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Federal Register / Vol. 70, No.

199 / Monday, October 17, 2005 / Proposed Rules 60251

SOCIAL SECURITY ADMINISTRATION of Social Security, P.O. Box 17703, this prohibition is appropriate; or (2) is
Baltimore, MD 21235–7703. You may fleeing to avoid prosecution, or custody
20 CFR Parts 404, 408 and 416 also deliver them to the Office of or confinement after conviction of a
RIN 0960–AG09 Regulations, Social Security crime that is a felony.
Administration, 100 Altmeyer Building, Section 104 of the SSPA requires fee-
Representative Payment Policies and 6401 Security Boulevard, Baltimore, MD for-service representative payees to
Administrative Procedure for Imposing 21235–6401, between 8 a.m. and 4:30 forfeit their fees for any months during
Penalties for False or Misleading p.m. on regular business days. which they misuse all or part of any
Statements or Withholding of Comments are posted on our Internet beneficiary’s benefits.
Information site, or you may inspect them physically Section 105 of the SSPA makes non-
on regular business days by making governmental representative payees
AGENCY: Social Security Administration arrangements with the contact person liable for any benefits they misuse and
(SSA). shown in this preamble. requires SSA to treat such misused
ACTION: Proposed rules. benefits as overpayments to the
Electronic Version representative payees, subject to
SUMMARY: We propose to amend our The electronic file of this document is overpayment recovery authorities.
regulations on representative payment available on the date of publication in Section 106 of the SSPA authorizes
and on the administrative procedure for the Federal Register on the Internet site the Commissioner of Social Security to
imposing penalties for false or for the Government Printing Office, require a representative payee to receive
misleading statements or withholding of http://www.gpoaccess.gov/fr/ benefits in person at a Social Security
information to reflect and implement index.html. It is also available on the field office or a United States
certain provisions of the Social Security Internet site for SSA (i.e., Social Government facility designated by the
Protection Act of 2004 (SSPA), Public Security Online) at http:// Social Security Administration if the
Law 108–203. The SSPA amends policy.ssa.gov/pnpublic.nsf/LawsRegs. payee fails to provide an annual
representative payment policies by accounting of benefits report or other
FOR FURTHER INFORMATION CONTACT:
providing additional safeguards for requested information.
Regarding this Federal Register In addition to the changes required by
Social Security, Special Veterans and document—Robert Augustine, Social
Supplemental Security Income Public Law 108–203, we propose to
Insurance Specialist, Office of clarify financial requirements for
beneficiaries served by representative Regulations, Social Security
payees. These changes include representative payees. Our current
Administration, 6401 Security regulations specify that the interest
additional disqualifying factors for Boulevard, Baltimore, MD 21235–6401,
representative payee applicants, earned on conserved funds belongs to
(410) 965–0020 or TTY (410) 966–5609; the beneficiary. However, the
additional requirements for non- regarding eligibility or filing for
governmental fee-for-service payees, regulations do not specifically address
benefits—our national toll-free number, interest earned on current benefits or
authority to redirect delivery of benefit 1–800–772–1213 or TTY 1–800–325–
