TN 16 (11-06)

A. Introduction

SSA assumes that an appointed representative will charge a fee for representing a claimant before the agency, unless the fee is waived via Form SSA-1696-U4 or another written statement or a third party is responsible for payment of the fee. SSA only inquires whether a fee will be collected or charged when the appointed representative works with a legal services organization that provides such services free of charge. (See GN 03920.020C. - Procedure - FO and PC - Legal Services Organizations.)

An appointed representative may request a fee for representing a claimant before SSA by filing a fee agreement or fee petition.

SSA is responsible for authorizing and processing direct payment to a representative when:

• a valid fee agreement or fee petition exists

• the representative is eligible for direct payment and;

• a favorable determination is made that results in past-due Title II and/or Title XVI benefits

SSA is not responsible for direct payment if any of the following statements are true (see GN 03920.010B.):

• there is no valid fee agreement or fee petition

• the representative is ineligible for direct payment (see GN 03920.017B.)

• the fee has been waived by the representative (see GN 03920.020F.)

• the representative works for a legal services organization that provides services free of charge and is not collecting a fee.

• a third party agreed to pay the fee (see GN 03920.020H. and GN 03920.020I.)

• there are no past-due Title II and/or Title XVI benefits

SSA processes direct payment of all or part of an authorized fee to the representative for services provided at the administrative level, under the process and procedure in this subchapter.

The Federal court is responsible for authorizing a fee for service at the court level.

NOTE: SSA does not withhold benefits for potential direct payment of fees to any representative whose appointment is no longer in effect as a result of a final disqualification or suspension decision by OGC, or a withdrawal or revocation of appointment that occurs prior to a favorable decision. Although a representative who has withdrawn or been discharged from representing a claimant may petition for approval of a reasonable fee for his/her services, collection of the authorized fee would be between the claimant and the former representative.

NOTE: If the claimant has filed for bankruptcy see GN 02215.185A.3 .

B. Definitions

When used in this subchapter, the following definition applies:

1. Direct Payment

A direct payment is an authorized fee paid directly to an eligible appointed representative for services rendered at the administrative or federal court level. SSA makes this payment by withholding up to 25% of a claimant’s past-due benefits. (See GN 03920.035 Title II Past-Due Benefits Subject to Withholding, and GN 03920.036 Title XVI Past-Due Benefits Subject to Withholding.)

2. Non-Attorney Representative Eligible for Direct Payment

Section 206(e) of the Social Security Act extends the fee withholding and assessment procedures to non-attorney representatives meeting certain prerequisites.

See GN 03920.018 Direct Payment for Non-Attorney Representatives, for detailed information. To determine if a non-attorney representative is currently eligible for direct payment, view the list found at http://policynet.ba.ssa.gov/repository/other/nonattorney.html .

The representative must also be registered as described in GN 03920.017B.3.

3. Representative Registered to Receive Direct Payment

Effective January 1, 2007, a representative must be registered on the agency’s Appointed Representative Database (ARDB) to receive direct payment of authorized fees.

Representatives may register on the ARDB beginning in August 2006. They must complete Form SSA-1699 and submit it via fax, following procedure in GN 03913.000. This is a one-time registration. However, the representative must update the registration if his or her personal, professional or business affiliation information changes. See note below for additional registration update information. SSA’s automated claims systems use the address information maintained on the ARDB to issue notices and fee payments.

The representative is also required to submit Form SSA-1695 (Identifying Information for Possible Direct Payment of Authorized Fees) for each claimant that he represents before SSA. Representatives may submit Form SSA-1695 beginning in November 2006. The representative must submit this form to receive direct payment effective January 1, 2007. The form will be available as of November 2006. It is only available in paper format.

If appointed on or after January 1, 2007, a representative must register via Form SSA-1699 and submit Form SSA-1695 prior to the date that SSA effectuates the favorable decision in order to receive direct payment. When multiple representatives are appointed concurrently in one claim, SSA must secure a separate SSA-1695 from each co-representative who is eligible to receive, and who is or will be requesting direct payment, even when all co-representatives are members of the same firm.

NOTE: If the representative wants to delete his or her affiliation with an entity, he or she must submit an updated SSA-1699. In addition, for each pending claim related to that affiliation, the representative must submit a new SSA-1695 to avoid incorrect fee payments. For more information on updating appointed representative registration, see GN 03913.015A.

