# SSR 89-7c: SSR 89-7c: SECTION 203(f)(4)(A), 203(h)(3), 205(c)(2)(A), AND 205(c)(4)(C) OF THE SOCIAL SECURITY ACT (42 U.S.C. 403(f)(4)(A), 403(h)(3), 405(c)(2)(A), AND 405(c)(4)(C)) WORK DEDUCTIONS — SUBSTANTIAL SERVICES IN SELF-EMPLOYMENT — EVIDENTIARY REQUIREMENTS

> Federal · Rulings · In force

URL: https://www.frixlaw.com/law-library/statutes/SSA_SSR_OASI_SSR_89_7c

## Section

- **Citation:** SSR 89-7c
- **Heading:** SSR 89-7c: SECTION 203(f)(4)(A), 203(h)(3), 205(c)(2)(A), AND 205(c)(4)(C) OF THE SOCIAL SECURITY ACT (42 U.S.C. 403(f)(4)(A), 403(h)(3), 405(c)(2)(A), AND 405(c)(4)(C)) WORK DEDUCTIONS — SUBSTANTIAL SERVICES IN SELF-EMPLOYMENT — EVIDENTIARY REQUIREMENTS
- **Jurisdiction:** Federal
- **Kind:** Rulings
- **Status:** In force
- **Text as of:** August 14, 2026
- **Source:** Compiled text
- **Location:** Social Security Rulings / OASI / Reduction of Insurance Benefits / SSR 89-7c

## Text

SSR 89-7c

EFFECTIVE/PUBLICATION DATE: 10/23/89

20 CFR 404.435(e) , 404.446(c) , 404.705 , AND 404.803(c)(3)

Ciccone v. Sec. of HHS, 861 F.2d 14 (2nd Cir. 1988)

The claimant, who was self-employed, applied for old-age insurance
benefits, contending that he had retired at the end of June 1983. He
submitted a portion of his tax return for 1983, which showed $12,000
self-employment income. The Secretary asked the claimant for more
information regarding his occupation and work practices to determine
whether the claimant had retired and, if so, when. He refused to supply
the information, and the Secretary decided to withhold benefits for work
deductions. After the District Court affirmed the Secretary's decision,
the claimant appealed to the U.S. Court of Appeals for the Second Circuit.
The Court of Appeals held that the Secretary's determination was
proper and found that 20 CFR
404.446(c) did not violate the claimant's Fifth Amendment rights. The
Court of Appeals rejected the claimant's first argument that, because he
last filed a self-employment tax return for 1983, he had proven
conclusively under 42 U.S.C. 405(c)(4)(C) that he had retired. Subject to
few exceptions, 42 U.S.C. 405(c)(4)(C) provides that, after the expiration
of the 3-year, 3-month, and 15-day time limitation following the year in
which wages were paid or self-employment income was received, the absence
of an entry in the Secretary's records as to an individual's
self-employment income for that year is conclusive evidence that the
individual did not receive self-employment income in that year. The Court
found that the conclusive presumption in 42 U.S.C. 405(c)(4)(C) applies
only to situations when self-employed individuals attempt, after the time
limitation, to establish earnings for coverage purposes and that 42 U.S.C.
403(f)(4)(A) is controlling for deduction purposes
or that year is conclusive evidence that the
individual did not receive self-employment income in that year. The Court
found that the conclusive presumption in 42 U.S.C. 405(c)(4)(C) applies
only to situations when self-employed individuals attempt, after the time
limitation, to establish earnings for coverage purposes and that 42 U.S.C.
403(f)(4)(A) is controlling for deduction purposes. Section 403(f)(4)(A)
specifies that the Secretary will presume a self-employed individual is
rendering substantial services in his or her trade(s) or business(es),
unless the individual shows to the satisfaction of the Secretary,
according to methods and criteria which the regulations prescribe, that he
or she is not doing so. The Court noted that the implementing regulations, 20 CFR 404.435(e) and 404.446(c) , require
individuals to submit detailed information regarding their trades or
businesses to prove that they are not rendering substantial services. The
Court concluded that such a requirement is "a legitimate prerequisite to
an applicant's receipt of benefits." The Court also rejected the
claimant's second argument that 20 CFR 404.446(c) violated
his Fifth Amendment right against self-incrimination. The Court found that
such a right applies only when the information being requested is
compelled, testimonial, and incriminating, and reasoned that the
Government had not compelled the claimant to file his application because
applying for Social Security benefits is purely voluntary.