payments when a representative payee how current benefits should be held. We
0778 or visit our Internet Web site, propose to specify that a representative
fails to provide required accountings, Social Security Online, at http://
and authority to treat misused benefits payee must keep any payments received
www.socialsecurity.gov. for the beneficiary separate from the
as an overpayment to the representative
payee. In addition, we propose to SUPPLEMENTARY INFORMATION: representative payee’s own funds and
modify our rules to explain financial ensure that the beneficiary’s ownership
Background is shown unless the representative
requirements for representative payees,
and we also have made minor clarifying Public Law 108–203, the SSPA, payee is the spouse or parent of the
plain language changes. enacted March 2, 2004, requires a beneficiary and lives in the same
The SSPA also allows SSA to impose number of changes to representative household with the beneficiary. We also
a penalty on any person who knowingly payee policy and procedures. A propose to provide for an exception to
withholds information that is material representative payee is the person, this requirement for State or local
for use in determining any right to or agency, organization, or institution government agencies when we
the amount of monthly benefits under selected to receive and manage benefits determine that their accounting
titles II or XVI. The penalty is on behalf of an incapable beneficiary. structure sufficiently protects the
nonpayment for a specified number of This includes a parent who is receiving beneficiaries’ interest in the benefits
months of benefits under title II that benefits on behalf of his or her minor (i.e., accounting structure clearly
would otherwise be payable and child. The SSPA also changes the rules identifies what funds belong to the
ineligibility for the same period of time for imposing penalties for false or beneficiary). We further propose to
for cash benefits under title XVI misleading statements or for specify that the payee must treat any
(including State supplementary withholding information. interest earned on current benefits as
payments). Section 102 of the SSPA requires non- the beneficiary’s own property. In
governmental fee-for-service addition, we propose to clarify that the
DATES: To consider your comments, we organizational representative payees to payee is responsible for making records
must receive them no later than be both bonded and licensed, provided available for review if requested by us.
December 16, 2005. that licensing is available in the State. These records must be examined when
ADDRESSES: You may give us your Section 103 of the SSPA expands the conducting our site visits.
comments by: using our Internet facility scope of disqualification to prohibit an Section 201(a)(2) of the SSPA
(i.e., Social Security Online) at http:// individual from serving as a amended section 1129A of the Act to
policy.ssa.gov/pnpublic.nsf/LawsRegs or representative payee if he or she: (1) Has help prevent and respond to fraud and
the Federal eRulemaking Portal at been convicted of any offense resulting abuse in SSA’s programs and
http://www.regulations.gov; e-mail to in imprisonment for more than 1 year, operations. Prior to its amendment by
regulations@ssa.gov; telefax to (410) unless the Commissioner of Social the SSPA, section 1129A allowed SSA
966–2830; or letter to the Commissioner Security determines that an exception to to impose a penalty against any person

