Special employment tax rules for certain public employees (election workers, emergency workers, public officials, etc.)
Classification Issues Involving Government Employees
The following categories of state and local governmental workers have special tax rules that apply to them, including in some cases exclusions from withholding and paying Social Security. For details on what special rules apply to each type of worker, go to the Federal-State Reference Guide, IRS Pub. 963, and enter the specific type of worker in to the “search” box.
Also, the Colorado State Social Security Administrator’s Office issues Advisories on some of these topics when unique requirements apply to some of these workers in this State. Any such Advisories are included under the specific category listed below.
Elected and Appointed Officials (Public Officials)
For Social Security and Medicare purposes, elected officials (also referred to as “individuals in elective positions”), are subject to a degree of control that typically makes them employees under the common law, and therefore subject to these taxes. Elected officials are responsible to the public, which has the power to vote them out of office. Elected officials may also be subject to recall by the public or a superior official. Very few elected officials have sufficient independence to be considered independent contractors. Under U.S. Internal Revenue Code (IRC) Section 3401, wages, for income tax withholding purposes, include all remuneration, other than fees paid to a public official. Because elected officials receive wages, not fees, they are employees for income tax withholding purposes, regardless of any determination for Social Security and Medicare purposes.
Election Workers and Officials
If the compensation of an election workers is less than a statutorily established amount that is established annually by the U.S. Social Security Administration (go to https://www.ssa.gov/slge/election_workers.htm for the most current information), it is generally not subject to mandatory Social Security and Medicare tax under the U.S. Internal Revenue Code. A state’s Section 218 Agreement, however, may subject an election worker’s compensation to Social Security and Medicare taxes at a level below the statutory amount.
If an election worker’s wages are subject to withholding of Social Security and Medicare tax, Form W-2 reporting is required for all compensation, regardless of the amount. If an election worker’s compensation is not subject to withholding of Social Security and Medicare tax, Form W-2 reporting is required for payments that aggregate $600 or more in a calendar year.
Colorado’s State Social Security Administrator’s Office issues periodic Advisories to interpret and apply federal and state laws and regulations to election workers and officials in this state.
Emergency Workers
Colorado’s State Social Security Administrator’s Office issues periodic Advisories to interpret and apply federal and state laws and regulations to emergency workers in this state.
The definition of “Emergency Workers” does NOT include regular police and firefighter positions (including regular “volunteer” fire positions). This exemption from the FICA tax DOES NOT apply to ordinary positions for whom normal withholding practices need to be followed. For the emergency worker exception to apply, the workers must be hired on a temporary basis to assist with immediate recovery and rescue operations but DOES NOT include workers regularly employed by the entity (even if such work is now in response to the emergency). Federal law exempts emergency workers from FICA (Federal Insurance Contribution Act) taxes. Emergency workers are employees of a state or local government serving on a temporary basis in case of fire, storm, snow, earthquake, flood, or other similar emergency.
Political subdivisions that provide Social Security coverage to their employees through a Section 218 Agreement that hire temporary workers for the emergency should not withhold FICA on the temporary emergency workers as they are barred from Social Security coverage under the Section 218 Agreement pursuant to 42 U.S.C. 418(c)(6)(E).
This exemption only applies to FICA taxes and does not apply to contributions that may be required by any public pension plan. Such pension contribution may be required. Please check with your pension system for what is required.
Police Officers
The term “police officer” is defined, for these purposes, as a municipal law enforcement officer and should not be confused with sheriffs, peace officers, state patrol, correctional officers, or other such government officials. Police officers are employees of the municipality they serve, but each city and town’s coverage of police officers can vary from location to location. Under certain circumstances, police officers in Colorado have been covered by Section 218 Agreements. Otherwise, absent a “qualifying FICA replacement plan” police officers are subject to “Mandatory Social Security.” Regardless of any other situation of pension coverage, police officers hired on or after April 1, 1986, are subject to “Mandatory Medicare.”
Sheriffs
Sheriffs are elected officials in Colorado and their deputies and under sheriffs are employees of the county. As all counties in Colorado (except Summit and Pitkin) have Section 218 Agreements the sheriff personal are covered for Social Security – EXCEPT the actual elected sheriff might be excluded from the Section 218 Agreement, if the county chose to exclude elected officials at the time of their Section 218 Agreement.
Firefighters
The term “firefighter” is defined, for these purposes, as a person employed by a political subdivision to respond in the event of a fire, but does not include clerical, administrative, or other such staff at fire department/district. Firefighters are generally excluded from Social Security as state law requires their participation in a pension fund. Many fire districts, however, have Section 218 Agreements to provide Social Security coverage for their support personnel and cannot remove this coverage even though such support staff are now eligible for participation in the pension fund.
District Attorneys
District Attorneys are elected officials in Colorado and their deputy and assistance district attorneys are employees of the Office of District Attorney. Colorado statutes are conflicting and somewhat confusing as one statute mandates district attorneys’ staff to participate in Social Security and these offices have Section 218 Agreements. The actual elected District Attorney, however, is mandated to participate in the state retirement system. As such, deputy and assistant district attorneys and the staff are subject to Social Security through their Section 218 Agreement, while the actual elected district attorneys are excluded from the Section 218 Agreement.