Federal Register / Vol. 70, No. 199 / Monday, October 17, 2005 / Proposed Rules 60251 

SOCIAL SECURITY ADMINISTRATION 

20 CFR Parts 404, 408 and 416 

RIN 0960–AG09 

Representative Payment Policies and 

Administrative Procedure for Imposing 

Penalties for False or Misleading 

Statements or Withholding of 

Information 

AGENCY: Social Security Administration 

(SSA). 

ACTION: Proposed rules. 

SUMMARY: We propose to amend our 

regulations on representative payment 

and on the administrative procedure for 

imposing penalties for false or 

misleading statements or withholding of 

information to reflect and implement 

certain provisions of the Social Security 

Protection Act of 2004 (SSPA), Public 

Law 108–203. The SSPA amends 

representative payment policies by 

providing additional safeguards for 

Social Security, Special Veterans and 

Supplemental Security Income 

beneficiaries served by representative 

payees. These changes include 

additional disqualifying factors for 

representative payee applicants, 

additional requirements for nongovernmental fee-for-service payees, 

authority to redirect delivery of benefit 

payments when a representative payee 

fails to provide required accountings, 

and authority to treat misused benefits 

as an overpayment to the representative 

payee. In addition, we propose to 

modify our rules to explain financial 

requirements for representative payees, 

and we also have made minor clarifying 

plain language changes. 

The SSPA also allows SSA to impose 

a penalty on any person who knowingly 

withholds information that is material 

for use in determining any right to or 

the amount of monthly benefits under 

titles II or XVI. The penalty is 

nonpayment for a specified number of 

months of benefits under title II that 

would otherwise be payable and 

ineligibility for the same period of time 

for cash benefits under title XVI 

(including State supplementary 

payments). 

DATES: To consider your comments, we 

must receive them no later than 

December 16, 2005. 

ADDRESSES: You may give us your 

comments by: using our Internet facility 

(i.e., Social Security Online) at http:// 

policy.ssa.gov/pnpublic.nsf/LawsRegs or 

the Federal eRulemaking Portal at 

http://www.regulations.gov; e-mail to 

regulations@ssa.gov; telefax to (410) 

966–2830; or letter to the Commissioner 

of Social Security, P.O. Box 17703, 

Baltimore, MD 21235–7703. You may 

also deliver them to the Office of 

Regulations, Social Security 

Administration, 100 Altmeyer Building, 

6401 Security Boulevard, Baltimore, MD 

21235–6401, between 8 a.m. and 4:30 

p.m. on regular business days. 

Comments are posted on our Internet 

site, or you may inspect them physically 

on regular business days by making 

arrangements with the contact person 

shown in this preamble. 

Electronic Version 

The electronic file of this document is 

available on the date of publication in 

the Federal Register on the Internet site 

for the Government Printing Office, 

http://www.gpoaccess.gov/fr/ 

index.html. It is also available on the 

Internet site for SSA (i.e., Social 

Security Online) at http:// 

policy.ssa.gov/pnpublic.nsf/LawsRegs. 

FOR FURTHER INFORMATION CONTACT: 

Regarding this Federal Register 

document—Robert Augustine, Social 

Insurance Specialist, Office of 

Regulations, Social Security 

Administration, 6401 Security 

Boulevard, Baltimore, MD 21235–6401, 

(410) 965–0020 or TTY (410) 966–5609; 

regarding eligibility or filing for 

benefits—our national toll-free number, 

1–800–772–1213 or TTY 1–800–325–

0778 or visit our Internet Web site, 

Social Security Online, at http:// 

www.socialsecurity.gov. 

SUPPLEMENTARY INFORMATION: 

Background 

Public Law 108–203, the SSPA, 

enacted March 2, 2004, requires a 

number of changes to representative 

payee policy and procedures. A 

representative payee is the person, 

agency, organization, or institution 

selected to receive and manage benefits 

on behalf of an incapable beneficiary. 

This includes a parent who is receiving 

benefits on behalf of his or her minor 

child. The SSPA also changes the rules 

for imposing penalties for false or 

misleading statements or for 

withholding information. 

Section 102 of the SSPA requires nongovernmental fee-for-service 

organizational representative payees to 

be both bonded and licensed, provided 

that licensing is available in the State. 

Section 103 of the SSPA expands the 

scope of disqualification to prohibit an 

individual from serving as a 

representative payee if he or she: (1) Has 

been convicted of any offense resulting 

in imprisonment for more than 1 year, 

unless the Commissioner of Social 

Security determines that an exception to 

this prohibition is appropriate; or (2) is 

fleeing to avoid prosecution, or custody 

or confinement after conviction of a 

crime that is a felony. 

