined in 18 U.S.C. 1151. Law

enforcement appears in Part 12, and

Detention and Rehabilitation appears in

Part 10, Chapter I of Title 25 Code of

Federal Regulations.

The Office of Law Enforcement

Services, Bureau of Indian Affairs, is

updating and revising the Bureau of

Indian Affairs Manual (BIAM), and

accompanying operational handbooks

that provide policy, procedures,

guidelines and standards for all law

enforcement programs. The manual and

accompanying handbooks will be

available to program managers and

supervisors, the public, other agencies,

and law enforcement officers or

investigators. Self-governance tribes

with compacts or other tribal entities

with enforcement jurisdiction other

than the Bureau of Indian Affairs or

contracts are encouraged to use the

manuals and handbooks for guidance in

developing or maintaining their own

programs. The Indian Country Detention

Facilities and Programs manuals and

handbooks may be found in Chapter 69

Bureau of Indian Affairs Manual (BIAM)

including an inmate handbook for all

individuals who are incarcerated in a

BIA or tribal detention facility.

Review of Public Comments

The Nez Perce Tribe expressed several

concerns with the proposed rule, many

relating to their anticipated contracting

of their law enforcement program under

self-determination. This rule will not

change BIA’s relationship with a tribe or

any tribe’s ability to self-govern. This

rule implements the Indian Law

Enforcement Reform Act (Pub. L. 101–

379) and suggests minimal professional

standards for law enforcement officers.

Each of the Nez Perce Tribe’s

comments are addressed here:

The tribe believes the local

superintendent or chief law