See GN 03910.042B.5 for procedures when the SSA-1695 is not received prior to effectuating a claim.

See GN 03910.090 for Exhibit 7 Form SSA-1699 and Exhibit 6 Form SSA-1695.

4. Representative Eligible to Receive Direct Payment of Fee for Administrative Services

a. Claimant Signed One or More Appointment of Representative Forms Before January 1, 2007 on the Same Claim

If the claimant signed one or more Form(s) SSA-1696-U4 (Appointment of Representative) or equivalent written statement (i.e., the appointment document) before January 1, 2007, SSA may make direct payment to an appointed representative who:

• is an attorney, or

• is a non-attorney that:

  • SSA has determined is eligible to receive direct payment (see GN 03920.017B.2) as of the date SSA effectuates the favorable decision that results in past-due benefits; and

  • Was appointed on or after February 28, 2005 (no non-attorney became eligible for direct fee payment before July 28, 2005).

• has not withdrawn or has not been discharged from representing the claimant before SSA issued the favorable decision.

• has not been disqualified or suspended at the time SSA certifies payment (see GN 03970.050).

b. Claimant Signed One or More Appointment of Representative Forms After December 31, 2006 on the Same Claim

As of January 1, 2007 SSA may make a direct payment to appointed representative(s) who:

• is an attorney; or non-attorney eligible to receive direct payment, and;

• has not withdrawn or has not been discharged from representing the claimant before SSA issued the favorable decision; and;

• has registered with SSA to receive direct payment before the agency effectuates a favorable decision that results in past-due benefits.

• has not been disqualified or suspended at the time SSA certifies payment (see GN 03970.050).

c. Claimant Signed At Least One Appointment of Representative Form (SSA-1696-U4) Before January 1, 2007 and At Least One After December 31, 2006 on the Same Claim

When there are multiple appointments of representative on the same claim with at least one appointment signed prior to 01/01/07 and at least one appointment signed after 12/31/06, due to a system limitation, the appointment prior to 01/01/07 is controlling. There is no requirement that the representative who was appointed by the claimant before 01/01/07 register for the ARdB. Direct payment of the representative fee must be processed under GN 03920.017C.2. for all representatives who qualify for direct payment. See GN 03920.017.B.5.a.

EXAMPLE: SSA 1696-U4 is signed by claimant on 11/20/06. The representative is not registered for the ARdB. On 03/15/07 a new appointment is signed by the claimant. Effectuate payment to all appointed representatives who elect and are eligible to receive direct payment of fees under the payment instructions in effect prior to 01/01/07.

5. Attorney Eligible for Direct Payment of Fee Authorized for Federal Court Services

An attorney eligible for direct payment of a fee the court authorizes for services the attorney provided at the Federal court level is:

• Prior to January 1, 2007, any attorney to whom the court authorizes a fee.

• After December 31, 2006, an attorney to whom the court authorizes a fee and who is registered to receive direct payment (see GN 03920.017B.3.) when SSA receives the court’s fee authorization.

See GN 03920.060 Attorneys’ Fees for Representation in Proceedings Before a Court.

C. Policy - Titles II and XVI - Direct Payment to Representatives

1. Introduction

a. Representative Is an Attorney

Section 206(a) of the Social Security Act provides that if the claimant is determined to be entitled to past-due benefits under Title II and the person representing the claimant is an attorney, we pay the attorney his/her fee that does not exceed 25 percent of the past-due benefits.

Prior to February 28, 2005, SSA did not withhold and make direct payment in a Title XVI (SSI) only case. The SSPA, in section 302, extended the Title II attorney fee withholding and direct payment process to Title XVI. This provision applies to fees for representation of claimants in the case of any claim for benefits effectuated on or after February 28, 2005.

b. Representative Is a Non-Attorney

Section 206(e) of the Social Security Act expands the direct payment provisions to allow eligible non-attorneys who represent claimants before the Commissioner under Title II and/or Title XVI, the option of fee withholding and direct payment. Direct payment of fees for representation is effective for eligible non-attorneys in claims for benefits in which the agreement for representation is entered into on or after February 28, 2005. On and after, but not before February 28, 2005, SSA withholds Title II and/or Title XVI past-due benefits for direct payment of a fee for administrative proceedings to a non-attorney representative whom SSA has determined is eligible for direct payment (see GN 03920.017B.2.) and who meets the other requirements for direct payment as defined in GN 03920.017C.2. and GN 03920.017C.3. However, no non-attorney became eligible for direct payment before July 28, 2005.