Section 104 of the SSPA requires feefor-service representative payees to 

forfeit their fees for any months during 

which they misuse all or part of any 

beneficiary’s benefits. 

Section 105 of the SSPA makes nongovernmental representative payees 

liable for any benefits they misuse and 

requires SSA to treat such misused 

benefits as overpayments to the 

representative payees, subject to 

overpayment recovery authorities. 

Section 106 of the SSPA authorizes 

the Commissioner of Social Security to 

require a representative payee to receive 

benefits in person at a Social Security 

field office or a United States 

Government facility designated by the 

Social Security Administration if the 

payee fails to provide an annual 

accounting of benefits report or other 

requested information. 

In addition to the changes required by 

Public Law 108–203, we propose to 

clarify financial requirements for 

representative payees. Our current 

regulations specify that the interest 

earned on conserved funds belongs to 

the beneficiary. However, the 

regulations do not specifically address 

interest earned on current benefits or 

how current benefits should be held. We 

propose to specify that a representative 

payee must keep any payments received 

for the beneficiary separate from the 

representative payee’s own funds and 

ensure that the beneficiary’s ownership 

is shown unless the representative 

payee is the spouse or parent of the 

beneficiary and lives in the same 

household with the beneficiary. We also 

propose to provide for an exception to 

this requirement for State or local 

government agencies when we 

determine that their accounting 

structure sufficiently protects the 

beneficiaries’ interest in the benefits 

(i.e., accounting structure clearly 

identifies what funds belong to the 

beneficiary). We further propose to 

specify that the payee must treat any 

interest earned on current benefits as 

the beneficiary’s own property. In 

addition, we propose to clarify that the 

payee is responsible for making records 

available for review if requested by us. 

These records must be examined when 

conducting our site visits. 

Section 201(a)(2) of the SSPA 

amended section 1129A of the Act to 

help prevent and respond to fraud and 

abuse in SSA’s programs and 

operations. Prior to its amendment by 

the SSPA, section 1129A allowed SSA 

to impose a penalty against any person 

60252 Federal Register / Vol. 70, No. 199 / Monday, October 17, 2005 / Proposed Rules 

who makes, or causes to be made, a 

statement or representation of a material 

fact that the person knows or should 

know is false or misleading or that omits 

a material fact, or that the person makes 

with a knowing disregard for the truth. 

The statement must have been made for 

use in determining eligibility for or the 

amount of benefits under titles II or XVI. 

The penalty is nonpayment for 6, 12 or 

24 months of benefits under title II that 

would otherwise be payable to the 

person and ineligibility for the same 

period of time for cash benefits under 

title XVI (including State supplementary 

payments made by SSA according to 

§ 416.2005). 

Section 201(a)(2) amended section 

1129A to also allow SSA to impose this 

penalty against any person who 

withholds disclosure of information that 

is material for use in determining any 

right to or the amount of monthly 

benefits under titles II or XVI if the 

person knows, or should know, that the 

withholding of such disclosure is 

misleading. Prior to the enactment of 

section 201(a)(2), in order for a penalty 

to be imposed, the law required an 

affirmative act on the part of the 

individual of making a statement that 

omitted a material fact. 

This new penalty under section 

1129A of the Act will be effective with 

respect to violations committed after the 

date on which SSA implements the 

centralized computer file described in 

section 202 of the SSPA. This 

centralized computer file will 

electronically record information about 

changes in work status that a disability 

beneficiary (or representative) reports to 

SSA and is expected to be implemented 

in February 2006. 

Explanation of Proposed Changes on 

Representative Payment 

Because our regulations for 

representative payment under the title 

VIII program cross-reference the 

appropriate material in our title II 

representative payment rules, most of 

the changes we now propose to our title 

II representative payment regulations 

would also apply to title VIII. Where 

only a cross-reference to the title II rules 

would not be sufficient, we propose a 

specific rule for title VIII. 

We are proposing the following policy 

changes to our representative payment 

regulations: 

1. We propose to amend §§ 404.2022 

and 416.622 to explain that a person 

who is convicted of an offense resulting 

in imprisonment for more than 1 year 

may not serve as a representative payee. 

These sections also would explain that 

we may make an exception to this rule 

if the nature of the conviction poses no 

risk to the beneficiary and selection of 

the applicant is in the beneficiary’s best 

interest. In addition, these sections 

would explain that a person who is 

fleeing prosecution, custody or 

confinement for a crime, or an attempt 

to commit a crime that is a felony may 

not serve as a representative payee. If 

we identify a currently serving payee 

who is no longer qualified for this 

reason, we will allow them 10 days to 

respond to notification before making 

any payee change. 

