The Appeals Process
This course serves as a reminder that there are no appeals processes for Section 218 determinations. However, appeals processes are an important part of Social Security benefit determinations, and this course takes a look at those processes.
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- Is there a Section 218 appeals process with SSA?
- I recall Section 218 having appeals language at one time. Is this correct?
- Did SSA retain any authority to process appeals?
- If SSA's Section 218 determinations are final, what can I do to insure that the outcome of my modification is favorable?
- Are there exceptions when an SSA Section 218 determination can be reversed?
- Are there alternatives to appealing (or the lack of ability to do so) an SSA Section 218 determination?
- Can civil action in a Federal district court be filed as an alternative to an appeal?
- Are there additional SSA resources that can tell me more about the appeals processes that do exist?
- If Section 218 appeals processes were repealed as a result of P.L. 99-509, shouldn’t these rights have been re-established by the IRS?
- What are my appeals rights with the IRS?
- Is there a Section 218 Appeals process with the States?
- What issues are relevant to State law for purposes of Section 218?
1. Is there a Section 218 appeals process with SSA?
There are no appeals processes for Section 218 determinations. Determinations regarding Section 218 Agreements are governed by Federal law and are made by SSA. These final determinations may be based on decisions regarding certain specific issues to which either Federal or State law is applied. Where State law may have a bearing on the issue, an opinion of the State legal officer may be requested if one does not already exist. The opinion will be given due weight in making the final determination.
2. I recall Section 218 having appeals language at one time. Is this correct?
Before 1987, Section 218(s) of the Act allowed a State to request administrative review of the following types of determinations issued to the State on wages paid prior to 1987:
- an assessment by SSA of an amount due;
- an allowance of a credit or refund of an overpayment; or
- a disallowance of a State’s claim for credit or refund.
However, Section 218(s) was repealed from the Act after Public Law 99-509, the law which transferred FICA tax collecting responsibilities to IRS.
3. Did SSA retain any authority to process appeals?
Regarding Section 218 coverage determinations, No. There are no appeals processes for Section 218 determinations.
Although, appeals processes are an important part of Social Security determinations. A person who disagrees with an initial Title II or Title XVI determination or decision may request further review. Reviews, also known as appeals, consist of several levels of administrative review that must be requested within certain time periods and at the proper level. The levels of administrative review are the reconsideration, Administrative Law Judge (ALJ) hearing, and Appeals Council (AC) review. The AC review ends the administrative review process. If an individual is still dissatisfied, he may request judicial review which is done by filing an action in Federal court. These steps are explained in more detail below.
In most cases, the reconsideration is the first step in the administrative review process for individuals who disagree with the initial determination.
A reconsideration is a complete review of the claim by someone other than the person who made the original decision. We will reevaluate all evidence, plus any additional evidence submitted and render a new decision. If you disagree with the reconsidered decision, you choose to go to the next level of the appeals process. Use the Request for Reconsideration (Form SSA-561-U2) for a reconsideration request.
In general, a hearing before an administrative law judge is the next level of appeal after we have made a reconsideration determination. The ALJ will conduct a hearing. You and your representative, if you have one, may come to the hearing and present your case in person. The ALJ will evaluate all the evidence on record, including any additional evidence brought to the hearing, and will render a decision. Use the Request for Review of Decision/Order of Administrative Law Judge (Form HA-520-U5) to appeal an ALJ's decision.
If the individual disagrees with either the ALJ decision or the dismissal of a hearing request, he may ask the AC to review the action. The AC may dismiss or deny the request for review, or it may grant the request and either issue a decision or remand the case to an ALJ. The AC may also review an ALJ decision (within 60 days of the hearing decision or dismissal) on its own motion. The AC has final review authority for SSA.
Expedited Appeals Process (EAP)
An individual may request EAP but only after appealing at least through the reconsideration step. EAP may be used in those cases in which the individual does not dispute SSA's version of the facts in his claim. Rather, he challenges the constitutionality of the law underlying the determination. SSA, and all parties to the determination, must agree to using EAP.
Federal Court Review
The AC review completes the administrative review process. If an individual is still dissatisfied, he may request judicial review which is done by filing a civil action in a Federal district court.
4. If SSA’s Section 218 determinations are final, what can I do to insure that the outcome of my modification is favorable?
If a State wishes to modify its Agreement, it is imperative that the following Federal Regulations are abided.
For a majority vote referendum the Governor (or designate) must certify the:
- Vote was held by secret written ballot (Federal law does not prescribe the ballot format or the voting mechanics),
- Opportunity to vote was given and limited to the eligible employees,
- Employees were given not less than 90 days notice of the vote (Federal law does not prescribe the form of notice),
- Vote was supervised by the Governor or by a named designate of the Governor, and
- A majority of the eligible employees of the retirement system voted for coverage.
In a divided vote referendum the Governor (or an official designated by the Governor) must certify that the:
- Vote was held by written ballot (the ballot is not secret since the individuals choosing coverage must be identified),
- Opportunity to vote was given to all individuals who were members when the vote was held,
- Employees who are eligible members on the date of notice were given not less than 90 days notice,
- Vote was supervised by the Governor or a named designate, and
- Retirement system was divided into two parts, one composed of the members who voted for coverage and the other composed of the remaining positions under the retirement system.
Once a referendum is held, Federal Law and Regulations provide a period within which an act or action is required. There are two time limitations that apply to a referendum:
- The modification to extend coverage must be executed within 2 years of the date of the referendum, and
- Another referendum cannot be held among the employees of the same retirement system for at least 1 year after an unfavorable referendum. This prohibition does not apply where the first referendum was null and void.