MESKILL, Circuit Judge:

Plaintiff-appellant Anthony Ciccone appeals from an order entered in the
United States District Court for the Eastern District of New York,
Nickerson, J., dismissing his appeal from a decision of the Secretary of
the Department of Health and Human Services (Secretary). Ciccone claims
that the Secretary improperly denied his application for retirement
benefits in violation of statute and the Fifth Amendment to the United
States Constitution.
r entered in the
United States District Court for the Eastern District of New York,
Nickerson, J., dismissing his appeal from a decision of the Secretary of
the Department of Health and Human Services (Secretary). Ciccone claims
that the Secretary improperly denied his application for retirement
benefits in violation of statute and the Fifth Amendment to the United
States Constitution.

The district court concluded that Ciccone's refusal to state his former
occupation constituted a valid reason to deny his claim and that the Fifth
Amendment cannot be used to "frustrate the collection of highly relevant
information the submission of which is a fair prerequisite to receipt of
benefits." Ciccone v. Bowen, No. 86 Civ. 795, slip op. at 4 (E.D.N.Y. Mar.
3, 1988) [available on WESTLAW, 1988 WL23537], App. of Appellant at 89. We
affirm the decision of the district court.

BACKGROUND

Appellant Ciccone, a self-employed individual, filed for old age insurance
benefits under the Social Security Act, 42 U.S.C. § 402(a) (1982 &
Supp. IV 1986), on August 18, 1983, claiming that he had retired at the
end of June 1983. App. of Appellant at 45-48. In support of his
application, Ciccone filed a copy of his 1983 federal tax return with the
Secretary. Id. at 62-65. Appellant has not filed a tax return since
1983. [1] Neither his application
nor his 1983 tax return revealed Ciccone's occupation, id. at 62-65, and
when requested by the Secretary's to supply this information, Ciccone
refused. Id. at 37-40, 49, 52-54. Although there was no evidence that
Ciccone had not retired and he had stated, under oath, that he had
retired, id. at 42-43, the Secretary claimed he needed to know what
appellant's occupation had been to determine whether appellant had stopped
working.
occupation, id. at 62-65, and
when requested by the Secretary's to supply this information, Ciccone
refused. Id. at 37-40, 49, 52-54. Although there was no evidence that
Ciccone had not retired and he had stated, under oath, that he had
retired, id. at 42-43, the Secretary claimed he needed to know what
appellant's occupation had been to determine whether appellant had stopped
working.

Because appellant failed to furnish the requested information, the
Secretary ruled that he could not receive benefits. Id. at 53. This ruling
was affirmed by the Secretary on reconsideration, id. at 55-58, by an
Administrative Law Judge, id. at 19-23, and by the district court, Ciccone
v. Bowen, No. 86 Civ. 795 (E.D.N.Y. Mar. 3, 1988), App. of Appellant at
86-90.

On appeal, Ciccone claims that he has proved his retirement and therefore
is entitled to receive social security benefits. Second, he claims that
his Fifth Amendment right not to incriminate himself allows him to refuse
to provide the information requested by the Secretary and still be
eligible for benefits.

DISCUSSION

The Social Security Act provides for benefits to be paid to retirees in an
amount based, in part, on prior and current wages. 42 U.S.C. §§ 402(a),
415(a)(1)(A) (1982), 415(f)(2) (1982 & Supp. IV 1986). The Secretary
is empowered to make regulations concerning proof of entitlement, 42
U.S.C. § 405(a) (1982), and is required to keep records of past wages of
self-employed individuals, 52 U.S.C. § 405(c)(2)(A). If the Secretary's
records contain no evidence of self-employment wages for a certain period,
and if no tax return has been filed for that period, then the records are
"conclusive" as to the absence of earnings for that period after a
limitations period of three years, three months and fifteen days has
expired. 42 U.S.C. §§ 405(c)(1)(B), 405(c)(4)(C). See Yoder v. Harris, 650
F.2d 1170, 1171-73 (10th Cir. 1981); Shore v. Califano, 589 F.2d 1232,
1233 (3d Cir. 1978); Taylor v
d,
and if no tax return has been filed for that period, then the records are
"conclusive" as to the absence of earnings for that period after a
limitations period of three years, three months and fifteen days has
expired. 42 U.S.C. §§ 405(c)(1)(B), 405(c)(4)(C). See Yoder v. Harris, 650
F.2d 1170, 1171-73 (10th Cir. 1981); Shore v. Califano, 589 F.2d 1232,
1233 (3d Cir. 1978); Taylor v. Weinberger, 528 F.2d 1153, 1155 (4th Cir.
1975); Singer v. Weinberger,513 F.2d 176, 177-78 (9th Cir. 1975). If an
individual earns wages during a period in which he or she otherwise is
entitled to benefits, i.e., after "retirement," deductions will be taken
against the amount to which the individual is entitled. 42 U.S.C. § 403
(1982 & Supp. IV 1986). In the case of a self-employed individual,
these deductions will be taken unless the individual proves to the
Secretary that he or she received no outside income. 42 U.S.C. §
403(f)(4)(A). Section 403(f)(4)(A) provides that