2. We propose to amend §§ 404.2035 

and 416.635 to explain that a 

representative payee must keep any 

payments received for the beneficiary 

separate from the payee’s own funds 

and ensure the beneficiary’s ownership 

is shown unless the payee is the spouse 

or parent of the beneficiary and lives in 

the same household with the 

beneficiary. We also propose to provide 

for an exception to this requirement for 

State or local government agencies that 

use a different accounting structure. We 

would grant such an exception to a State 

or local government agency if we 

determine that its accounting structure 

sufficiently protects the beneficiaries’

interest in the benefits. Also, these 

sections would explain that the payee 

must treat any interest earned on 

current benefits as the beneficiary’s own 

property. 

3. We propose to amend §§ 404.2035 

and 416.635 to require representative 

payees to make available to us their 

records supporting their written 

accounting reports. We believe those 

records are essential to verify the 

written reports. 

4. We propose to amend existing 

§§ 404.2040a and 416.640a to require 

fee-for-service non-governmental 

community-based nonprofit 

organizational representative payees to 

be both bonded and licensed (provided 

that licensing is available in the State). 

The bond would have to be of a 

sufficient amount to repay any funds 

(current social security benefits and 

supplemental security income payments 

plus any conserved funds and interest) 

lost by the beneficiaries in the event of 

misuse or theft, and the license would 

have to be appropriate under the laws 

of the State for the type of services the 

organization provides. These bonding 

and licensing requirements would not 

apply to the title VIII program. In 

addition, these sections would explain 

that a fee-for-service representative 

payee must forfeit its fee for the months 

during which it misused benefits. 

5. We propose to amend §§ 404.2041 

and 416.641 to explain that a nongovernmental representative payee will 

be liable for any benefits it misuses and 

that SSA will treat the misused benefits 

as an overpayment to the representative 

payee, subject to overpayment recovery 

authorities. 

6. We propose to amend §§ 404.2065 

and 416.665 to explain that we may 

require a representative payee to receive 

benefits in person at a local Social 

Security field office or a United States 

Government facility designated by the 

Social Security Administration if the 

payee fails to provide an annual 

accounting of benefits or other 

requested information. We propose to 

make a similar amendment to § 408.665, 

but the benefits would be directed to a 

United States Government facility 

designated by the Social Security 

Administration. 

Explanation of Proposed Changes on 

Administrative Procedures for 

Imposing Administrative Penalties 

We propose to amend §§ 404.459 and 

416.1340 of our regulations by revising 

the heading and paragraphs (a) and (e) 

of each section to reflect that, as a result 

of section 201 of the SSPA, an 

individual will be subject to the penalty 

if he or she withholds information that 

is material for use in determining any 

right to or the amount of monthly 

benefits under title II or XVI if the 

person knows, or should know, that the 

withholding of the information is 

misleading. 

Clarity of These Regulations 

Executive Order 12866, as amended 

by Executive Order 13258, requires each 

agency to write all rules in plain 

language. In addition to comments you 

may have on the substance of these 

proposed rules, we also invite your 

comments on how to make these rules 

easier to understand. For example: 

• Have we organized the material to 

suit your needs? 

• Are the requirements in the rules 

clearly stated? 

• Do the rules contain technical 

language or jargon that is not clear? 

• Would a different format (grouping 

and order of sections, use of headings, 

paragraphing) make the rules easier to 

understand? 

• Would more (but shorter) sections 

be better? 

• Could we improve clarity by adding 

tables, lists, or diagrams? 

• What else could we do to make the 

rules easier to understand? 

Regulatory Procedures 

Executive Order 12866 

We have consulted with the Office of 

Management and Budget (OMB) and 

determined that these proposed rules 

Federal Register / Vol. 70, No. 199 / Monday, October 17, 2005 / Proposed Rules 60253 

meet the criteria for a significant 

regulatory action under Executive Order 

12866, as amended by Executive Order 

13258. Thus, the rules have been 

reviewed by OMB. 

Executive Order 13132 (Federalism) and 

the Unfunded Mandates Reform Act of 

1995 

We have reviewed the proposed rules 

for compliance with Executive Order 

13132 and the Unfunded Mandates 

Reform Act of 1995 (UMRA of 1995). 

We have determined that the proposed 

rules are not significant within the 

meaning of the UMRA of 1995 nor will 

they have any substantial direct effects 

on the States, on the relationship 

between the federal government and the 

States, or on the distribution of power 

and responsibilities among the various 

levels of government within the 

meaning of Executive Order 13132. 

The provision requiring a State 

license for certain qualified 

organizations seeking compensation for 

serving as representative payees affects 

a very small number of organizational 

payees and will not significantly impact 

the States. First, the total number of 

organizations seeking compensation is 

very small, approximately 800. There 

are a significant number of State or local 

government agencies within this group 

which we do not require to be licensed. 

