20 CFR 404.1225, 404.1255, 404.1260-404.1261, and 404.1285
The State of Tennessee timely requested a review pursuant to section 218(s) of the Administration's assessment of interest charges. The assessment resulted from an underpayment of contributions due in connection with a wage report filed on May 30, 1969, for the quarter ending March 31, 1969, on which advance credit in the amount of $478.50 had been taken by the State for partial payment based on an adjustment report filed to delete wages erroneously reported for an employee in the quarters ending September 30, 1965, and December 31, 1965. The credit was subsequently denied as the State had not transmitted the adjustment report to the Administration prior to the expiration of the statute of limitations for the year 1965. The Administration on June 18, 1970, notified the State of contributions due on the underreporting of wages paid to employees of the Metro Government of Nashville and Davidson County. The notice to the State indicated that the State would remain liable for the assessment of contributions due, together with any interest which might accrue unless the contributions were paid on or before August 15, 1970, and that the State's Report of Adjustments signed March 20, 1969, could not be processed because the time limitation for correction of 1965 wages had expired. The contribution payment was made by the State on January 28, 1971, and December 1, 1971. On January 17, 1972, the Administration issued a letter of assessment of interest charges to the State in which $69.61 was charged with respect to the Metro Government of Nashville and Davidson County. The State requested review of the assessment in a letter dated January 25, 1972, contending that the interest assessment should be waived since the staff responsible for processing, preparing, and transmitting the reports to the Administration was reduced due to illness which necessitated utilization of new personnel totally inexperienced in the proper procedure.
The Tennessee section 218 coverage agreement entered into on August 16, 1951, 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 8-3803 and 8-3814 of the Tennessee Statutes, Annotated, provide the Federal and the State authority, respectively, regarding the above conditions of the Tennessee section 218 coverage agreement.
Social Security Regulations No. 4 provide in pertinent part as follows:
There is no disagreement as to the facts. It is the State's position that the subject interest assessment should be waived since the staff responsible for processing, preparing, and transmitting the reports to the Administration was reduced due to illness which necessitated utilization of new personnel totally inexperienced in the proper procedure. 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)(1) of the regulations. Although section 404.1255(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 underpayment is adjusted pursuant to section 404.1261 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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