This course identifies the key players, and the role they play in State and local coverage. They are SSA, the IRS, State Social Security Administrators, and governmental employers.
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- Who are the key representatives for State and local coverage and compliance?
- Who is SSA?
- Who is the IRS?
- Who are State Social Security Administrators?
- What are SSA’s responsibilities to State and local coverage?
- What are IRS’s responsibilities to State and local coverage?
- What are the State’s responsibilities to State and local coverage?
- What are the responsibilities of government employers?
- How do the three key representatives interact with one another?
- What is the relationship between the States and the organizational components of SSA?
Representatives for State and local coverage are comprised from the Social Security Administration (SSA), Internal Revenue Service (IRS) and State Administrator offices across the country. Other interested parties include representatives from the National Conference of State Social Security Administrators (NCSSSA) and the Government Finance Officers Association.
The Social Security Act was signed into law by President Roosevelt on August 14, 1935. In addition to several provisions for general welfare, the new Act created a social insurance program designed to pay retired workers age 65 or older a continuing income after retirement. Since its enactment, the Act has undergone significant amendments to expand its breadth of coverage and benefits.
Today, SSA is an independent agency headed by a Commissioner and has a staff of approximately 70,000 employees. SSA's central office is located in Baltimore, Maryland. The field organization, which is decentralized to provide services at the local level, includes 10 regional offices, 6 processing centers, and approximately 1,260 field offices.
For more information on SSA, go to our Social Security Online home page.
The IRS, an agency of the Department of Treasury, is the Federal agency charged with the administration of the tax laws passed by Congress. National Headquarters for the Internal Revenue Service, in Washington DC, develops nationwide policies and programs for the administration of the agency. The chief executive of the agency is the IRS Commissioner.
For many years, the IRS was organized geographically with a national office in Washington and regional, district and local offices throughout the country. With the Restructuring and Reform Act of 1998, the Internal Revenue Service began a major reorganization in an effort to improve compliance and customer service. This restructuring marked the most sweeping overhaul of the agency since 1952. Today, the IRS is organized around four specific “customer bases,” or groups of taxpayers with generally common interests and needs. Each operating division has a Commissioner and its own Counsel to provide legal expertise and guidance. This structure replaces the system of Regional and District Offices that existed under the previous, geographically-based organization.
The following are the four customer-based operating divisions:
- Wage and Investment (W&I) is focused on individual taxpayers.
- Small Business/Self-Employed (SB/SE) is oriented to S-corporations, partnerships, small corporations and sole proprietors.
- Large Business and International (LB&I) deals with the largest businesses and international tax issues. (This was formerly the Large and Mid-Size Business division).
- Tax Exempt and Government Entities (TE/GE) serves all government organizations as well as nonprofit and other exempt organizations.
For more information on the IRS, go to their IRS.gov homepage.
Each State, as well as Puerto Rico and the Virgin Islands, has its own State Social Security Administrator (SSSA). This individual is a State employee who is the main resource for information about Social Security and Medicare coverage and reporting issues for State and local government employers and employees. The state administrator acts for the State in maintaining and administering the provisions of the Section 218 agreement.
Social Security Regulations 20 CFR 404.1204 provides the legal obligation for each State to designate such an official while State law specifies the State department or officer who will handle this function. If there is any change in the designated state Social Security official, the State must notify the Social Security Administration.
The names and contact information for all of the State Social Security Administrators can be found on the web site of the National Conference of State Social Security Administrators.