[a]n individual will be presumed, with respect to any month, to have been
engaged in self-employment in such month until it is shown to the
satisfaction of the Secretary that such individual rendered no substantial
services in such month.... The Secretary shall by regulations prescribe
the methods and criteria for determining whether or not an individual has
rendered substantial services with respect to any trade or business.

Id. Nevertheless, appellant argues that section 405(c)(4)(C) is
controlling, and that his failure to file tax returns subsequent to 1983
is conclusive evidence of retirement. We disagree.

We begin by noting that at the time the Secretary denied appellant's
claim, the "conclusive" presumption of section 405(c)(4)(C) did not apply
to any year for which Ciccone claimed benefits because the limitations
period had not yet expired. Even if we were to find that it did apply,
Ciccone's argument would fail.
rns subsequent to 1983
is conclusive evidence of retirement. We disagree.

We begin by noting that at the time the Secretary denied appellant's
claim, the "conclusive" presumption of section 405(c)(4)(C) did not apply
to any year for which Ciccone claimed benefits because the limitations
period had not yet expired. Even if we were to find that it did apply,
Ciccone's argument would fail.

The purpose of the self-employment provisions of section 405 was to
provide a mechanism for self-employed individuals to record their wages
with the Secretary, so that they can show that they meet minimum length of
employment requirements and therefore become eligible for benefits. See
Jabbar v. Secretary of Health and Human Services, 855 F.2d 295, 298 (6th
Cir. 1988) (Congress viewed a "timely filed tax return . . . as sufficient
to bring self-employed persons into the social security system") (per
curiam); Weisbraut v. Secretary of the Department of Health and Human
Services, 757 F.2d 83, 85 (3d Cir.) (Congress had been concerned with
claims of earnings of which there was no record), cert. denied, 474 U.S.
852, 106 S.Ct. 152, 88 L.Ed.2d 125 (1985). As we have stated, section
405(c)(4)(C) "addresses the situation . . . where a claimant wishes to
create a social security self-employment earnings record after the . . .
time limit." Hollman v. Department of Health and Human Services, 696 F.2d
13, 16-17 (2d Cir. 1982).
h
claims of earnings of which there was no record), cert. denied, 474 U.S.
852, 106 S.Ct. 152, 88 L.Ed.2d 125 (1985). As we have stated, section
405(c)(4)(C) "addresses the situation . . . where a claimant wishes to
create a social security self-employment earnings record after the . . .
time limit." Hollman v. Department of Health and Human Services, 696 F.2d
13, 16-17 (2d Cir. 1982).

Appellant, however, is not attempting to prove that this earnings are
sufficient to entitle him to benefits. Rather, he is trying to prove that
he is retired. Section 405(c)(4)(C) cannot be read in this circumstance to
require that a conclusive effect be given to Ciccone's failure to file a
tax return after 1983. That section's "conclusive" presumption applies
only to situations where a self-employed individual has waited too long to
attempt to prove that he or she has had past earnings. Where an applicant
attempts to prove the converse — that there have been no earnings
— a lack of evidence in the Secretary's records is insufficient
proof. Congress has specifically provided for this situation in section
403(f)(4)(A), which requires the applicant to present more detailed
information than appellant has done here.