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

who makes, or causes to be made, a risk to the beneficiary and selection of that SSA will treat the misused benefits
statement or representation of a material the applicant is in the beneficiary’s best as an overpayment to the representative
fact that the person knows or should interest. In addition, these sections payee, subject to overpayment recovery
know is false or misleading or that omits would explain that a person who is authorities.
a material fact, or that the person makes fleeing prosecution, custody or 6. We propose to amend §§ 404.2065
with a knowing disregard for the truth. confinement for a crime, or an attempt and 416.665 to explain that we may
The statement must have been made for to commit a crime that is a felony may require a representative payee to receive
use in determining eligibility for or the not serve as a representative payee. If benefits in person at a local Social
amount of benefits under titles II or XVI. we identify a currently serving payee Security field office or a United States
The penalty is nonpayment for 6, 12 or who is no longer qualified for this Government facility designated by the
24 months of benefits under title II that reason, we will allow them 10 days to Social Security Administration if the
would otherwise be payable to the respond to notification before making payee fails to provide an annual
person and ineligibility for the same any payee change. accounting of benefits or other
period of time for cash benefits under 2. We propose to amend §§ 404.2035 requested information. We propose to
title XVI (including State supplementary and 416.635 to explain that a make a similar amendment to § 408.665,
payments made by SSA according to representative payee must keep any but the benefits would be directed to a
§ 416.2005). payments received for the beneficiary United States Government facility
Section 201(a)(2) amended section separate from the payee’s own funds designated by the Social Security
1129A to also allow SSA to impose this and ensure the beneficiary’s ownership Administration.
penalty against any person who is shown unless the payee is the spouse
withholds disclosure of information that or parent of the beneficiary and lives in Explanation of Proposed Changes on
is material for use in determining any the same household with the Administrative Procedures for
right to or the amount of monthly beneficiary. We also propose to provide Imposing Administrative Penalties
benefits under titles II or XVI if the for an exception to this requirement for We propose to amend §§ 404.459 and
person knows, or should know, that the State or local government agencies that 416.1340 of our regulations by revising
withholding of such disclosure is use a different accounting structure. We the heading and paragraphs (a) and (e)
misleading. Prior to the enactment of would grant such an exception to a State of each section to reflect that, as a result
section 201(a)(2), in order for a penalty or local government agency if we of section 201 of the SSPA, an
to be imposed, the law required an determine that its accounting structure individual will be subject to the penalty
affirmative act on the part of the sufficiently protects the beneficiaries’ if he or she withholds information that
individual of making a statement that interest in the benefits. Also, these is material for use in determining any
omitted a material fact. sections would explain that the payee right to or the amount of monthly
This new penalty under section must treat any interest earned on benefits under title II or XVI if the
1129A of the Act will be effective with current benefits as the beneficiary’s own person knows, or should know, that the
respect to violations committed after the property. withholding of the information is
date on which SSA implements the 3. We propose to amend §§ 404.2035 misleading.
centralized computer file described in and 416.635 to require representative
section 202 of the SSPA. This payees to make available to us their Clarity of These Regulations
centralized computer file will records supporting their written Executive Order 12866, as amended
electronically record information about accounting reports. We believe those by Executive Order 13258, requires each
changes in work status that a disability records are essential to verify the agency to write all rules in plain
beneficiary (or representative) reports to written reports. language. In addition to comments you
SSA and is expected to be implemented 4. We propose to amend existing may have on the substance of these
in February 2006. §§ 404.2040a and 416.640a to require proposed rules, we also invite your
fee-for-service non-governmental comments on how to make these rules
Explanation of Proposed Changes on community-based nonprofit
Representative Payment easier to understand. For example:
organizational representative payees to
• Have we organized the material to
Because our regulations for be both bonded and licensed (provided
suit your needs?
representative payment under the title that licensing is available in the State).
• Are the requirements in the rules
VIII program cross-reference the The bond would have to be of a
clearly stated?
appropriate material in our title II sufficient amount to repay any funds
• Do the rules contain technical
representative payment rules, most of (current social security benefits and
language or jargon that is not clear?
the changes we now propose to our title supplemental security income payments
• Would a different format (grouping
II representative payment regulations plus any conserved funds and interest)
and order of sections, use of headings,
would also apply to title VIII. Where lost by the beneficiaries in the event of
paragraphing) make the rules easier to
only a cross-reference to the title II rules misuse or theft, and the license would
understand?
would not be sufficient, we propose a have to be appropriate under the laws
• Would more (but shorter) sections
specific rule for title VIII. of the State for the type of services the
be better?
We are proposing the following policy organization provides. These bonding
• Could we improve clarity by adding
changes to our representative payment and licensing requirements would not
tables, lists, or diagrams?
regulations: apply to the title VIII program. In
1. We propose to amend §§ 404.2022 • What else could we do to make the
addition, these sections would explain
and 416.622 to explain that a person rules easier to understand?
that a fee-for-service representative
who is convicted of an offense resulting payee must forfeit its fee for the months Regulatory Procedures
in imprisonment for more than 1 year during which it misused benefits.
may not serve as a representative payee. 5. We propose to amend §§ 404.2041 Executive Order 12866
These sections also would explain that and 416.641 to explain that a non- We have consulted with the Office of
we may make an exception to this rule governmental representative payee will Management and Budget (OMB) and
if the nature of the conviction poses no be liable for any benefits it misuses and determined that these proposed rules