5. Are there exceptions when an SSA Section 218 determination can be reversed?
Yes. There are times when SSA may make an unfavorable determination or reserve determination until the State can provide additional information. If the State timely responds to the request, SSA will make a determination based on the new information.
For example, if minor corrections (i.e., misspellings, typos) are necessary before a modification can be executed, SSA will ask the State to provide written authority to make the change. Changes made pursuant to the State's authorization must be handwritten in ink, identify the authorizing document, show the name and title of the authorizing State official, the date the change is made and the name of the person making the change. The State's original authorization is attached to the original executed modification.
Major changes may require the State to rewrite the modification. If this is necessary, SSA will keep a copy of the modification initially submitted in case it is necessary to establish the date of its submittal.
6. Are there alternatives to appealing (or the lack of ability to do so) an SSA Section 218 determination?
Yes, through withdrawal. After submitting a modification, the State may decide that it does not wish to proceed further with the modification. The State may withdraw the modification by written request at any time prior to its execution on behalf of the Commissioner of Social Security. If a modification is withdrawn, the RO will return all copies of the unexecuted modification to the State.
7. Can civil action in a Federal district court be filed as an alternative to an appeal?
In the absence of an appeals process, or when all existing appeals processes have been exhausted, civil action is an option. Consider the following court case as an example of a State filing action against SSA.
State of Minnesota v. Apfel, 151 F.3d 742 (8th Cir. 1998) -- Coverage for Employees Under a Federal-State Section 218 Agreement or Modification and Application of the Student Services Exclusion From Coverage to Services Performed by Medical Residents -- Title II of the Social Security Act.
Issue: On September 13, 1990, SSA issued a formal notice of assessment holding the State liable for unpaid contributions totaling nearly $8 million based on stipends paid to medical residents during 1985 and 1986. The State requested administrative review and on January 11, 1994, SSA's Deputy Commissioner for Programs affirmed the assessment. The State of Minnesota then sought judicial review. The district court granted the State's motion for summary judgment and overturned the assessment. The district court held that: (1) the medical residents were not "employees" of the University within the meaning of the 1958 modification; and (2) even if they were employees, they were excluded from coverage based upon the modification's student exclusion. SSA appealed this decision to the United States Court of Appeals for the Eighth Circuit.
The United States Court of Appeals for the Eighth Circuit affirmed the district court's alternative holdings and further stated that the regulatory approach set forth in 20 CFR 404.1028(c) prevents SSA from summarily concluding that medical residents never qualify for the student services exclusion without a case by case examination of the nature of the medical residents' relationship with their employer.
8. Are there additional SSA resources that can tell me more about the appeals processes that do exist?
Yes. Refer to SSA’s online version of SSA Publication No. 05-10058. Or you can call SSA toll-free at 1-800-772-1213 and speak to a representative from 7 a.m. to 7 p.m., Monday through Friday. SSA’s automated phone service operates 24 hours a day. If you are deaf or hard of hearing, you may call our TTY number, 1-800-325-0778.
If you are helping someone else appeal an SSA determination there are some things you should know. Refer to the SSA resources for third parties.
9. If Section 218 appeals processes were repealed as a result of P.L. 99-509, shouldn’t these rights have been re-established by the IRS?
Yes, and they were. P.L. 99-509 only had an affect on a State’s ability to request administrative review of an assessment by SSA of an amount due, an allowance of a credit or refund of an overpayment, or a disallowance of a State’s claim for credit or refund on wages paid prior to 1987.
Since 1987, if an employer disagrees with an IRS assessment that FICA taxes are due for services covered under a Section 218 Agreement, the employer should appeal the determination with the IRS. If necessary, IRS will coordinate the coverage issue with SSA. For more information, refer to the IRS’s Appeal a Tax Dispute.
10. What are my appeals rights with the IRS?
Sometimes a taxpayer does not agree with an IRS determination. This is where Appeals comes in. Appeals is independent of any other IRS office and serves as an informal administrative forum for any taxpayer who disagrees with an IRS determination.
Appeals provides a venue where disagreements concerning the application of tax law can be resolved on a fair and impartial basis for both the taxpayer and the government. The mission of Appeals is to settle tax disagreements without having to go to the Courts and a formal trial.
Learn more about what to expect of the Appeals process in these online videos, or click the following line if you need to determine if Appeals is right for you.
11. Is there a Section 218 Appeals process with the States?
Yes. The State determines for whom and whether and when to extend Section 218 coverage subject to the requirements of Section 218 of the Act. For example, whether and when to hold referenda on the coverage of services of individuals in positions under retirement systems is a matter to be determined under State and local law, subject to Section 218 requirements. Therefore, any disagreement of a Section 218 coverage decision or related determinations that occurs between the government entity and the State, involving the state administrator, possibly where the government entity wants to appeal a coverage decision, is between the entity and the State only. It may have to be elevated though the State courts, if necessary.
12. What issues are relevant to State law for purposes of Section 218?
Listed below are the most significant issues that will require State determinations. Any disagreement pertaining to these issues should be appealed to the State.
- Who is an officer of a state or political subdivision?
- Is an entity a political subdivision?
- What is the legal status of a new entity?
- Is a function governmental or proprietary?
- Is a position under a retirement system?
- Which employees are eligible for membership in a retirement system?
- Who is an employee for purposes of retirement system participation?