NOTE: Refer to GN 03920.018 for a discussion of the requirements a non-attorney must meet for the Commissioner to determine that he or she is eligible for direct payment.

c. Internal Revenue Service Fee Reporting Requirement

On 10/02/06, SSA published a notice in the Federal Register (see 71 FR 58043, October 2, 2006) to announce SSA’s implementation of the reporting requirement, related to direct payment of fees to representatives, required by changes in the Internal Revenue Service Federal Income Tax Regulations. This requires SSA to issue 1099s to representatives who receive direct payment of $600 or more in a calendar year.

In January 2010, SSA will begin issuing Form 1099s to representatives to whom SSA pays aggregate fees of $600 or more in the preceding calendar year. To meet the requirements of the IRS for appointments of representative claimants sign after December 31, 2006 (see GN 03920.017B.4.), SSA requires, as a condition for receiving direct payment, that the appointed representative provide his/her social security number (SSN) or TIN at an initial registration and in each instance of representation (i.e., in each claim). The TIN (Tax Identification Number) for most individuals is their social security number. SSA must include the representative’s TIN or SSN to ensure that the representative receives direct payment of the authorized fee for services provided. “Representative registered to receive direct payment” is defined at GN 03920.017B.3.

d. Informational 1099

SSA will also issue an informational Form 1099-MISC to the representative’s employer if the employer registers with SSA for this purpose. To register, the employer should complete Form SSA-1694 (Request for Business Entity Taxpayer Information). This registration is not mandatory. The form is available on-line or in paper format. See MSOM INTRANETARDB 001.006 for information on the representative and employer registration Internet processes.

2. Claimant Signed Appointment of Representative before January 1, 2007

a. Representative is Attorney

If a claimant submits a signed Appointment of Representative form (Form SSA-1696-U4) or equivalent written statement before January 1, 2007, the appointed attorney may be eligible to receive direct payment.

If the attorney meets the requirements stated above in 5a, SSA will withhold up to 25% of the past-due Title II benefits for possible direct payment to the attorney. When a claimant has auxiliaries who are not represented, the auxiliaries’ past-due Title II benefits are included when calculating the attorney’s fee for services. (See GN 03920.030, Representative’s Fee – Title II Past-due Benefits.

On or after February 28, 2005, an attorney may receive direct payment for a Title XVI-only claims. In SSI couples cases, if the spouse does not have a representative, the agency also withholds the otherwise unrepresented eligible spouse’s past-due benefits if the benefits increased or the spouse became eligible for SSI as a result of the claimant’s representative’s work on the claimant’s claim. (See GN 03920.031, Representative’s Fee – Title XVI Past-due Benefits and GN 03940.052 – SSI Couples Cases.)

b. Representative is Non-Attorney

If the claimant appoints a non-attorney to represent him/her and signs the appointment document before January 1, 2007, and if:

• the representative and the claimant have entered into a representative agreement or supplemental agreement on or after February 28, 2005,

• SSA has determined that the non-attorney is eligible for direct payment as of the date SSA effectuates the favorable determination or decision that results in past-due benefits (see GN 03920.017B.2.),

• the representative has not waived the fee or direct payment of the fee (see GN 03920.020), and

• the representative has not withdrawn and has not been discharged from representing the claimant before SSA issued the favorable decision;

SSA withholds for possible direct payment to the representative, of all or part of the fee authorized (to the extent possible based on the available past-due benefits) for administrative proceedings, (up to) 25 percent:

• of a claimant's and the claimant's otherwise unrepresented affected auxiliaries’ Title II past-due benefits (see GN 03920.030, Representative’s Fee – Title II Past-due Benefits.), and/or

• of a claimant’s Title XVI past-due benefits. In SSI couples cases, SSA also withholds the claimant’s otherwise unrepresented eligible spouse’s past-due benefits if the spouse’s SSI benefits increased or the spouse became eligible for SSI as a result of the claimant’s representative’s work on the claimant’s claim. (See GN 03920.031, Representative’s Fee – Title XVI Past-due Benefits and GN 03940.052 – Fee Agreements - SSI Couples Cases.)