Only the small number of remaining 

organizations (community-based 

nonprofit social service organizations) 

must seek State licensing. Second, such 

organizations should already have 

obtained the necessary license to be in 

compliance with State law. Therefore, 

the very small number of organizations 

seeking a State license will not 

significantly impact the States. 

Regulatory Flexibility Act 

We certify that these proposed rules 

will not have a significant economic 

impact on a substantial number of small 

entities. Therefore, a regulatory 

flexibility analysis, as provided for in 

the Regulatory Flexibility Act, as 

amended, is not required. 

Paperwork Reduction Act 

These proposed rules contain 

reporting requirements as shown in the 

table below. Where the public reporting 

burden is accounted for in Information 

Collection Requests for the various 

forms that the public uses to submit the 

information to SSA, a 1-hour 

placeholder burden is being assigned to 

the specific reporting requirement(s) 

contained in these rules; we are seeking 

clearance of these burdens because they 

were not considered during the 

clearance of the forms. 

Section 

Annual 

number of 

responses 

Frequency of 

response 

Average 

burden per 

response 

Estimated annual burden 

404.2035(d) ...................................................................................................... 550,000 1 .083 45,650 

404.2035(e); 404.2065; 408.665 ..................................................................... ........................ ........................ ........................ 1 

404.2035(f) ....................................................................................................... 5,500 1 .083 457 

416.635(d) ........................................................................................................ 300,000 1 .083 24,900 

416.635(e); 416.665 ........................................................................................ ........................ ........................ ........................ 1 

416.635(f) ......................................................................................................... 3,000 1 .083 250 

Total .......................................................................................................... 858,500 ........................ ........................ 71,257 

An Information Collection Request 

has been submitted to OMB. We are 

soliciting comments on the burden 

estimate; the need for the information; 

its practical utility; ways to enhance its 

quality, utility and clarity; and on ways 

to minimize the burden on respondents, 

including the use of automated 

collection techniques or other forms of 

information technology. Comments 

should be submitted and/or faxed to 

OMB and to the Social Security 

Administration at the following 

addresses/numbers: Office of 

Management and Budget, Attn: Desk 

Officer for SSA, Fax Number: 202–395–

6974. Social Security Administration, 

Attn: SSA Reports Clearance Officer, 

Rm: 1338 Annex Building, 6401 

Security Boulevard, Baltimore, MD 

21235–6401, Fax Number: 410–965–

6400. 

Comments can be received for up to 

60 days after publication of this notice 

and will be most useful if received 

within 30 days of publication. To 

receive a copy of the OMB clearance 

package, you may call the SSA Reports 

Clearance Officer on 410–965–0454. 

(Catalog of Federal Domestic Assistance 

Program Nos. 96.001, Social SecurityDisability Insurance; 96.002, Social SecurityRetirement Insurance; 96.004, Social 

Security-Survivors Insurance; 96.006, 

Supplemental Security Income; 96.020, 

Special Benefits for Certain World War II 

Veterans) 

List of Subjects 

20 CFR Part 404 

Administrative practice and 

procedure, Blind, Disability benefits, 

Old-Age, Survivors and Disability 

Insurance; Reporting and recordkeeping 

requirements, Social Security. 

20 CFR Part 408 

Administrative practice and 

procedure, Aged; Reporting and 

recordkeeping requirements, Social 

Security; Special Veterans benefits; 

Veterans. 

20 CFR Part 416 

Administrative practice and 

procedure, Aged, Blind, Disability 

benefits, Public assistance programs, 

Reporting and recordkeeping 

requirements, Supplemental security 

income (SSI). 

Dated: October 7, 2005. 

Jo Anne B. Barnhart, 

Commissioner of Social Security. 

For the reasons set out in the 

preamble, we propose to amend 

subparts E and U of part 404, subpart F 

of part 408, and subparts F and M of 

part 416 of Title 20 of the Code of 

Federal Regulations as follows: 

PART 404—FEDERAL OLD-AGE, 

SURVIVORS AND DISABILITY 

INSURANCE (1950– ) 

Subpart E—[Amended] 

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), 216(l), 223(e), 224, 225, 

702(a)(5), and 1129A of the Social Security 

Act (42 U.S.C. 402, 403, 404(a) and (e), 405(a) 

and (c), 416(l), 423(e), 424a, 425, 902(a)(5), 

1320a–8a) and 48 U.S.C. 1801. 