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

meet the criteria for a significant The provision requiring a State Regulatory Flexibility Act
regulatory action under Executive Order license for certain qualified We certify that these proposed rules
12866, as amended by Executive Order organizations seeking compensation for will not have a significant economic
13258. Thus, the rules have been serving as representative payees affects impact on a substantial number of small
reviewed by OMB. a very small number of organizational entities. Therefore, a regulatory
Executive Order 13132 (Federalism) and payees and will not significantly impact flexibility analysis, as provided for in
the Unfunded Mandates Reform Act of the States. First, the total number of the Regulatory Flexibility Act, as
1995 organizations seeking compensation is amended, is not required.
very small, approximately 800. There
We have reviewed the proposed rules Paperwork Reduction Act
are a significant number of State or local
for compliance with Executive Order government agencies within this group These proposed rules contain
13132 and the Unfunded Mandates which we do not require to be licensed. reporting requirements as shown in the
Reform Act of 1995 (UMRA of 1995). Only the small number of remaining table below. Where the public reporting
We have determined that the proposed organizations (community-based burden is accounted for in Information
rules are not significant within the nonprofit social service organizations) Collection Requests for the various
meaning of the UMRA of 1995 nor will must seek State licensing. Second, such forms that the public uses to submit the
they have any substantial direct effects organizations should already have information to SSA, a 1-hour
on the States, on the relationship obtained the necessary license to be in placeholder burden is being assigned to
between the federal government and the compliance with State law. Therefore, the specific reporting requirement(s)
States, or on the distribution of power contained in these rules; we are seeking
the very small number of organizations
and responsibilities among the various clearance of these burdens because they
seeking a State license will not
levels of government within the were not considered during the
significantly impact the States.
meaning of Executive Order 13132. clearance of the forms.

Annual Average
Frequency of Estimated an-
Section number of burden per
response nual burden
responses response

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 Disability Insurance; 96.002, Social Security- Dated: October 7, 2005.
has been submitted to OMB. We are Retirement Insurance; 96.004, Social Jo Anne B. Barnhart,
soliciting comments on the burden Security-Survivors Insurance; 96.006, Commissioner of Social Security.
estimate; the need for the information; Supplemental Security Income; 96.020,
its practical utility; ways to enhance its Special Benefits for Certain World War II For the reasons set out in the
quality, utility and clarity; and on ways Veterans) preamble, we propose to amend
to minimize the burden on respondents, subparts E and U of part 404, subpart F
List of Subjects of part 408, and subparts F and M of
including the use of automated
collection techniques or other forms of 20 CFR Part 404 part 416 of Title 20 of the Code of
information technology. Comments Federal Regulations as follows:
should be submitted and/or faxed to Administrative practice and
OMB and to the Social Security procedure, Blind, Disability benefits, PART 404—FEDERAL OLD-AGE,
Administration at the following Old-Age, Survivors and Disability SURVIVORS AND DISABILITY
addresses/numbers: Office of Insurance; Reporting and recordkeeping INSURANCE (1950– )
Management and Budget, Attn: Desk requirements, Social Security.
Officer for SSA, Fax Number: 202–395– Subpart E—[Amended]
20 CFR Part 408
6974. Social Security Administration,
Attn: SSA Reports Clearance Officer, 1. The authority citation for subpart E
Administrative practice and
Rm: 1338 Annex Building, 6401 of part 404 continues to read as follows:
procedure, Aged; Reporting and
Security Boulevard, Baltimore, MD recordkeeping requirements, Social Authority: Secs. 202, 203, 204(a) and (e),
21235–6401, Fax Number: 410–965– Security; Special Veterans benefits; 205(a) and (c), 216(l), 223(e), 224, 225,
6400. Veterans. 702(a)(5), and 1129A of the Social Security
Comments can be received for up to Act (42 U.S.C. 402, 403, 404(a) and (e), 405(a)
60 days after publication of this notice 20 CFR Part 416 and (c), 416(l), 423(e), 424a, 425, 902(a)(5),
and will be most useful if received 1320a–8a) and 48 U.S.C. 1801.
within 30 days of publication. To Administrative practice and
receive a copy of the OMB clearance procedure, Aged, Blind, Disability 2. Amend § 404.459 by revising the
package, you may call the SSA Reports benefits, Public assistance programs, heading and paragraphs (a) and (e) to
Clearance Officer on 410–965–0454. Reporting and recordkeeping read as follows:
requirements, Supplemental security
(Catalog of Federal Domestic Assistance
Program Nos. 96.001, Social Security- income (SSI).