The following notification guidelines apply when a claimant is represented by a non-attorney eligible for direct payment.

• If the claimant and representative signed and submitted an agreement for representation on Form SSA-1696 or equivalent written statement before February 28, 2005, the SSPA requires that the claimant and the non-attorney representative sign and submit to SSA another appointment of representative (i.e., appointment of representative on Form SSA-1696 or equivalent written statement) to establish an agreement for representation on or after that date.

• If the claimant and representative signed and submitted an agreement for representation on or after February 28, 2005, but before SSA determines that the non-attorney representative is eligible for direct payment, SSA requests that the representative submit a supplemental Form SSA-1696 on each case on which he or she wishes to receive direct payment. This action advises SSA of the change in his/her direct payment status. If the claimant signed an appointment of representative on or after February 28, 2005, it is not necessary for the claimant to sign the supplemental appointment statement the non-attorney submits to notify SSA of his/her status change.

3. Claimant Signed Appointment of Representative after December 31, 2006

If the claimant appointed an attorney or non-attorney to represent him/her and signed Form SSA-1696 or equivalent written statement after December 31, 2006, the representative must meet the criteria listed directly above in 2 and be registered for direct payment when SSA effectuates the favorable decision in order to receive direct payment.

If the claimant signs the Appointment of Representative after December 31, 2006, and the attorney or the non-attorney, is not registered for direct payment when the favorable decision is effectuated, SSA is not responsible for paying the fee directly to the representative. In these cases:

• There is no provision for establishing good cause for late registration.

• SSA will not withhold past-due benefits to permit a representative to register after we effectuate a favorable decision.

• After SSA effectuates the favorable decision, the agency will not subsequently establish an overpayment for the claimant in order to pay the fee to the representative who registered after the date we effectuated the favorable decision.

• SSA will advise the representative that he/she must look to the claimant for payment of the fee.

4. Court Issues Favorable Decision

a. Title II

When SSA effectuates a court’s favorable Title II decision, SSA withholds (up to) 25 percent of a claimant's and the claimant's otherwise unrepresented affected auxiliaries’ past-due benefits, for possible direct payment of all or part of the attorney's court authorized fee, unless the attorney has waived direct payment or waived the fee. SSA will then pay the authorized fee to the attorney, to the extent that the withheld past-due benefits permit, under these circumstances:

• If SSA receives the court’s fee authorization before January 1, 2007, SSA makes direct payment of the fee to the attorney.

• If SSA receives the court’s fee authorization after December 31, 2006, SSA makes direct payment of the fee to the attorney only if the attorney is registered for direct payment (see GN 03920.017B.3.).

NOTE: In court cases, the period used for calculating past-due benefits ends the month before the month of the court’s judgement. See GN 03920.060B.1.

b. Title XVI

Beginning February 28, 2005, upon effectuation of a court’s favorable Title XVI decision, SSA withholds (up to) 25 percent of a claimant's and the claimant's otherwise unrepresented spouse’s past-due benefits, for possible direct payment of all or part of the attorney's court authorized fee. If the attorney has waived direct payment or waived the fee, the agency will not withhold any of the claimant’s past-due benefits. SSA then pays the court authorized fee, to the extent that the withheld past-due benefits permit, as described below.

• If SSA receives the court’s fee authorization before January 1, 2007, SSA makes direct payment of the fee to the attorney.

• If SSA receives the court’s fee authorization after December 31, 2006, and if the attorney has registered for direct payment (see GN 03920.017B.), SSA makes direct payment of the fee to the attorney.

5. Auxiliary or Eligible Spouse Represented Independently

If an affected Title II auxiliary is represented independently of the primary claimant:

• SSA will withhold that auxiliary’s past-due benefits for possible direct payment to the auxiliary’s representative, if the representative is eligible for direct payment.

• SSA will not use an independently represented auxiliary’s past-due benefits to determine the fee due the primary beneficiary's representative under the fee agreement process or to directly pay any part of the primary beneficiary's representative's fee.

If a spouse, whose Title XVI benefits increased or who became eligible to SSI benefits as a result of the claimant’s SSI eligibility, is represented independently of the claimant:

• SSA will withhold up to 25 percent of the spouse’s past-due benefits for possible direct payment of his/her representative’s fee, if the spouse’s representative is eligible to receive direct payment.