SSA’s primary responsibilities are to:
- Administer the Social Security and Medicare coverage provisions for State and local government employees under Sections 210 and 218;
- Make rules and regulations and establish procedures, not inconsistent with Title II of the Act (42 U.S.C. 401 et. seq.), which are necessary or appropriate to carry out certain provisions of the Act;
- Adopt reasonable and proper rules and regulations to regulate and provide for the nature and extent of the proofs and evidence and the method of taking and furnishing the same in order to establish the right to benefits under the Act;
- Determine the coverage status of State and local government employees covered under a State’s Section 218 agreement and modifications thereof, and the mandatory coverage provisions under Section 210 of the Act, for Social Security and Medicare benefit purposes;
- Interpret, execute and maintain Section 218 agreements and modifications to such agreements;
- Assure the accurate crediting of earnings to all workers, maintain accurate earnings records, verify the earnings amounts provided, and correct erroneously posted amounts, as required by law;
- Permanently maintain physical custody of the States’ Section 218 agreements, modifications, and dissolutions; and
- Permanently maintain physical custody of correspondence if it relates to the content of an agreement or modification (extent of coverage, deletions, corrections, dissolutions, etc.), a question or clarification involving the coverage extended by an agreement or modification, or any other coverage matter, or changes in the names of state and local entities.
More information on SSA's responsibilities can be found in our Programs Operations Manual System (POMS), and for those responsibilities specifically addressing State and local coverage, refer to our State and Local Coverage Handbook (SLCH).
IRS’s primary responsibilities are to:
- Administer the Federal Insurance Contributions Act (FICA), including the mandatory Social Security and Medicare provisions concerning services performed by State and local government employees;
- Assure proper reporting and collection of Social Security and Medicare taxes by State and local government employers under the FICA through examination and other compliance programs; and
- Interpret the FICA provisions applicable to State and local governments through published guidance, e.g., regulations, revenue rulings, revenue procedures, private letter rulings and field directives.
More information about the programs and responsibilities of the IRS is available at www.irs.gov, and for those responsibilities specifically addressing State and local coverage, refer to their Publication 963: Federal-State Reference Guide.
The State Administrator should be able to interpret the provisions of the Section 218 agreement as well as State law, retirement system, and personnel rules to determine Social Security and Medicare coverage for State and local government employees.
The other major responsibilities of the State Administrator are to:
- Permanently maintain physical custody, in a secure location, Section 218 Agreements, modifications, dissolutions, intrastate agreements, and, but not limited to, prior letters and other forms of correspondence between the entities and the State concerning retirement systems which could affect future coverage determinations, contacts the state administrator made with political subdivisions in the past, ballots from referenda, etc;
- Determine which State and political subdivision employees’ positions are covered by Social Security approved Section 218 Agreements and modifications, and subsequently work with employers to guarantee proper Social Security and Medicare withholding and reporting;
- Take appropriate steps with respect to the execution of modifications to the original agreement to include additional coverage groups, correct errors in coverage, or identify additional political subdivisions that join a covered retirement system;
- Conduct referenda on the coverage of services of individuals in positions under a retirement system;
- Identify new, inactive, merged or dissolved political subdivisions, and take the appropriate coverage related action;
- Provide SSA with notice and evidence of the legal dissolution of covered State or political subdivision entities;
- Provide guidance to government employers on issues related to Section 218 coverage;
- Work with SSA and the IRS to address coverage and taxation questions related to the Agreement and any modifications; and
- Serve as an intermediary for federal, State and local agencies, and educate public employers on coverage and benefit issues.
More information about the state administrator responsibilities is available in our State and Local Handbook under State Social Security Administrator Responsibilities.
Social Security and Medicare coverage for State and local government employees is unique because there are special coverage provisions for government employees under the Social Security Act. With an estimated 86,000 governmental employers employing approximately 22 million workers, it is critical that employers are aware of and understand the provisions and the affect they may have on their employees.
The primary employer responsibilities include:
- Properly classify workers as independent contractors or employees;
- Determine which employees are exempt from Social Security and Medicare taxes;
- Withhold, report, and pay appropriate Social Security and Medicare taxes or Medicare-only taxes for each employee;
- Obtain clarifications of laws, regulations and other appropriate information from State Social Security Administrators, IRS, and SSA;
- Contact state administrators when an entity merges, consolidates or dissolves;
- Disclose to newly hired public employees that they are earning retirement benefits not covered by Social Security by completing Form SSA-1945; and
- Perform other responsibilities to public employers as provided by state law.