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

§ 404.459 Penalty for making false or disclose in terms of its likely impact on right to receive benefits, or how you
misleading statements or withholding your benefits. receive them;
information.
* * * * * (e) Submit to us, upon our request, a
(a) When may SSA penalize me? You written report accounting for the
will be subject to a penalty if: Subpart U—[Amended] benefits received on your behalf, and
(1) You make, or cause to be made, a 3. The authority citation for subpart U make all supporting records available
statement or representation of a material of part 404 continues to read as follows: for review if requested by us; and
fact, for use in determining any initial Authority: Secs. 205(a), (j), and (k), and (f) Notify us of any change in his or
or continuing right to, or the amount of, 702(a)(5) of the Social Security Act (42 U.S.C. her circumstances that would affect
monthly insurance benefits under title II 405(a), (j), and (k), and 902(a)(5)). performance of his/her payee
or benefits or payments under title XVI, 4. Amend § 404.2022 by redesignating responsibilities.
that you know or should know is false paragraphs (b), (c) and (d) as paragraphs 6. Amend § 404.2040a by revising
or misleading, or (d), (e) and (f) and adding new paragraph (a)(2), redesignating
(2) You make a statement or paragraphs (b) and (c) to read as follows: paragraph (g)(6) as (g)(7), and adding a
representation of a material fact for use new paragraph (g)(6) to read as follows:
as described in paragraph (a)(1) of this § 404.2022 Who may not serve as a
representative payee? § 404.2040a Compensation for qualified
section with knowing disregard for the
truth, or * * * * * organizations serving as representative
(b) Is fleeing to avoid prosecution, or payees.
(3) You omit from a statement or custody or confinement after conviction * * * * *
representation made for use as of a crime, or an attempt to commit a
described in paragraph (a)(1) of this (a) * * *
crime, that is a felony under the laws of
section, or otherwise withhold the place from which he/she flees (or, in (2) Any community-based nonprofit
disclosure (for example, fail to come jurisdictions that do not define crimes social service organization founded for
forward to notify SSA) of a fact which as felonies, is punishable by death or religious, charitable or social welfare
you know or should know is material to imprisonment for a term exceeding one purposes, which is tax exempt under
the determination of any initial or year, regardless of the actual sentence section 501(c) of the Internal Revenue
continuing right to, or the amount of, imposed). If we identify a currently Code and which is bonded/insured to
monthly insurance benefits under title II serving payee who is no longer qualified cover misuse and embezzlement by
or benefits or payments under title XVI, for this reason, we will allow them 10 officers and employees and which is
if you know, or should know, that the days to respond to notification before licensed in each State in which it serves
statement or representation with such making any payee change. as representative payee (if licensing is
omission is false or misleading or that (c) Has been convicted of an offense available in the State). The minimum
the withholding of such disclosure is resulting in imprisonment for more than amount of bonding or insurance
