20 CFR 404.1252
The State of California timely requested a review under Section 218(s) of the Social Security Act, as amended, of the Administration's denial of a request for refund of the social security contributions paid. This denial was based on the Administration's determination that the wages shown on the City of Santa Rosa's report for the first quarter of 1971 were paid for services covered under the agreement and that the related contributions were due and payable. The State denies liability for wage reports or contribution payments for wages paid in a later quarter since social security coverage terminated effective December 31, 1970.
The facts in this matter establish that social security coverage terminated effective December 31, 1970, for the employees of the City of Santa Rosa. Upon advice of the Administration the State of California, under protest, reported wages paid to employees of the City of Santa Rosa in the March 1971 calendar quarter for services performed in 1970 and paid the related contributions of $9,810.97. A subsequent request for refund of the $9,810.97 was denied based on the Administration's determination that the wages paid in the first quarter of 1971 were for services performed in 1970 and covered under the section 218 agreement. The State disagrees with the Administration's determination and the denial of the request for refund.
The California section 218 coverage agreement, provides that the State will pay at the times prescribed in the Social Security Act, the appropriate contributions due on wages paid for covered services; and that the State will comply with the regulations prescribed by the Administration to carry out the purpose of section 218.
The pertinent provisions of the Social Security Act, as amended, are:
* * * * * * *
Subpart M of the Social Security Regulations No. 4, in pertinent part, provides as follows:
It is the State's position that the City of Santa Rosa was officially removed from the social security program effective December 31, 1970. The State's responsibility for wage reporting and contribution payments for city employees ceased on December 31, 1970.
It is the position of the Social Security Administration that a State is liable for contributions with respect to wages paid for services performed in employment covered by the State's social security coverage agreement. The date the wages are paid for covered services is not a factor.
The agreement between the State and the Secretary provided for coverage of services for the City of Santa Rosa effective April 1, 1951. In retrospect, the State was not required to report wages and was not liable for contribution for services performed before April 1, 1951, as such services were not performed under the agreement. Conversely, the wages paid after termination of coverage for services performed under the 218 agreement must be reported and the State is liable for the related contributions. The effect of the termination was merely to exclude from social security coverage services performed for the city after the calendar quarter ending December 31, 1970, the date of termination.
There are no provisions in the California Federal-State coverage agreement, the law or implementing regulations that would permit elimination of the State's liability for contributions with respect to wages paid for services performed during the period of coverage, even though the wages paid for such services are not paid until after employment or coverage terminates.
The Commissioner found on review pursuant to the State's request that the State was responsible for filing reports and paying contributions on wages paid to employees of the City of Santa Rosa in the first quarter of 1971 for services performed in 1970. On the basis of this finding the request for refund was properly denied.
Back to Table of Contents