2. Amend § 404.459 by revising the 

heading and paragraphs (a) and (e) to 

read as follows: 

60254 Federal Register / Vol. 70, No. 199 / Monday, October 17, 2005 / Proposed Rules 

§ 404.459 Penalty for making false or 

misleading statements or withholding 

information. 

(a) When may SSA penalize me? You 

will be subject to a penalty if: 

(1) You make, or cause to be made, a 

statement or representation of a material 

fact, for use in determining any initial 

or continuing right to, or the amount of, 

monthly insurance benefits under title II 

or benefits or payments under title XVI, 

that you know or should know is false 

or misleading, or 

(2) You make a statement or 

representation of a material fact for use 

as described in paragraph (a)(1) of this 

section with knowing disregard for the 

truth, or 

(3) You omit from a statement or 

representation made for use as 

described in paragraph (a)(1) of this 

section, or otherwise withhold 

disclosure (for example, fail to come 

forward to notify SSA) of a fact which 

you know or should know is material to 

the determination of any initial or 

continuing right to, or the amount of, 

monthly insurance benefits under title II 

or benefits or payments under title XVI, 

if you know, or should know, that the 

statement or representation with such 

omission is false or misleading or that 

the withholding of such disclosure is 

misleading. 

* * * * * 

(e) How will SSA make its decision to 

penalize me? In order to impose a 

penalty on you, we must find that you 

knowingly (knew or should have known 

or acted with knowing disregard for the 

truth) made a false or misleading 

statement or omitted or failed to report 

a material fact if you knew, or should 

have known, that the omission or failure 

to disclose was misleading. We will 

base our decision to penalize you on the 

evidence and the reasonable inferences 

that can be drawn from that evidence, 

not on speculation or suspicion. Our 

decision to penalize you will be 

documented with the basis and 

rationale for that decision. In 

determining whether you knowingly 

made a false or misleading statement or 

omitted or failed to report a material fact 

so as to justify imposition of the 

penalty, we will consider all evidence 

in the record, including any physical, 

mental, educational, or linguistic 

limitations (including any lack of 

facility with the English language) 

which you may have had at the time. In 

determining whether you acted 

knowingly, we will also consider the 

significance of the false or misleading 

statement or omission or failure to 

disclose in terms of its likely impact on 

your benefits. 

* * * * * 

Subpart U—[Amended] 

3. The authority citation for subpart U 

of part 404 continues to read as follows: 

Authority: Secs. 205(a), (j), and (k), and 

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

405(a), (j), and (k), and 902(a)(5)). 

4. Amend § 404.2022 by redesignating 

paragraphs (b), (c) and (d) as paragraphs 

(d), (e) and (f) and adding new 

paragraphs (b) and (c) to read as follows: 

§ 404.2022 Who may not serve as a 

representative payee? 

* * * * * 

(b) Is fleeing to avoid prosecution, or 

custody or confinement after conviction 

of a crime, or an attempt to commit a 

crime, that is a felony under the laws of 

the place from which he/she flees (or, in 

jurisdictions that do not define crimes 

as felonies, is punishable by death or 

imprisonment for a term exceeding one 

year, regardless of the actual sentence 

imposed). If we identify a currently 

serving payee who is no longer qualified 

for this reason, we will allow them 10 

days to respond to notification before 

making any payee change. 

(c) Has been convicted of an offense 

resulting in imprisonment for more than 

1 year. However, we may make an 

exception to this prohibition, if the 

nature of the conviction is such that 

selection of the applicant poses no risk 

to the beneficiary and the exception is 

in the beneficiary’s best interest. 

* * * * * 

5. Revise § 404.2035 to read as 

follows: 

§ 404.2035 What are the responsibilities of 

your representative payee? 

A representative payee has a 

responsibility to—

(a) Use the benefits received on your 

behalf only for your use and benefit in 

a manner and for the purposes he or she 

determines, under the guidelines in this 

subpart, to be in your best interests. 

(b) Keep any benefits received on your 

behalf separate from his or her own 

funds and show your ownership of 

these benefits unless he or she is your 

spouse or natural or adoptive parent or 

stepparent and lives in the same 

household with you or is a State or local 

government agency for whom we have 

granted an exception to this 

requirement. 

(c) Treat any interest earned on the 

benefits as your property. 

(d) Notify us of any event or change 

in your circumstances that will affect 

the amount of benefits you receive, your 

right to receive benefits, or how you 

receive them; 

(e) Submit to us, upon our request, a 

written report accounting for the 

benefits received on your behalf, and 

make all supporting records available 

for review if requested by us; and 

(f) Notify us of any change in his or 

her circumstances that would affect 

performance of his/her payee 

responsibilities. 

