TN 37 (11-15)

Citations:

Social Security Act, Section (Sec.) 207 [42 U.S.C. 407]

Public Law No. 103-465, Section 702

A. Authority for VTW

Public Law No. 103-465 amends the Internal Revenue Code to allow individuals to request voluntary tax withholding (VTW) from certain Federal payments to satisfy Federal income tax liability.

B. Policy for VTW benefit withholding

1. Withholding from Title II monthly payment amount

Title II beneficiaries may request SSA to withhold a percentage of their monthly payment amount (MPA) each month to help meet their Federal income tax liability for the current tax year. The MPA is the amount received after all deductions, withholding, or benefit offset(s).

A request for VTW applies to both current month (CMA) and prior month accrual (PMA) payments of title II benefits.

NOTE: Direct all questions regarding tax liability to the Internal Revenue Service.

2. Eligibility for VTW

All Title II beneficiaries may request VTW. Only the beneficiary or his or her representative payee can make the request for VTW. All requests for VTW must include the beneficiary's own social security number (BOAN).

NOTE: The following are not subject to VTW:

• Title XVI payments,

• Black Lung payments,

• Lump Sum Death Payments,

• returned check reissuances, or

• benefits due before January 1984.

3. VTW for Railroad Retirement Board (RRB) benefits

Beneficiaries certified by the Railroad Board (RRB) can request VTW. We can accept a VTW request for RRB certified cases. The RRB does not have to contact us before approving a request for VTW.

NOTE: Inform beneficiaries certified by the Railroad Board that they may wish to check with RRB prior to electing VTW because VTW from Title II benefits can cause an overpayment of RRB benefits.

4. VTW withholding rates

Only accept a request for the current withholding rates for VTW of 0 percent, 7 percent, 10 percent, 12 percent, or 22 percent only. The IRS sets withholding rates for VTW. Do not input other percentages or flat dollar amounts. For IRS Form W-4V (Voluntary Withholding Request) see GN 02410.017A.

NOTE: Code a 0 percent withholding rate to:

• permanently or temporarily stop withholding; or

• elect a future withholding date.

For VTW coding on the Voluntary Tax Withholding (VTWH) screen see Example 3 in GN 02410.017A.4. and MSOM MCS 009.012.

5. VTW withholding amount

The requester must state the percentage(s) he or she wants withheld for VTW.

If requested, calculate the dollar amount a particular percentage of his benefit represents and round the resulting amount to the nearest dime.

Box 6 of the SSA 1099 (Social Security Benefit Statement) and the Description of Box 3 show the benefit amount deducted for VTW. For information on how we reflect VTW amount deducted on Form SSA-1099, see GN 05002.016.

NOTE: Whenever the MPA changes, we automatically recompute the VTW.

6. Effective date(s) for VTW requests

a. Immediate VTW request

For requests for an immediate VTW effective date, withhold payments effective with the earliest current operating month (COM) we can process the request.

If the request specifies a past effective date, or we cannot input it due to a change in the COM, withhold payments effective with the next COM.

b. Future VTW request

If the beneficiary or his or her representative payee would like a future effective date, instruct them to add the requested date to item 6 of IRS Form W-4V.
NOTE: We can input future VTW effective dates for months through December of the next calendar year. However, the W-4V does not have a specified place to annotate a future effective date.

c. Retroactive VTW request

Do not accept retroactive VTW effective dates.

NOTE: The effective date relates to the COM we update the Master Beneficiary Record (MBR) for VTW. For example, if we post VTW for the February COM, it applies to any CMA or PMA issued in the February COM.

7. Discontinuing VTW

If the beneficiary wants to stop or suspend VTW, or elects a future withholding date, code a 0 percent withholding rate.

8. Benefit termination and reentitlement

a. Correct termination

When benefits terminate, VTW stops. If the beneficiary later becomes reentitled, we require a new VTW request.

b. Incorrect termination

If we resume benefits after an erroneous termination, resume the VTW based on the existing request.

9. Benefits suspended or deferred

Accept a VTW request from a beneficiary in deferred status. If we cannot immediately honor a beneficiary's request for VTW because of deferred benefits, the system holds the request until we can pay benefits.

Do not accept a VTW request from a beneficiary that is in suspense status.

If we suspend or defer benefits after VTW begins, the system defers withholding until benefit payments resume.

10. Determining overpayment when VTW applied

If we subsequently determine an overpayment for months when VTW applied, we will include the money withheld in the overpayment amount. The notice explains this to the beneficiary.

C. Improper VTW withholdings

1. Refunds when SSA withholds too much from a beneficiary who requested VTW

Adjust or stop withholding from ongoing benefits if:

• we withhold too much money and the beneficiary requests a refund; and

• we can process the request before the end of COM 12 in the same tax year that the erroneous withholding occurred.

If we cannot correct a withholding before the end of COM 12, instruct the beneficiary or his or her representative payee to contact the IRS for a refund.

2. Refunds when SSA withholds from a beneficiary who did not request VTW

Refund the amount if:

• we incorrectly withhold VTW from a beneficiary who did not request VTW; and

• we can process the refund before the end of COM 12 in the same tax year that the erroneous withholding occurred.

If we cannot make corrections before the end of COM 12 in the tax year when the erroneous withholding occurred, instruct the beneficiary or his or her representative payee to contact the IRS for a refund.

D. Claims withdrawals involving VTW

Once a beneficiary decides to withdraw his or her claim to benefits, he or she must repay any benefits previously issued.

We report VTW for the current tax year (COM 1 through 12) to the IRS at the end of COM 12. 

1. Closed year

Include all VTW withheld in closed tax years in the repayment amount. SSA will have already reported the funds to the IRS. Consider closed year VTW as paid benefits.

2. Current year

Do not include any VTW withheld during a current tax year in the repayment amount. SSA will not have reported the funds to the IRS.