In order 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 the representative must register to receive direct payment by doing both of the following:
- Submitting a completed Form SSA-1699 Registration for Appointed Representative Services and Direct Payment . This is a one-time submission. However, a representative must update the information 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.
- 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 and will request direct fee payment;
- a Federal court approves a fee, if the attorney requests direct payment and did not submit an SSA-1695 when the claim was pending before SSA; or
- he or she ends affiliation with an entity and has pending case(s) related to that entity affiliation. The representative must provide a new SSA-1695 for each pending case. Submitting a new SSA-1695 will update the EIN and prevent delayed or incorrect fee payments.
Representatives who are eligible for and request direct payment must register in order to receive direct payment of approved representative's fees from a claimant's past-due benefits.
An attorney or a non-attorney eligible for direct payment of fees 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 qualified for direct payment of fees.
The completed paper Form SSA-1695, Identifying Information for Possible Direct Payment of Authorized Fees, should be sent or delivered to the local Social Security Office. In order to receive direct payment, an attorney or a qualified non-attorney 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.
Firms or organizations that have individual representatives as employees or partners are encouraged to register voluntarily in order to receive IRS Forms 1099-MISC. This will allow SSA to report to the IRS that the payments made to the individual representatives are taxable income to the firm or organization rather than to the individual representatives. To register, these firms or organizations may file a Form SSA-1694, Request for Business Entity Taxpayer Information, online or by submitting 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).
NOTE: Beginning January 1, 2015, SSA will no longer provide the Fee Detail Summary with the IRS Form 1099-Misc issued to representatives who received from us payment of $600 or more during the calendar year.
In the past, we have provided the Fee Detail Summary as a courtesy to representatives, but due to increasing costs associated with processing, printing, and mailing the sheets, we have discontinued this service.With the payments, we provide information to the financial institutions where representatives receive their direct payments. We also recommend that representatives retain all detailed claim and authorized fee payment notices from us. This will help for an easier reconciliation of the payments at the end of the year.
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. The financial institution receiving the direct deposit is provided with information which may assist representatives to identify the source of the payment. This information includes the first four letters of the claimants' first name, the first thirteen letters of the claimants' last name, any suffix to the claimants name, the claimants' SSN, and the payment amount. It is at the discretion of the financial institution to provide this information to representatives and other account holders.