6. Amend § 404.2040a by revising 

paragraph (a)(2), redesignating 

paragraph (g)(6) as (g)(7), and adding a 

new paragraph (g)(6) to read as follows: 

§ 404.2040a Compensation for qualified 

organizations serving as representative 

payees. 

* * * * * 

(a) * * * 

(2) Any community-based nonprofit 

social service organization founded for 

religious, charitable or social welfare 

purposes, which is tax exempt under 

section 501(c) of the Internal Revenue 

Code and which is bonded/insured to 

cover misuse and embezzlement by 

officers and employees and which is 

licensed in each State in which it serves 

as representative payee (if licensing is 

available in the State). The minimum 

amount of bonding or insurance 

coverage must equal the average 

monthly amount of social security 

payments received by the organization 

plus the amount of the beneficiaries’

conserved funds (i.e., beneficiaries’

saved social security benefits) plus 

interest on hand. For example, an 

organization that has conserved funds of 

$5,000 and receives an average of 

$12,000 a month in social security 

payments must be bonded/insured for a 

minimum of $17,000. The license must 

be appropriate under the laws of the 

State for the type of services the 

organization provides. An example of an 

appropriately licensed organization is a 

community mental health center 

holding a State license to provide 

community mental health services. 

* * * * * 

(g) * * * 

(6) Fees for services may not be taken 

from beneficiary benefits for the months 

for which the Commissioner or a court 

of competent jurisdiction determines 

that the representative payee misused 

benefits. Any fees collected for such 

months will be treated as a part of the 

beneficiary’s misused benefits. 

* * * * * 

7. Amend § 404.2041 by adding a new 

paragraph (f) to read as follows: 

Federal Register / Vol. 70, No. 199 / Monday, October 17, 2005 / Proposed Rules 60255 

§ 404.2041 Who is liable if your 

representative payee misuses your 

benefits? 

* * * * * 

(f) Any amounts that the 

representative payee misuses and does 

not refund will be treated as an 

overpayment to that representative 

payee. See subpart F of part 404. 

8. Amend § 404.2065 by revising the 

introductory text to read as follows: 

§ 404.2065 How does your representative 

payee account for the use of benefits? 

Your representative payee must 

account for the use of your benefits. We 

require written reports from your 

representative payee at least once a year 

(except for certain State institutions that 

participate in a separate onsite review 

program). We may verify how your 

representative payee used your benefits. 

Your representative payee should keep 

records of how benefits were used in 

order to make accounting reports and 

must make those records available upon 

our request. If your representative payee 

fails to provide an annual accounting of 

benefits or other required reports, we 

may require your payee to receive your 

benefits in person at the local Social 

Security field office or a United States 

Government facility designated by the 

Social Security Administration serving 

the area in which you reside. The 

decision to have your representative 

payee receive your benefits in person 

may be based on a variety of reasons. 

Some of these reasons may include the 

payee’s history of past performance or 

SSA’s past difficulty in contacting the 

payee. We may ask your representative 

payee to give us the following 

information: 

* * * * * 

PART 408—SPECIAL BENEFITS FOR 

CERTAIN WORLD WAR II VETERANS 

(SVB) 

Subpart F—[Amended] 

9. The authority citation for subpart F 

of part 408 continues to read as follows: 

Authority: Secs. 702(a)(5), 807, and 810 of 

the Social Security Act (42 U.S.C. 902(a)(5), 

1007, and 1010). 

10. Revise § 408.665 to read as 

follows: 

§ 408.665 How does your representative 

payee account for the use of your SVB 

benefits? 

Your representative payee must 

account for the use of your benefits. We 

require written reports from your 

representative payee at least once a year. 

We may verify how your representative 

payee used your benefits. Your 

representative payee should keep 

records of how benefits were used in 

order to provide accounting reports and 

must make those records available upon 

our request. If your representative payee 

fails to provide an annual accounting of 

benefits or other required report, we 

may require your payee to appear in 

person at a United States Government 

facility designated by the Social 

Security Administration serving the area 

in which you reside. The decision to 

have your representative payee receive 

your benefits in person may be based on 

a variety of reasons. Some of these 

reasons may include the payee’s history 

of past performance or SSA’s past 

difficulty in contacting the payee. We 

may ask your representative payee to 

give us the following information: 

(a) Where you lived during the 

accounting period; 

(b) Who made the decisions on how 

your benefits were spent or saved; 

(c) How your benefit payments were 

used; and 

(d) How much of your benefit 

payments were saved and how the 

savings were invested. 

PART 416—SUPPLEMENTAL 

SECURITY INCOME FOR THE AGED, 

BLIND AND DISABLED 

Subpart F—[Amended] 

11. The authority citation for subpart 

F continues to read as follows: 

Authority: Secs. 702(a)(5), 1631(a)(2) and 

(d)(1) of the Social Security Act (42 U.S.C. 

