Retirement & Financial Planning Report

Some benefits statements on federal retirees that federal agencies submit to the IRS contain missing or inaccurate Social Security numbers and when such problems are detected they aren’t always corrected, with the result that many retirees do not have taxes withheld at the proper rate, an inspector general audit has said.

“Federal agencies are required to file accurate tax distribution statements listing reportable payments, including pensions and annuities, and perform required income tax withholding at the highest level when the payee SSN is missing or when notified by the IRS that the payee SSN is invalid. Accurate SSNs are essential to the success of IRS programs that match tax information reported by payers against filed tax returns to determine whether pension recipients subsequently filed and reported the payments on their income tax returns,” it said.


An audit found that for 2015, 13 agencies had submitted nearly 50,000 benefit statements to the IRS with a missing or inaccurate SSN, but the IRS notified only four of those agencies of the errors. The nine that were not notified accounted for about 14,000 of those statements.

“Federal agencies are required to begin immediate withholding at the highest rate when a payee SSN is missing or when notified by the IRS that the SSN is inaccurate. However, because the IRS notification process was ineffective, federal agencies did not always withhold at the required rates,” it said.