We cannot disregard the express provisions of section 403(f)(4)(A). It has
been held that section 405(c)(4)(C) cannot be read alone, but should be
interpreted in light of other relevant statutory provisions. Hendrickson
v. Secretary of Health and Human Services, 765 F.2d 747, 750 (8th Cir.)
(citing Grigg v. Finch, 418 F.2d 661, 664 (6th Cir. 1969)), vacated as
moot, 774 F.2d 1355 (8th Cir. 1985). When read in conjunction with section
403(f)(4)(A), a more specific section of the Social Security Act, it is
clear that Congress did not intend the absence of a tax return to prove
that an individual is retired and therefore entitled to benefits. To the
contrary, such a result would encourage the very kind of spurious claims
that Congress intended to discourage
.2d 1355 (8th Cir. 1985). When read in conjunction with section
403(f)(4)(A), a more specific section of the Social Security Act, it is
clear that Congress did not intend the absence of a tax return to prove
that an individual is retired and therefore entitled to benefits. To the
contrary, such a result would encourage the very kind of spurious claims
that Congress intended to discourage. See Hollman, 696 F.2d at 17.
Appellant must comply with section 403(f)(4)(A) to be eligible for
benefits.

The regulations implementing section 403(f)(4)(A) require individuals to
submit detailed information regarding their trade or business to prove
that they are retired. 20
C.F.R. § 404.446(c) (1988). Requirements such as these ar a legitimate
prerequisite to an applicant's receipt of benefits. See Schweiker v.
Hansen, 450 U.S. 785, 786, 788 790, 101 S.Ct. 1468, 1469, 1470, 1471, 67
L.Ed.2d 685 (1981) (regulations requiring written application not
impermissible; courts must observe congressional conditions for spending
public funds through Social Security Administration programs) (per
curiam). Ciccone admittedly did not furnish evidence regarding the nature
of his business to the Secretary; this is a sufficient ground for a
"determination that the [appellant] rendered substantial services in
self-employment" after June 1983, 20 C.F.R. § 404.446(c) .
Thus, appellant's application was properly denied.
public funds through Social Security Administration programs) (per
curiam). Ciccone admittedly did not furnish evidence regarding the nature
of his business to the Secretary; this is a sufficient ground for a
"determination that the [appellant] rendered substantial services in
self-employment" after June 1983, 20 C.F.R. § 404.446(c) .
Thus, appellant's application was properly denied.

Appellant Ciccone's second contention is that the regulations requiring
him to state his occupation violate his constitutional right not to
incriminate himself. This argument is without merit. It is only when the
required information is compelled, testimonial and incriminating that the
Fifth Amendment privilege protects an individual's right to refuse to give
information. See Doe v. United States, _____ U.S. _____, _____, 108 S.Ct
2341, 2345, 101 L.Ed. 2d 184 (1988). Applying for benefits is a voluntary
action. It is in no way compelled by the government. In Selective Service
System v. Minnesota Public Interest Research Group, 468 U.S. 841, 104
S.Ct. 3348, 82 L.Ed.2d 632 (1984), the Supreme Court examined the Military
Selective Service Act, which requires males between the ages of eighteen
and twenty-six to comply with draft registration laws in order to be
eligible for federal financial aid for education. The Court stated that

a person who has not registered [for the draft] clearly is under no
compulsion to seek financial aid [for education]; if he has not
registered, he is simply ineligible for aid. Since a nonregistrant is
bound to know that his application for federal aid would be denied, he is
in no sense under any "compulsion" to seek that aid.
for federal financial aid for education. The Court stated that

a person who has not registered [for the draft] clearly is under no
compulsion to seek financial aid [for education]; if he has not
registered, he is simply ineligible for aid. Since a nonregistrant is
bound to know that his application for federal aid would be denied, he is
in no sense under any "compulsion" to seek that aid.

