Political Subdivisions

Transcription

1 Political Subdivisions & Other Entities John P. Fox Social Security Administration Office of General Counsel, Region VII *Not an official Social Security publication. Please consult the primary sources referenced in this presentation.

2 Political Subdivisions & Other Entities part I terminology questions part II common issues questions ~end~

3 Part I Terminology*

4 Social Security Act (1935)

5 Social Security Act (1935) Section 218 (1951) State and SSA may agree to extend Social Security to services performed by individuals as employees of [the] State or any political subdivision thereof

6 Social Security Act (1935) Section 218 (1951) State and SSA may agree to extend Social Security to services performed by individuals as employees of [the] State or any political subdivision thereof (b) political subdivision includes an instrumentality of (A) a State, (B) one or more political subdivisions of a State, or (C) a State and one or more of its political subdivisions

7 States political subdivisions instrumentalities

8 States political subdivisions instrumentalities integral parts or components

9 States political subdivisions instrumentalities integral parts or components

10 State political subdivision +instrumentality integral part

11 State political subdivision +instrumentality integral part

12 State political subdivision +instrumentality integral part Section 218(b) includes an instrumentality of (A) a State, (B) one or more political subdivisions of a State, or (C) a State and one or more of its political subdivisions

13 State political subdivision +instrumentality integral part 20 C.F.R A separate legal entity of a State which usually has specific governmental functions. The term ordinarily includes a county, city, town, village, or school district, and in many States, a sanitation, utility, reclamation, drainage, flood control, or similar district. determination is based on state law

14 State political subdivision +instrumentality integral part Section 218 lets States request coverage for services performed by individuals as employees of [the] State or any political subdivision thereof political subdivisions require their own Section 218 modifications

15 State political subdivision +instrumentality integral part

16 State political subdivision +instrumentality integral part Section 218 subset of political subdivision instrumentality of the State, etc. political subdivision with one gov t function

17 State political subdivision +instrumentality integral part Handbook independent legal entity with power to hire, supervise, and discharge its own employees, and generally to sue and be sued in its own name, to contract, [and] to hold and convey real and personal property instrumentalities, like other political subdivisions, require their own mods

18 State political subdivision +instrumentality integral part

19 State political subdivision +instrumentality integral part unit of a State, political subdivision, or instrumentality that is not itself a political subdivision or instrumentality an integral part is part of a political subdivision; look to that entity to determine Social Security coverage

20 State political subdivision +instrumentality integral part

21 State political subdivision +instrumentality integral part coverage errors easy to misclassify political subdivision or instrumentality as an integral part changes in law or interpretation of the law

22 State political subdivision +instrumentality integral part oddities joint venture multiple political subdivisions create an entity to carry on some government function is it a political subdivision? who is the employer?

23 State political subdivision +instrumentality integral part oddities interstate instrumentality instrumentality organized by multiple states treat as a state; requires an original agreement

24 other definitions IRS and other federal agencies States political subdivision vs. instrumentality multiple definitions?

25 Questions?

26 Part II Common Issues

27 issue 1 political subdivision or integral part? issue 2 who is the employer? issue 3 is the entity public or private?

28 issue 1 political subdivision or integral part? The head librarian at a city library asks whether he should withhold FICA taxes on employee wages. His library has always paid into Social Security, but other city libraries do not. The city is listed in the State s Agreement, but the city library is not.

29 issue 1 political subdivision or integral part? issue is the library a political subdivision, or is it an integral part of the city? answer may determine coverage determination is based on state law

30 issue 1 political subdivision or integral part? 3 definitions of political subdivision (1) separate legal entity of a State with specific governmental functions; (2) a county, city, town, village, or school district, etc..; or (3) (instrumentality) independent legal entity with power to hire, supervise, and discharge its own employees, and generally to sue and be sued in its own name, to contract, [and] to hold and convey real and personal property

31 issue 1 political subdivision or integral part? resources (1) precedents (2) authorizing statutes, ordinances, etc.. (3) court decisions (4) State attorney general opinions (5) information from the entity (6) entity website (7) newspaper articles and so on...

32 issue 1 political subdivision or integral part? watch for changes in the enabling statutes board of trustees/directors dissimilar entities with similar names

33 issue 1 political subdivision or integral part? The head librarian at a city library asks whether he should withhold FICA taxes on employee wages. His library has always paid into Social Security, but other city libraries do not. The city is listed in the State s Agreement, but the city library is not. answer?

34 issue 2 who is the employer? You must determine whether workers at a city bus terminal are covered by Social Security. The city receives coverage under the State s Agreement but the bus terminal is not listed in any modification. You are confident the bus terminal is a political subdivision, but the staff who work there are hired through the city s civil service program and are paid by the city.

35 issue 2 who is the employer? issue are the workers employees of the bus terminal or the city? issue may determine Social Security coverage

36 issue 2 who is the employer? identity of employer is a question of federal law Section 218(b)(3) employee includes an officer of a State or political subdivision * otherwise, agency determines employer based on common-law rules common-law rule employer is the person who can tell the worker what to do and how to do it

37 issue 2 who is the employer? You must determine whether workers at a city bus terminal are covered by Social Security. The city receives coverage under the State s Agreement but the bus terminal is not listed in any modification. You are confident the bus terminal is a political subdivision, but the staff who work there are hired through the city s civil service program and are paid by the city. answer?

38 issue 3 is the entity public or private? An economic development agency pays into Social Security but is not listed in the State s Section 218 agreement. The employees are members of a state retirement system. However, the entity is organized under the state s ordinary non-profit laws and receives some funding from private sources.

39 issue 3 is the entity public or private? issue is the agency public or private? Section 218 State and SSA may agree to extend Social Security to services performed by individuals as employees of [the] State or any political subdivision thereof SSA cannot approve a modification that requests coverage for a private entity

40 issue 3 is the entity public or private? source of law? IRS Revenue Rulings and government purpose or function? private interests, or government owned? control and supervision vested in public authority? statutory or other authority necessary for the creation or use? degree of financial autonomy and source of operating expenses?**

41 police department public city school district city water department soil conservation district dependent???? economic development council independent private for-profit corporation

42 issue 3 is the entity public or private? An economic development agency pays into Social Security but is not listed in the State s Section 218 agreement. The employees are members of a state retirement system. However, the entity is organized under the state s ordinary non-profit laws and receives some funding from private sources. answer?

43 final thoughts don t assume that what happened in 1955 holds true today when in doubt, contact SSA

44 summary Part I four basic entities State, political subdivision, instrumentality, integral part political subdivisions are basic unit of coverage political subdivisions are independent legal entities; integral parts are not

45 summary Part II political subdivision or integral part? who is the employer? public or private? when in doubt, contact SSA

46 Questions?

47 ~end~