The IRS and SSA both interact with one another as well as with individual States concerning their respective specialties. The States are the primary source of information for the public entities of their state; however, this does not preclude the public entities from dealing with the IRS directly when they have specific FICA concerns.
States are expected to work with the the Regional Office (RO) on State and local coverage and reporting issues.
The following identifies each component within SSA that plays an integral role in State and local coverage.
Regional Office provides leadership and technical direction in administering the State and local coverage program within the region, consistent with established policy. Within the RO, the Assistant Regional Commissioner (ARC) has responsibility for State and local coverage activities within the region. The RO:
- Interprets, reviews, processes and executes Section 218 Agreements and modifications;
- Reviews supporting documentation from States to remove legally dissolved entities from coverage under Section 218 Agreements;
- Reviews and makes coverage determinations consistent with established policy;
- Provides guidance and advice to States on proposed legislation that may have impact on the State's Section 218 Agreement;
- Interprets and advises States on established SSA policies and procedures;
- Refers to Central Office issues for which no policy has been established or present policy may require a change;
- Maintains file of original agreements and modifications;
- Responds to inquiries concerning magnetic media reporting, electronic filing, and paper reporting of wages; and
- Advises State Social Security Administrators and the Internal Revenue Service regarding Social Security and Medicare issues.
To contact the RO, refer to the SSA Regional Office State and Local Coverage Specialists.
Headquarters Office of Income Security Programs (OISP) is primarily responsible for administering the State and local coverage program under the Act. Organizationally, OISP is located under the Deputy Commissioner for Retirement and Disability Policy (DCRDP). OISP plans, develops, evaluates, and issues operational policies and procedures concerning coverage and wage questions related to Sections 210 and 218 of the Social Security Act. As lead component for the State and local coverage program, OISP:
- Interprets laws and regulations relating to state and local coverage and wages;
- Coordinates national coverage and wage policy with the Internal Revenue Service and other Federal and state agencies;
- Coordinates coverage and wages issues for which no policy has been established or present policy may require a change that may have national impact;
- Issues policies and develops procedures and instructions on coverage, wages, and reporting;
- Administers the policy for decisions involving pre-1987 reporting and wage corrections; and
- Maintains the SSA website for State and Local Government Employers (SLGE); and
- Maintains the SLCH for SSA and the State Social Security Administrators.
Correspondence requiring submission to OISP should be sent to:
SSA, ORDP, OISP, OEMP
State and Local Coverage
Room 2500, Robert Ball Building
6401 Security Blvd
Baltimore, MD 21235-6401
Office of Central Operations (OCO) maintains the earnings records for all working individuals covered by Social Security, and processes and maintains domestic and international Social Security Benefits and Disability Claims.
Office of Communications (OCOMM) is responsible for SSA’s national public information and public affairs (PI/PA) programs. Public affairs specialists in each region speak at seminars to discuss the Social Security and Medicare program and its benefits.
Office of Legislation and Congressional Affairs (OLCA) monitors and advises SSA officials on legislation pending in Congress and on legislative activity including those related to State and local coverage issues. OLCA also prepares testimony and background material for use by SSA officials for congressional hearings and other contacts with the Congress.
Office of the General Counsel (OGC) advises the Commissioner on legal matters, is responsible for providing all legal advice to the Commissioner, Deputy Commissioner, and all subordinate organizational components (except OIG) of SSA in connection with the operation and administration of SSA. Responsible for the policy formulation and decision making related to the collection, access, and disclosure of such information in the records of the Social Security Administration; and processing of Freedom of Information requests and appeals (under the Freedom of Information and Privacy Acts).
Regional Chief Counsel’s office reviews Section 218 Agreements, modifications and legal dissolutions for legal form and substance and provides legal opinions, advice and legal clearance. This office also provides legal interpretations on Federal and State laws and advises SSA when to obtain an Attorney General opinion. Other Counsel responsibilities include:
- Provide professional legal and managerial expertise for the OGC in their respective geographic locations, and
- Provide litigation support and legal services and advice to the SSA Regional Commissioners in the various areas set out above.