902(a)(5) and 1383(a)(2) and (d)(1)). 

12. Amend § 416.622 by redesignating 

paragraphs (b), (c) and (d) as paragraphs 

(d), (e) and (f) and adding new 

paragraphs (b) and (c) to read as follows: 

§ 416.622 Who may not serve as a 

representative payee? 

* * * * * 

(b) Is fleeing to avoid prosecution, or 

custody or confinement after conviction 

of a crime, or an attempt to commit a 

crime, that is a felony under the laws of 

the place from which he/she flees (or in 

jurisdictions that do not define crimes 

as felonies, is punishable by death or 

imprisonment for a term exceeding one 

year, regardless of the actual sentence 

imposed). If we identify a currently 

serving payee who is no longer qualified 

for this reason, we will allow them 10 

days to respond to notification before 

making any payee change. 

(c) Has been convicted of an offense 

resulting in imprisonment for more than 

1 year. However, we may make an 

exception to this prohibition, if the 

nature of the conviction is such that 

selection of the applicant poses no risk 

to the beneficiary and the exception is 

in the beneficiary’s best interest. 

* * * * * 

13. Revise § 416.635 to read as 

follows: 

§ 416.635 What are the responsibilities of 

your representative payee? 

A representative payee has a 

responsibility to—

(a) Use the benefits received on your 

behalf only for your use and benefit in 

a manner and for the purposes he or she 

determines under the guidelines in this 

subpart, to be in your best interests. 

(b) Keep any benefits received on your 

behalf separate from his or her own 

funds and show your ownership of 

these benefits unless he or she is your 

spouse or natural or adoptive parent or 

stepparent and lives in the same 

household with you or is a State or local 

government agency for whom we have 

granted an exception to this 

requirement. 

(c) Treat any interest earned on the 

benefits as your property. 

(d) Notify us of any event or change 

in your circumstances that will affect 

the amount of benefits you receive, your 

right to receive benefits, or how you 

receive them; 

(e) Submit to us, upon our request, a 

written report accounting for the 

benefits received on your behalf, and 

make all supporting records available 

for review if requested by us; and 

(f) Notify us of any change in his or 

her circumstances that would affect 

performance of his/her payee 

responsibilities. 

(g) If you are under age 18 (including 

cases in which your low birth weight is 

a contributing factor material to our 

determination that you are disabled), 

ensure that you are receiving treatment 

to the extent considered medically 

necessary and available for the 

condition that was the basis for 

providing benefits (see § 416.994a(i)). 

14. Amend § 416.640a by revising 

paragraph (a)(2), redesignating 

paragraph (g)(6) as (g)(7), and adding a 

new paragraph (g)(6) to read as follows: 

§ 416.640a Compensation for qualified 

organizations serving as representative 

payees. 

* * * * * 

(a) * * * 

(2) Any community-based nonprofit 

social service organization founded for 

religious, charitable or social welfare 

purposes, which is tax exempt under 

section 501(c) of the Internal Revenue 

Code and which is bonded/insured to 

cover misuse and embezzlement by 

officers and employees and licensed in 

each State in which it serves as 

60256 Federal Register / Vol. 70, No. 199 / Monday, October 17, 2005 / Proposed Rules 

representative payee (if licensing is 

available in the State). The minimum 

amount of bonding or insurance 

coverage must equal the average 

monthly amount of supplemental 

security income payments received by 

the organization plus the amount of the 

beneficiaries’ conserved funds (i.e., 

beneficiaries’ saved supplemental 

security income payments) plus interest 

on hand. For example, an organization 

that has conserved funds of $5,000 and 

receives an average of $12,000 a month 

in supplemental security income 

payments must be bonded/insured for a 

minimum of $17,000. The license must 

be appropriate under the laws of the 

State for the type of services the 

organization provides. An example of an 

appropriately licensed organization is a 

community mental health center 

holding a State license to provide 

community mental health services. 

* * * * * 

(g) * * * 

(6) Fees for services may not be taken 

from beneficiary benefits for the months 

for which the Commissioner or a court 

of competent jurisdiction determines 

that the representative payee misused 

benefits. Any fees collected for such 

months will be treated as a part of the 

beneficiary’s misused benefits. 

* * * * * 

15. Amend § 416.641 by adding a new 

paragraph (f) to read as follows: 

§ 416.641 Who is liable if your 

representative payee misuses your 

benefits? 

* * * * * 

(f) Any amounts that the 

representative payee misuses and does 

not refund will be treated as an 

overpayment to that representative 

payee. See subpart E of part 416. 

