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‘Invalid’ Forms by Supposed Billionaires Skew U.S. Wage Figures

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‘Invalid’ Forms Skew U.S. Wage Figures
The Social Security Administration figures are based on forms filed with the Internal Revenue Service. Photographer: Andrew Harrer/Bloomberg

Nov. 2 (Bloomberg) -- The Social Security Administration asked its inspector general to investigate how a $32.3 billion mistake skewed its statistics on 2009 wages in the U.S.

Two people were found to have filed multiple W-2 forms that made them into multibillionaires, an agency official said yesterday. Those reports threw statistical wage tables out of whack and, in figures released Oct. 15, made it appear that top U.S. earners had seen their pay quintuple in 2009 to an average of $519 million.

The agency yesterday released corrected tables that showed the average incomes of the top earners, in fact, declined 7.7 percent to $84 million each.

Social Security spokesman Mark Lassiter provided few details about the W-2 forms and declined to answer questions about how they were filed, how many were filed by the same two people, or if a hoax was suspected. “We call it erroneous, you call it fictitious. It’s the same thing,” Lassiter said. “There were some invalid, I guess is the best way to put it, W-2s.”

The W-2 is a tax form on which employers report their workers’ compensation. Taxpayers must provide a copy when they file tax returns.

Lassiter said this is the first time Social Security statistics have been affected by erroneous filings. A written request detailing concerns about the data was sent yesterday to the Office of the Inspector General, he said.

Jonathan Lasher, a spokesman for the inspector general’s office, confirmed the request. “It wouldn’t be an actionable investigation at this point, more properly an allegation, but we are looking into it,” Lasher said.

High Earners

The Social Security Administration figures are based on forms filed with the Internal Revenue Service. It wasn’t known yesterday whether the IRS was conducting its own investigation into how the W-2 forms were submitted. IRS spokesman Terry Lemons said he didn’t “have any immediate comment.”

Bloomberg News wrote a report last week about high-earners’ income after questioning Social Security officials about record-high wages found in the statistics. The agency’s staff confirmed the data, though they began reviewing W-2s by hand after the news story was published.

Yesterday, the Social Security office announced it found “invalid” wages from two of the 74 top wage earners detailed in its data.

The data were part of the National Average Wage Index and contained the pay for 74 Americans who earned more than $50 million in 2009. The Social Security review found two tax filers, between them, reported more than $32 billion in wages and officials decided to invalidate those filings.

Error Discovered

“We discovered an error in the net compensation for wage earners earning $50 million and over and have adjusted those figures downward,” Lassiter said in an initial e-mail.

The combined total earned by the top Americans fell to $6 billion last year from $11.9 billion in 2008, the agency said in the corrected report.

A comparison of the Oct. 15 data and the corrected figures show the change affected wage statistics more broadly. The Oct. 15 index indicated that the average wage nationwide fell $384 to $39,269 in 2009. The corrected index shows averages wages fell $598 to $39,055.

Lassiter said he couldn’t explain why the mistake wasn’t detected previously.

“We have checks in place, but these slipped through,” he said. The error would have eventually been detected as part of a reconciliation of the data with the IRS, he said.

To contact the reporter on this story: Ryan J. Donmoyer in Washington at rdonmoyer@bloomberg.net

To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net

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