20 CFR 404.1050
A question has been raised as to whether relocation payments made to small businesses pursuant to the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970, Public Law 91-646 (42 U.S.C. 4601 et seq.), may be included in computing net earnings from self-employment for coverage and deduction purposes under sections 211(a) and 203(f)(5) of the Social Security Act.
P.L. 91-646 repealed various statutory provisions on relocation payments and substituted a single set of provisions of general applicability. The new provisions are designed to "establish a uniform policy for the fair and equitable treatment of persons displaced as a result of Federal and Federally- assisted programs * * *." Sec. 201 (42 U.S.C. 4621).
Under section 202 of the new provisions (42 U.S.C. 4622), entitled "Moving and Related Expenses," a person displaced from his place of business or farm operation who is eligible for relocation assistance may elect one of two types of payments. He may receive actual moving expenses for himself, his business or farm operation, or other personal property; actual direct losses of tangible personal property (up to certain limits); and actual reasonable expenses in searching for a replacement business or farm; or he may elect in the alternative to receive a fixed payment in an amount equal to the average annual net earnings of the business of farm operation, but not less than $2,500 nor more than $10,000.
Thus, under P.L. 91-646, an individual who is displaced from his place of business may no longer receive an "additional" payment to offset a loss of sales volume or expected business profits as provided in prior statutes (e.g., 42 U.S.C. 1465 (1964 ed.)). While the alternative payment based on average earnings resembles the "additional" small business displacement allowance of prior law and its amount is similarly related to "average annual net earnings," it is not an "additional" payment but an alternative method for making reimbursement on a commuted basis for moving and other "actual reasonable expenses" and "actual direct losses" incident to the relocation.
Section 216 of P.L. 91-646 (42 U.S.C. 4636) provides:
Section 211(a) of the Social Security Act provides, in pertinent part, that:
Since section 216, supra, precludes the treatment of such relocation payment as income under the Internal Revenue Code, it may not be considered in the computation of "net earnings from self-employment" as defined in section 211(a) of the Social Security Act. It is similarly excluded from the determination of "net earnings from self-employment" for deduction purposes under section 203(f)(5) of such Act.
Accordingly, it is held that small business relocation payments made pursuant to P.L. 91-646 are excluded in computing net earnings from self-employment for coverage and deduction purposes under sections 211(a) and 203(f)(5) of the Social Security Act.
P.L. 91-646 in section 210 provides that small business relocation payments may be made under Federally-assisted State programs as well as under Federal programs. However, section 221(b) of that Act provides that until July 1, 1972, it --
Thus until July 2, 1972, P.L. 91-646 may not be fully operative. Some payments may be encountered which are made under the provisions of prior law. It is therefore further held, the provisions of prior law must be applied to determine whether such payments are excluded in computing net earnings from self-employment under the Social Security Act.
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