16. Amend § 416.665 by revising the 

introductory text to read as follows: 

§ 416.665 How does your representative 

payee account for the use of benefits? 

Your representative payee must 

account for the use of your benefits. We 

require written reports from your 

representative payee at least once a year 

(except for certain State institutions that 

participate in a separate onsite review 

program). We may verify how your 

representative payee used your benefits. 

Your representative payee should keep 

records of how benefits were used in 

order to make accounting reports and 

must make those records available upon 

our request. If your representative payee 

fails to provide an annual accounting of 

benefits or other required reports, we 

may require your payee to receive your 

benefits in person at the local Social 

Security field office or a United States 

Government facility designated by the 

Social Security Administration serving 

the area in which you reside. The 

decision to have your representative 

payee receive your benefits in person 

may be based on a variety of reasons. 

Some of these reasons may include the 

payee’s history of past performance or 

SSA’s past difficulty in contacting the 

payee. We may ask your representative 

payee to give us the following 

information: 

* * * * * 

Subpart M—[Amended] 

17. The authority citation for subpart 

M of part 416 continues to read as 

follows: 

Authority: Secs. 702(a)(5), 1129A, 1611–

1614, 1619, and 1631 of the Social Security 

Act (42 U.S.C. 902(a)(5), 1320a–8a, 1382–

1382c, 1382h, and 1383). 

18. Amend § 416.1340 by revising the 

heading and paragraphs (a) and (e) to 

read as follows: 

§ 416.1340 Penalty for making false or 

misleading statements or withholding 

information. 

(a) When may SSA penalize me? You 

will be subject to a penalty if: 

(1) You make, or cause to be made, a 

statement or representation of a material 

fact, for use in determining any initial 

or continuing right to, or the amount of, 

monthly insurance benefits under title II 

or benefits or payments under title XVI, 

that you know or should know is false 

or misleading, or 

(2) You make a statement or 

representation of a material fact for use 

as described in paragraph (a)(1) of this 

section with knowing disregard for the 

truth, or 

(3) You omit from a statement or 

representation made for use as 

described in paragraph (a)(1) of this 

section, or otherwise withhold 

disclosure (for example, fail to come 

forward to notify SSA) of, a fact which 

you know or should know is material to 

the determination of any initial or 

continuing right to, or the amount of, 

monthly insurance benefits under title II 

or benefits or payments under title XVI, 

if you know, or should know, that the 

statement or representation with such 

omission is false or misleading or that 

the withholding of such disclosure is 

misleading. 

* * * * * 

(e) How will SSA make its decision to 

penalize me? In order to impose a 

penalty on you, we must find that you 

knowingly (knew or should have known 

or acted with knowing disregard for the 

truth) made a false or misleading 

statement or omitted or failed to report 

a material fact if you knew, or should 

have known, that the omission or failure 

to disclose was misleading. We will 

base our decision to penalize you on the 

evidence and the reasonable inferences 

that can be drawn from that evidence, 

not on speculation or suspicion. Our 

decision to penalize you will be 

documented with the basis and 

rationale for that decision. In 

determining whether you knowingly 

made a false or misleading statement or 

omitted or failure to report a material 

fact so as to justify imposition of the 

penalty, we will consider all evidence 

in the record, including any physical, 

mental, educational, or linguistic 

limitations (including any lack of 

facility with the English language) 

which you may have had at the time. In 

determining whether you acted 

knowingly, we will also consider the 

significance of the false or misleading 

statement or omission or failure to 

disclose in terms of its likely impact on 

your benefits. 

* * * * * 

[FR Doc. 05–20697 Filed 10–14–05; 8:45 am] 

BILLING CODE 4191–02–P 

DEPARTMENT OF THE TREASURY 

Internal Revenue Service 

26 CFR Part 801 

[REG–114444–05] 

RIN 1545–BE45 

Balanced System for Measuring 

Organizational and Employee 

Performance Within the Internal 

Revenue Service 

AGENCY: Internal Revenue Service (IRS), 

Treasury. 

ACTION: Notice of proposed rulemaking 

by cross-reference to temporary 

regulations. 

SUMMARY: In the Rules and Regulations 

section of this issue of the Federal 

Register, the IRS is issuing temporary 

regulations designed to modify 26 CFR 

part 801, the regulations governing the 

IRS Balanced System for Measuring 

Organizational and Employee 

Performance, to clarify when quantity 

measures, which are not tax 

enforcement results, may be used in 

measuring organizational and employee 

performance. The temporary regulations 

affect internal operations of the IRS and 

the systems it employs to evaluate the 

performance of organizations within the 

IRS. The text of the temporary 

regulations also serves as the text of 

these proposed regulations.