Id. at 856-57, 104 S.Ct. at 3357. The situations in Selective Service and
in the case at bar are analogous. Ciccone was not compelled to file for
social security benefits, nor are they a constitutionally protected
entitlement, see United States Railroad Retirement Board v. Fritz, 449
U.S. 166, 174, 101 S.Ct. 453, 459, 66 L.Ed.2d 368 (1980) ("railroad
benefits, like social security benefits, are not contractual and may be
altered or even eliminated at any time"); Califano v. Goldfarb, 430 U.S.
199, 210, 97 S.Ct. 1021, 1028, 51 L.Ed.2d 270 (1977) (Brennan J.)
(plurality opinion) ("Congress has wide latitude to create classifications
that allocate noncontractual benefits under a social welfare program");
Richardson v. Belcher, 404 U.S. 78, 80, 92 S.Ct. 254, 257, 30 L.Ed.2d 231
(1971) ("The fact that social security benefits are financed in part by
taxes on an employee's wages does not in itself limit the power of
Congress to fix the levels of benefits under the Act or the conditions
upon which they may be paid."); Flemming v. Nestor, 363 U.S. 603, 608-10
S.Ct. 1367, 1371-72, 4 L.Ed.2d 1435 (1960) ("eligibility for benefits . .
. do[es] not in any true sense depend on contribution to the program
through the payment of taxes. . . . [T]he noncontractual interest of an
employee covered by the Act cannot be soundly analogized to that of the
holder of an annuity, whose right to benefits is bottomed on his
contractual premium payments."); see also Pineman v. Oechslin, 637 F.2d
601, 605 (2d Cir. 1981) (citing Flemming).
do[es] not in any true sense depend on contribution to the program
through the payment of taxes. . . . [T]he noncontractual interest of an
employee covered by the Act cannot be soundly analogized to that of the
holder of an annuity, whose right to benefits is bottomed on his
contractual premium payments."); see also Pineman v. Oechslin, 637 F.2d
601, 605 (2d Cir. 1981) (citing Flemming).

Thus, simply because the government provides benefits to those who qualify
and who comply with its regulations, does not mean that it must give
benefits to all those who apply regardless of their compliance with those
regulations. Nor does it mean that one who has relied on the promise of
benefits to come is compelled to file for them upon retirement. Mr.
Ciccone fails to meet the first test for claiming the protection of the
privilege of the Fifth Amendment: his application was not compelled.

Because Ciccone was not compelled to file for social security benefits,
his situation is distinguishable from those cases where the Supreme Court
has hinted that compelled responses to specific questions on certain forms
or reports required to be filed with the government may be
unconstitutional. See, e.g., Garner v. United States, 424 U.S. 648, 650,
662 n. 16, 96 S.Ct. 1178, 1180, 1186 n. 16, 47 L.Ed.2d 370 (1976) (Fifth
Amendment not defense to failure to file income tax return) (citing United
States v. Sullivan, 274 U.S. 259, 47 S.Ct. 607, 71 L.Ed. 1037 (1927));
California v. Byers,402 U.S. 424, 434 n. 6, 91 S.Ct. 1535, 1541 n. 6, 29
L.Ed.2d 9 (1971) (plurality opinion) (statute requiring drivers involved
in accidents to furnish their names and addresses does not violate Fifth
Amendment). The Fifth Amendment does not protect appellant from having to
reveal the nature of his business in this case.
74 U.S. 259, 47 S.Ct. 607, 71 L.Ed. 1037 (1927));
California v. Byers,402 U.S. 424, 434 n. 6, 91 S.Ct. 1535, 1541 n. 6, 29
L.Ed.2d 9 (1971) (plurality opinion) (statute requiring drivers involved
in accidents to furnish their names and addresses does not violate Fifth
Amendment). The Fifth Amendment does not protect appellant from having to
reveal the nature of his business in this case.

For the foregoing reasons, we hold that the Secretary properly denied
Ciccone's claim and that it did not violate his Fifth Amendment rights to
require information concerning the nature of his business before awarding
him retirement benefits. We therefore affirm the order of the district
court.

[1] Appellant died after this
action was begun. Br. of Appellant at 1. Although no motion for
substitution of parties has been made, see Fed.R.Civ.P. 25(a)(1), this
defect is not fatal since no suggestion of death was made to the district
court. See Coffee v. Cutter Biological , 809 F.2d 191, 193 n. 1 (2d
Cir. 1987). Similarly, although no motion for substitution has been filed
in this Court, see Fed.R.App.P. 43(a), we may proceed to decide Ciccone's
appeal. See Hardie v. Cotter and Co ., 849 F.2d 1097, 1098 n. 2 (8th
Cir. 1988); Wright v. Commercial Union Insurance Co. , 818 F.2d 832,
834 n. 1 (11th Cir. 1987).

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Source: Frix Law Library, https://www.frixlaw.com/law-library/statutes/SSA_SSR_OASI_SSR_89_7c. Check the current official text before relying on it. Not legal advice.