misleading. 1 year. However, we may make an coverage must equal the average
* * * * * exception to this prohibition, if the monthly amount of social security
nature of the conviction is such that payments received by the organization
(e) How will SSA make its decision to
selection of the applicant poses no risk plus the amount of the beneficiaries’
penalize me? In order to impose a
to the beneficiary and the exception is conserved funds (i.e., beneficiaries’
penalty on you, we must find that you
in the beneficiary’s best interest. saved social security benefits) plus
knowingly (knew or should have known
or acted with knowing disregard for the * * * * * interest on hand. For example, an
truth) made a false or misleading 5. Revise § 404.2035 to read as organization that has conserved funds of
statement or omitted or failed to report follows: $5,000 and receives an average of
$12,000 a month in social security
a material fact if you knew, or should § 404.2035 What are the responsibilities of payments must be bonded/insured for a
have known, that the omission or failure your representative payee?
minimum of $17,000. The license must
to disclose was misleading. We will A representative payee has a be appropriate under the laws of the
base our decision to penalize you on the responsibility to— State for the type of services the
evidence and the reasonable inferences (a) Use the benefits received on your organization provides. An example of an
that can be drawn from that evidence, behalf only for your use and benefit in appropriately licensed organization is a
not on speculation or suspicion. Our a manner and for the purposes he or she community mental health center
decision to penalize you will be determines, under the guidelines in this holding a State license to provide
documented with the basis and subpart, to be in your best interests. community mental health services.
rationale for that decision. In (b) Keep any benefits received on your
determining whether you knowingly behalf separate from his or her own * * * * *
made a false or misleading statement or funds and show your ownership of (g) * * *
omitted or failed to report a material fact these benefits unless he or she is your (6) Fees for services may not be taken
so as to justify imposition of the spouse or natural or adoptive parent or from beneficiary benefits for the months
penalty, we will consider all evidence stepparent and lives in the same for which the Commissioner or a court
in the record, including any physical, household with you or is a State or local of competent jurisdiction determines
mental, educational, or linguistic government agency for whom we have that the representative payee misused
limitations (including any lack of granted an exception to this benefits. Any fees collected for such
facility with the English language) requirement. months will be treated as a part of the
which you may have had at the time. In (c) Treat any interest earned on the beneficiary’s misused benefits.
determining whether you acted benefits as your property.
knowingly, we will also consider the (d) Notify us of any event or change * * * * *
significance of the false or misleading in your circumstances that will affect 7. Amend § 404.2041 by adding a new
statement or omission or failure to the amount of benefits you receive, your paragraph (f) to read as follows:

