20 CFR 404.1225, 404.1255, 404.1260, 404.1261
The State of New Jersey timely requested a review pursuant to section 218(s) of the Administration's assessment of interest charges. The assessment was made due to the State's failure to pay the contributions due on an underreporting of wages within the time prescribed by the regulations. The State's position was that the interest assessment should be waived because of the extenuating circumstances which were involved in determining the status of blind workers in workshops conducted under the auspices of the New Jersey Commission for the Blind.
The facts are that the State of New Jersey requested the Administration's views concerning whether the services performed by blind workers for the New Jersey Commission for the Blind constituted employment and, if so, whether the services would be mandatorily excluded from coverage under the Federal-State agreement as "work to relieve from unemployment." The wages paid the blind workers had not been included in the State's quarterly wage reports. When it became apparent the statute of limitations for assessment for the year 1962 would expire on April 15, 1966, an agreement to extend the statutory time period for 1962 was solicited from the State. On April 15, 1966, the Administration was advised that the State did not desire to enter into such an agreement.
A notice of assessment was issued to the State on April 15, 1966, with respect to wages paid the blind workers in 1962 based upon the Administration's determination that the blind workers performing services for the New Jersey Commission for the Blind were employees of the Commission for the Blind which in turn was an integral part of the State of New Jersey; that such employment did not constitute "work to relieve from unemployment" within the meaning of section 218(c)(6)(A) of the Act; and that the services of the blind workers were covered under the State's section 218 agreement. The State was advised that it would remain liable for the assessment of contributions due, together with any interest which might accrue before payment is made. The State requested review of the assessment in a letter dated July 12, 1966, contending that the blind workers were not employees of the State Commission for the Blind. In October 1969, the State expressed agreement with the Administration's position regarding the blind workers' services for the Commission for the Blind and paid the Administration on December 15, 1969. Since the payment was not made on or before the due date of May 15, 1966, the Administration on October 2, 1970, issued a letter of assessment of interest charges to the State in the amount of $2,472.87. The State then requested review of the interest assessment by a letter dated December 29, 1970.
The New Jersey section 218 coverage agreement, entered into on December 30, 1952, provides that the State will pay, at the time prescribed in the Social Security Act, the appropriate contributions due on wages paid for covered services; that the State will comply with the regulations prescribed by the Administration to carry out the purpose of section 218; and that failure to make payment when due will cause interest at the rate of 6 percent per annum from the date due until paid to be added as part of the amounts due. Subsections 218(e)(1) and 218(j) of the Social Security Act, as amended, and Sections 43:22-3 of the New Jersey Statutes, Annotated, provide the Federal and the State authority, respectively, regarding the above-described conditions of the New Jersey section 218 coverage agreement.
Social Security Regulations No. 4 provide in pertinent part as follows:
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There is no disagreement as to the facts. It is the State's position, however, that the interest charges should be canceled because extenuating circumstances were involved in determining the employee status of blind workers who perform services inn workshops conducted under the auspices of the New Jersey State Commission for the Blind. The Commissioner found, on review pursuant to the State's request, that the evidence in file established that this underpayment of contributions was not adjusted in accord with the provisions of section 404.1261(a)(2)(ii) of the regulations. Although Section 404.1225(a) of the regulations allows for extension of the filing date for quarterly wage reports and contribution returns beyond the established month and 15-day period after the end of a calendar quarter upon a showing of "good cause," it does not allow for such an extension with respect to adjustment reports and payment. Pursuant to section 404.1225 interest must be charged from the original due date on any underpayment of contributions ascertained by the Administration unless such underpayments is adjusted pursuant to section 404.1261(a)(2)(ii) of the regulations, that section requiring the payment to be made within 30 days of the notification to the State of the underpayment by the Administration, and that there is no regulatory or administrative provision for granting an extension of this 30-day period for any reason. On the basis of these findings, the Commissioner affirmed the interest assessment.
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