Problems receiving SSI well after self-employment earnings ended

[Roger1]

A business failure resulted in high credit card debt and the loss of all property, savings, and assets except for a car. I then started driving for Uber, continuing for years in California. All non-survival driving income was applied to debt service. In 2019 I drove January-June but then stopped for medical reasons. Four months later, as a hopefully temporary measure, I applied for and was granted SSI at the maximum level of a little over $1000, based on finances and my age of 66, not disability. SS retirement benefits are not at issue here, having not yet paid in enough quarters. I am now told by the SSA that a mistake was made and benefits will be drastically reduced, because while four months passed with no Uber income before applying for SSI, and with no assets, as one self-employed, for SSI calculations, the earnings for the first half of 2019 (the only 2019 earnings) are calculated as being distributed over all of 2019, falsely appearing as continuing income for the second half of 2019, so now they claim major overpayment for 2019 SSI payments, now to be deducted from future payments. Have they made a mistake? If so, can you please cite a SSA rule I can cite to them? Is there an alternate approach here? Thanks for your help!

 

[commentator]

Have you received paperwork telling of this overpayment, and if so, have you filed an appeal of their decision? Be sure you do this timely. It sounds as though they annualized your most recent past few months income to obtain your income for qualification, but now they are seeing what your earnings were for the first six months of 2019 (probably based on your income tax filing), and finding that you were overpaid. You can of course, appeal this decision. You do not need to quote their laws to them in order to file such an appeal. You may want to talk to the agency for free or reduced cost Legal services in your area about your appeal.

 

[Roger1]

Thanks Commentator for your reply. I have not received overpayment paperwork. Rather, this issues was raised at an in-person SSI review yesterday. As requested, I provided all banking statements back to the beginning of 2019, and the Uber/Lyft driving records, showing that driving income stopped three and a half months before SSI application. However, as you suggest, as they consider Uber/Lyft driving to be self-employment, thus annualizing the early 2019 earnings was suggested as something they may need to do. The agent said he needed to do more research this next week before making a determination, and I wanted to be better prepared to understand and respond in the case of an adverse determination, by asking this question here. I could also provide a supporting document to the agent before he makes the determination. Also, as a California resident, it is interesting to note that the California Supreme Court and the California Labor Commission have both ruled in previous cases that rideshare drivers are employees, not contractors, thereby implying that annualization should not be applied. Further, recently passed California Assembly Bill 5 (AB 5) informally known as the "gig worker bill", requires that rideshare drivers be treated as employees. Is any of this applicable in arguing to SSA that my early 1995 earnings NOT be annualized because I should NOT be considered a contractor by SSA for SSI calculations? Would such an argument be effective to the front-line agent? - or only in an extended appeal process? Would there be a value in filing an IRS form SS-8 "Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding "? From my perspective as a former Uber/Lyft driver, and being familiar with IRS rules for contractor status, I clearly was NOT a contractor, give the control and other factors in the driver/Uber/Lyft relationship. Of course Uber and Lyft with their army of high-priced lawyers, are fighting tooth and nail against this as it would adversely affect their profits and stock prices in a major way, but their protestations should not affect SSA treatment of SSI recipients given SS-8, the California Supreme Court rulings, and the California Labor Commission rulings, it would seem to me. Your further wisdom on this topic and suggestions for appropriate action would be greatly appreciated. Thank you!

 

[Taxing Matters]

You do not need to quote their laws to them in order to file such an appeal.

Perhaps not to file it, but in order to succeed in the appeal you certainly have to point the law that supports your position.

 

[commentator]

I would say that right now you're still in the early stages as you have only just begun to work through this issue with SSI. It would be likely that the caseworker will take your situation to a higher level to help them make the decision of how to calculate your income and then you will hear what it is and you will be given the option to appeal. At that point you can present things to make your case. As I said, assistance with your appeal is sometimes available through legal aid.

Were you paid as an independent contractor last year? Are you going to try to identify as an employee for tax purposes? I understand that you want to do all you can, but I suspect you are not the first Uber/Lift driver who has applied for SSI benefits in your state lately. You are probably not going to be able to argue with a first level case worker and accomplish anything much at this stage in regard to deciding how they should calculate your income. Particularly since as you mention, so far the companies are using their "army of lawyers" to fight these classification/ misclassification issues in court right now. There are people within the Social Security and SSI legal department who study these cases closely. Because as I said, they have to deal with a lot of people who are in similar situations.

 

[Roger1]

Thank you for your considered response. I was paid as an independent contractor by Lyft and Uber. But they have a vested financial interest in keeping drivers as contractors, regardless of the proper legal categorization, and their opinion should not be controlling. As noted, a variety of state authorities in my home state of California and elsewhere, have deemed that rideshare drivers are properly classified as employees. As a driver, and one familiar with IRS requirements, I know that categorically that the Lyft-Uber/driver relationship clearly violates IRS contractor classification, as Lyft/Uber has their fingers into every detail of ride execution with penalties for violation, so drivers are by no means in control of the execution of specified work as would be the case for true contractors. I think I am going to file an IRS form SS-8, which I just downloaded, requesting a “worker status” determination from the IRS, using my arguments and those of the California Supreme Court (which determined that rideshare drivers should be classified as employees) and provide a copy of that filing to SSA as part of my record, in order to support my non-self-employed status, in an attempt to have the unfair annualization of income dropped. Perhaps the provision of such documentation might affect the thinking of the legal department, and help other rideshare drivers as well. And of course if I get a favorable response from the IRS, that will be provided to SSA too, as well in that case, a copy of my 2019 tax filing (not yet filed) as an employee. As noted, the Lyft/Uber's stance that riders are contractors, in the face of decisions by state authorities otherwise, should not be controlling. That decision affects rideshare company federal and state liabilities, and other issues, but should not dictate a driver's ability to file properly, in the face of possibly non-compliant rideshare companies that are abusing the system for purposes of seeking higher stock prices and company valuation, and perpetuating an unjust enrichment scheme. I know that is a strong allegation, but I think it is true, and is a position supported by many legal authorities. In the future, I will follow up in this thread with details of the outcome.

 

[Janke]

I doubt that the federal law is going to change just because California law has changed. As a general rule, SSA counts self-employment over a calendar year. Some self-employed persons work every day but only get paid when the crop sells or the commission is paid on the real estate deal. What did you file with the IRS for this work? Schedule C? Schedule SE?

This is the policy that should be used by your local office.
https://secure.ssa.gov/apps10/poms.nsf/lnx/0500820210

It specifically states that the taxable year does not end the day the business ends. Your local office is not going to ignore this policy because you don't like it or because California passed AB5. And I don't think an ALJ is going to flaunt the SSA law in favor of a newly passed state law. But you can try. You still have to go through the appeal process and it will be months before you will get to the ALJ level. And you may not win.

When you know how big the overpayment is, you may also decide to pursue easier resolutions than attempting to change SSA law. The amount matters to SSA and what they will do.

Since this all occurred in 2019, there should be no ongoing reduction in payment in 2020, so the easiest solution would be to request a waiver of recovery (SSA 632) after the overpayment notice is sent, and use the argument that the overpayment is not your fault. Next is a link to the waiver procedures.

https://secure.ssa.gov/apps10/poms.nsf/lnx/0502260000