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

§ 404.2041 Who is liable if your records of how benefits were used in to the beneficiary and the exception is
representative payee misuses your order to provide accounting reports and in the beneficiary’s best interest.
benefits? must make those records available upon * * * * *
* * * * * our request. If your representative payee 13. Revise § 416.635 to read as
(f) Any amounts that the fails to provide an annual accounting of follows:
representative payee misuses and does benefits or other required report, we
not refund will be treated as an may require your payee to appear in § 416.635 What are the responsibilities of
overpayment to that representative person at a United States Government your representative payee?
payee. See subpart F of part 404. facility designated by the Social A representative payee has a
8. Amend § 404.2065 by revising the Security Administration serving the area responsibility to—
introductory text to read as follows: in which you reside. The decision to (a) Use the benefits received on your
§ 404.2065 How does your representative have your representative payee receive behalf only for your use and benefit in
payee account for the use of benefits? your benefits in person may be based on a manner and for the purposes he or she
Your representative payee must a variety of reasons. Some of these determines under the guidelines in this
account for the use of your benefits. We reasons may include the payee’s history subpart, to be in your best interests.
require written reports from your of past performance or SSA’s past (b) Keep any benefits received on your
representative payee at least once a year difficulty in contacting the payee. We behalf separate from his or her own
(except for certain State institutions that may ask your representative payee to funds and show your ownership of
participate in a separate onsite review give us the following information: these benefits unless he or she is your
program). We may verify how your (a) Where you lived during the spouse or natural or adoptive parent or
representative payee used your benefits. accounting period; stepparent and lives in the same
Your representative payee should keep (b) Who made the decisions on how household with you or is a State or local
records of how benefits were used in your benefits were spent or saved; government agency for whom we have
order to make accounting reports and granted an exception to this
(c) How your benefit payments were
must make those records available upon requirement.
used; and
our request. If your representative payee (c) Treat any interest earned on the
(d) How much of your benefit benefits as your property.
fails to provide an annual accounting of payments were saved and how the
benefits or other required reports, we (d) Notify us of any event or change
savings were invested. in your circumstances that will affect
may require your payee to receive your
benefits in person at the local Social the amount of benefits you receive, your
PART 416—SUPPLEMENTAL
Security field office or a United States right to receive benefits, or how you
SECURITY INCOME FOR THE AGED,
Government facility designated by the receive them;
BLIND AND DISABLED
Social Security Administration serving (e) Submit to us, upon our request, a
the area in which you reside. The Subpart F—[Amended] written report accounting for the
decision to have your representative benefits received on your behalf, and
payee receive your benefits in person 11. The authority citation for subpart make all supporting records available
may be based on a variety of reasons. F continues to read as follows: for review if requested by us; and
Some of these reasons may include the Authority: Secs. 702(a)(5), 1631(a)(2) and (f) Notify us of any change in his or
payee’s history of past performance or (d)(1) of the Social Security Act (42 U.S.C. her circumstances that would affect
SSA’s past difficulty in contacting the 902(a)(5) and 1383(a)(2) and (d)(1)). performance of his/her payee
payee. We may ask your representative responsibilities.
12. Amend § 416.622 by redesignating (g) If you are under age 18 (including
payee to give us the following paragraphs (b), (c) and (d) as paragraphs
information: cases in which your low birth weight is
(d), (e) and (f) and adding new a contributing factor material to our
* * * * * paragraphs (b) and (c) to read as follows: determination that you are disabled),
PART 408—SPECIAL BENEFITS FOR § 416.622 Who may not serve as a ensure that you are receiving treatment
CERTAIN WORLD WAR II VETERANS representative payee? to the extent considered medically
(SVB) * * * * * necessary and available for the
(b) Is fleeing to avoid prosecution, or condition that was the basis for
Subpart F—[Amended] custody or confinement after conviction providing benefits (see § 416.994a(i)).
14. Amend § 416.640a by revising
9. The authority citation for subpart F of a crime, or an attempt to commit a
paragraph (a)(2), redesignating
of part 408 continues to read as follows: crime, that is a felony under the laws of
paragraph (g)(6) as (g)(7), and adding a
the place from which he/she flees (or in
Authority: Secs. 702(a)(5), 807, and 810 of new paragraph (g)(6) to read as follows:
the Social Security Act (42 U.S.C. 902(a)(5),
jurisdictions that do not define crimes
1007, and 1010). as felonies, is punishable by death or § 416.640a Compensation for qualified
imprisonment for a term exceeding one organizations serving as representative
10. Revise § 408.665 to read as year, regardless of the actual sentence payees.
follows: imposed). If we identify a currently * * * * *
§ 408.665 How does your representative serving payee who is no longer qualified (a) * * *
payee account for the use of your SVB for this reason, we will allow them 10 (2) Any community-based nonprofit
benefits? days to respond to notification before social service organization founded for
Your representative payee must making any payee change. religious, charitable or social welfare
account for the use of your benefits. We (c) Has been convicted of an offense purposes, which is tax exempt under
require written reports from your resulting in imprisonment for more than section 501(c) of the Internal Revenue
representative payee at least once a year. 1 year. However, we may make an Code and which is bonded/insured to
We may verify how your representative exception to this prohibition, if the cover misuse and embezzlement by
payee used your benefits. Your nature of the conviction is such that officers and employees and licensed in
representative payee should keep selection of the applicant poses no risk each State in which it serves as