• SSA will not use the spouse’s past-due benefits to determine the claimant’s representative’s fee under the fee agreement process or to directly pay any part of the claimant’s representative’s fee.

For the rationale for withholding from auxiliary beneficiaries, see Social Security Ruling (SSR) 68-61c.

D. Procedure - Amount of Direct Payment

1. Fee Petition – From Title II Past-Due Benefits

In fee petition cases, the amount that SSA will certify for direct payment to a representative eligible to receive direct payment from withheld Title II past-due benefits is the amount derived by completing Worksheet 1.

See GN 03920.017B.5. for the definition of “representative eligible to receive direct payment of fee for administrative services:” and GN 03920.017C. Policy – Direct Payment to Representative.

Worksheet 1 – Fee Amount Payable from Title II Past-Due Benefits – Fee Petition

If the authorized fee exceeds the amount of withheld Title II benefits:

• In a Title II claim only, the representative must collect the balance from the claimant.

• In concurrent Titles II and XVI claims, SSA will pay the remainder of the authorized fee to the representative, to the extent possible, from the Title XVI withheld past-due benefits available for direct payment. (See GN 03920.017D.2. - Fee Petition – From Title XVI Past-Due Benefits.)

EXCEPTION: If the representative requests a fee for services that are unique to the Title II or the Title XVI claim, then SSA will pay the portion of the fee SSA authorizes the representative to charge and collect for those unique services, from the past-due benefits withheld in connection with that specific claim.

NOTE: If one of the parties or the decision maker requests administrative review when the agency is no longer holding any past-due benefits, and SSA authorizes a fee greater than the initially authorized amount, SSA first directs the representative to seek payment of the increased amount from the claimant. If the claimant does not respond to the representative's request for the additional amount, SSA will:

• pay the additional fee amount, less the user fee (but only up to a maximum of 25 percent of past-due benefits) directly to the representative, and

• recover the amount from the claimant’s future benefits as an overpayment.

See GN 03920.055 - Benefits Not Available to Certify Direct Payment to a Representative.

2. Fee Petition – From Title XVI Past-Due Benefits

In fee petition cases, the amount that SSA will pay to a representative eligible to receive direct payment from withheld Title XVI past-due benefits is the amount derived by completing Worksheet 2 in a Title XVI only case or Worksheet 3 in a case involving concurrent Titles II and XVI claims.

See GN 03920.017B.5. for the definition of “representative eligible to receive direct payment of fee for administrative services:” and GN 03920.017C. - Policy – Direct Payment to Representative.

a. Worksheet 2 – Fee Amount Payable from Title XVI Past-Due Benefits – Title XVI Only – Fee Petition

b. Worksheet 3 – Fee Amount Payable from Title XVI Past-Due Benefits – Concurrent Titles II and XVI – Fee Petition

If the authorized fee exceeds the amount SSA can pay directly to the representative, the representative must collect the balance from the claimant.

If one of the parties requests administrative review and on administrative review SSA authorizes a fee higher than SSA initially authorized and paid to the representative, refer to the NOTE at the end of GN 03920.017D.1.

3. Fee Agreement – From Title II Past-Due Benefits

In fee agreement cases, the amount that SSA will certify for direct payment to a representative eligible to receive direct payment from withheld Title II past-due benefits is the fee SSA authorizes under the approved fee agreement based on the Title II past-due benefits (see GN 03920.030 - Representative’s Fee – Title II Past-Due Benefits and GN 03940.030 - FO and PC Processing of Fee Agreements on Title II Portion of Concurrent Titles II and XVI Claims.

Less (in order):

• funds the claimant put into a trust or escrow account the representative established, but only if the case is a Title II claim only. If the case involves concurrent Titles II and XVI claims, SSA will not reduce the amount of direct payment a representative receives from a claimant’s Title II past-due benefits unless the Title II fee is the maximum fee allowed. Refer to GN 03920.025 to determine how escrow funds affect the amount SSA will certify for direct payment to the representative, and

• the assessment imposed to cover administrative costs (see GN 03920.019 - Assessment on Representatives Who Receive Direct Payment).

If one of the parties requests administrative review and on administrative review SSA authorizes a fee higher than SSA initially authorized and paid to the representative, refer to the NOTE at the end of GN 03920.017D.1.

See GN 03920.017B.5. for the definition of “representative eligible to receive direct payment of fee for administrative services:” and GN 03920.017C. - Policy – Direct Payment to Representative.

4. Fee Agreement – From Title XVI Past-Due Benefits

In fee agreement cases, the amount that SSA will pay to a representative eligible to receive direct payment from withheld Title XVI past-due benefits is the amount derived by completing Worksheet 4.

See GN 03920.017B.5 for the definition of “representative eligible to receive direct payment of fee for administrative services:” and GN 03920.017C. Policy – Direct Payment to Representative.

Worksheet 4 – Fee Amount Payable from Title XVI Past-Due Benefits – Title XVI Only and Concurrent Titles II and XVI Claims – Fee Agreement

For direct payment in situations in which SSA increases the amount of the fee on administrative review, see the NOTE at the end of GN 03920.017D.1.

NOTE: The 25% of past-due benefits is calculated before subtracting any Interim Assistance Reimbursement (IAR) amount. However, IAR is issued before the representative’s fee.

5. Court Cases

When a court issues a favorable decision to a claimant on a Title II claim, the amount that SSA will certify for direct payment to an attorney who is eligible for direct payment is the fee the court set, which by statute cannot exceed 25 percent of the claimant's past-due benefits, less:

• any funds the claimant put into a trust or escrow account the attorney established, if reported to SSA (see GN 03920.025), and

• the assessment imposed to cover administrative costs (see GN 03920.019).

SSA extended the Title II attorney fee withholding process to Title XVI for favorable court decisions issued on or after February 28, 2005. SSA will pay an attorney eligible for direct payment an amount equal to the lesser of:

• the fee set by the court (less any funds the claimant put into a trust or escrow account the attorney established, if reported to SSA (see GN 03920.025));

• 25% of the Title XVI past-due benefits as defined in GN 03920.031 - Representative’s Fee – Title XVI Past-Due Benefits; or

• the Title XVI past due benefits remaining after reduction for interim assistance reimbursement; or

• in concurrent Titles II and XVI claims, the amount of the fee set by the court that SSA did not pay to the representative from the Title II withheld past-due benefits.

From that amount, SSA deducts the assessment, if any, imposed to cover administrative costs (see GN 03920.019). The worksheets in GN 03920.017D.2. and GN 03920.017D.4. may be adapted to perform these calculations.

NOTE 1: The assessment cap is applied to the combined authorized administrative and court fee. For example, if SSA pays the fee authorized for services at the administrative levels first and deducts the maximum assessment, when paying the court authorized fee, SSA does not deduct an additional assessment. Refer to GN 03930.066D. for guidance on prorating the assessment when SSA makes fee payments to two or more representatives.

The court fee is in addition to the fee, if any, SSA authorizes for proceedings at the administrative level. However, SSA withholds a maximum of 25 percent of past-due benefits for direct payment of fees, whether authorized by SSA, a court, or both. SSA pays the representative(s) the fee authorized for administrative services and the court set fee in the order the component responsible for paying the fees receives the fee authorizations.

NOTE 2: In court cases, the law does not provide for direct payment to a non-attorney.

For policy of attorneys’ fees for representation in proceedings before a court, see GN 03920.060.

E. Policy – No Direct Payment to Non-Attorney Representatives Ineligible for Direct Payment or to Representatives in Title XVIII Cases

There is no withholding in Title II or XVI cases for a non-attorney representative who is not eligible for direct payment. (See GN 03920.018 - Direct Payment for Non-Attorney Representatives.

There are no past-due benefits in Title XVIII (Medicare) cases. Therefore, in those cases, the representative must look to the claimant to pay the authorized fee.

F. Policy - Rounding

To determine the direct payment amount as provided in this section, SSA will round to the nearest cent if the 25 percent withholding amount (see GN 03920.035 and GN 03920.036), the total authorized fee or the user fee (see GN 03920.019) end with a fraction of a penny. See RS 00601.020B for the nearest cent rounding policy.

Do not revise the total authorized fee when dividing the fee among multiple representatives. Pay any odd cents to one or more of the representatives. Calculate the user fee on the fee paid to each representative.