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

representative payee (if licensing is Government facility designated by the a material fact if you knew, or should
available in the State). The minimum Social Security Administration serving have known, that the omission or failure
amount of bonding or insurance the area in which you reside. The to disclose was misleading. We will
coverage must equal the average decision to have your representative base our decision to penalize you on the
monthly amount of supplemental payee receive your benefits in person evidence and the reasonable inferences
security income payments received by may be based on a variety of reasons. that can be drawn from that evidence,
the organization plus the amount of the Some of these reasons may include the not on speculation or suspicion. Our
beneficiaries’ conserved funds (i.e., payee’s history of past performance or decision to penalize you will be
beneficiaries’ saved supplemental SSA’s past difficulty in contacting the documented with the basis and
security income payments) plus interest payee. We may ask your representative rationale for that decision. In
on hand. For example, an organization payee to give us the following determining whether you knowingly
that has conserved funds of $5,000 and information: made a false or misleading statement or
receives an average of $12,000 a month * * * * * omitted or failure to report a material
in supplemental security income fact so as to justify imposition of the
payments must be bonded/insured for a Subpart M—[Amended] penalty, we will consider all evidence
minimum of $17,000. The license must in the record, including any physical,
17. The authority citation for subpart
be appropriate under the laws of the mental, educational, or linguistic
M of part 416 continues to read as
State for the type of services the limitations (including any lack of
follows:
organization provides. An example of an facility with the English language)
appropriately licensed organization is a Authority: Secs. 702(a)(5), 1129A, 1611– which you may have had at the time. In
community mental health center 1614, 1619, and 1631 of the Social Security determining whether you acted
Act (42 U.S.C. 902(a)(5), 1320a–8a, 1382–
holding a State license to provide knowingly, we will also consider the
1382c, 1382h, and 1383).
community mental health services. significance of the false or misleading
* * * * * 18. Amend § 416.1340 by revising the statement or omission or failure to
(g) * * * heading and paragraphs (a) and (e) to disclose in terms of its likely impact on
(6) Fees for services may not be taken read as follows: your benefits.
from beneficiary benefits for the months § 416.1340 Penalty for making false or * * * * *
for which the Commissioner or a court misleading statements or withholding [FR Doc. 05–20697 Filed 10–14–05; 8:45 am]
of competent jurisdiction determines information. BILLING CODE 4191–02–P
that the representative payee misused (a) When may SSA penalize me? You
benefits. Any fees collected for such will be subject to a penalty if:
months will be treated as a part of the (1) You make, or cause to be made, a DEPARTMENT OF THE TREASURY
beneficiary’s misused benefits. statement or representation of a material
* * * * * fact, for use in determining any initial Internal Revenue Service
15. Amend § 416.641 by adding a new or continuing right to, or the amount of,
paragraph (f) to read as follows: monthly insurance benefits under title II 26 CFR Part 801
or benefits or payments under title XVI, [REG–114444–05]
§ 416.641 Who is liable if your
representative payee misuses your
that you know or should know is false
or misleading, or RIN 1545–BE45
benefits?
(2) You make a statement or
* * * * * representation of a material fact for use Balanced System for Measuring
(f) Any amounts that the Organizational and Employee
as described in paragraph (a)(1) of this
representative payee misuses and does Performance Within the Internal
section with knowing disregard for the
not refund will be treated as an Revenue Service
truth, or
overpayment to that representative (3) You omit from a statement or
payee. See subpart E of part 416. AGENCY: Internal Revenue Service (IRS),
representation made for use as Treasury.
16. Amend § 416.665 by revising the
described in paragraph (a)(1) of this
introductory text to read as follows: ACTION: Notice of proposed rulemaking
section, or otherwise withhold
by cross-reference to temporary
§ 416.665 How does your representative disclosure (for example, fail to come
regulations.
payee account for the use of benefits? forward to notify SSA) of, a fact which
Your representative payee must you know or should know is material to SUMMARY: In the Rules and Regulations
account for the use of your benefits. We the determination of any initial or section of this issue of the Federal
require written reports from your continuing right to, or the amount of, Register, the IRS is issuing temporary
representative payee at least once a year monthly insurance benefits under title II regulations designed to modify 26 CFR
(except for certain State institutions that or benefits or payments under title XVI, part 801, the regulations governing the
participate in a separate onsite review if you know, or should know, that the IRS Balanced System for Measuring
program). We may verify how your statement or representation with such Organizational and Employee
representative payee used your benefits. omission is false or misleading or that Performance, to clarify when quantity
Your representative payee should keep the withholding of such disclosure is measures, which are not tax
records of how benefits were used in misleading. enforcement results, may be used in
order to make accounting reports and * * * * * measuring organizational and employee
must make those records available upon (e) How will SSA make its decision to performance. The temporary regulations
our request. If your representative payee penalize me? In order to impose a affect internal operations of the IRS and
fails to provide an annual accounting of penalty on you, we must find that you the systems it employs to evaluate the
benefits or other required reports, we knowingly (knew or should have known performance of organizations within the
may require your payee to receive your or acted with knowing disregard for the IRS. The text of the temporary
benefits in person at the local Social truth) made a false or misleading regulations also serves as the text of
Security field office or a United States statement or omitted or failed to report these proposed regulations.

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