20 CFR 404.1026(a)(6) and 404.1220
The Social Security Administration determined that the fair market value of housing furnished to certain State employees was wages-in-kind and therefore, contributions were due. The State of Iowa contended that the housing was not provided as payment for labor or services and, therefore, not covered wages under the State's section 218 agreement. Held, since houses were furnished and employees required to occupy them as a condition of employment, the housing has a value of wage purposes equal to the amount of the employees would be required to pay for comparable housing in the area.
The Commissioner of Social Security has been requested to review pursuant to Section 218(s) of the Social Security Act, as amended, a statutory contribution assessment dated April 14, 1975. The contributions were determined due by the Social Security Administration on wages-in-kind covering fair market value of housing furnished to certain employees of the Iowa Conservation Commission, during the period July 1, 1971, through December 31, 1974. It is the State's view that the housing was not provided as a payment for labor or services and is, therefore, not covered wages under the State's section 218 agreement.
The requested review has been made by the Commissioner pursuant to authority delegated by the Secretary of Health, Education and Welfare. The evidence submitted shows that park rangers employed by the Iowa Conservation Commission are required by the conditions of their employment to live in housing furnished by the State on Commission property for which the rangers are responsible. The Commission at one time charged employees a flat $25 per month for such housing but discontinued this charge beginning July 1, 1971, because the presence of rangers living on Commission property was considered to be of value for the convenience of the public and for protection of the property. The General Policies Section of the Iowa Conservation Commission provides that housing may be furnished to Commission employees and requires that they occupy the housing as a condition of employment.
The definition of wages for purposes of social security coverage is determined under applicable provisions of Federal law and regulations. The applicable Federal laws as to what constitutes wages for purposes of a State's social security agreement are set forth in Section 209 (Definition of Wages) and Section 218 (Voluntary Agreements for Coverage of State and Local Employees) of the Social Security Act, as amended. The applicable Federal regulations are contained in Social Security Regulations No. 4, Section 404.1026 (Wages). Under Section 209 of the Act, the term "wages" is defined as all remuneration for employment, including the cash value of all remuneration paid in any medium other than cash, unless such remuneration is specifically excluded under one of the subsections of section 209. The fair value of housing furnished by an employer is not excluded from wages as defined in section 209 of the Act. The Iowa Section 218 coverage agreement provides that the State will pay the appropriate contributions due on wages paid for covered services. Pursuant to Social Security Regulations No. 4, section 404.1026(a)(6)(i), the value of lodging furnished to an employee is wages where it is agreed as part of the employment contract that the employer is to furnish regular lodging.
After considering this matter in light of the aforementioned criteria, the Commissioner concluded that the State is liable for contributions on wages-in-kind for the value of housing furnished to employees of the State Conservation Commission for the period July 1, 1971, through December 31, 1974. The housing furnished may not be viewed as being particularly advantageous or desirable to the employees as contended by the State. However, the employees are required to occupy the housing as a condition of employment and the fact remains that if the housing were not provided, the employees would be required to furnish housing at personal expenses. Therefore, the housing has a value of wage purposes equal to the amount the employees would be required to pay for comparable housing in the area. On the basis of this finding, the assessment of contributions is affirmed.
 Under Section 218(t) of the Social Security Act, a State may, within two years after the mailing of the Notice of the Commissioner's Decision, file a civil action in the Federal District Court for a redetermination of the correctness of the assessment of the amount due.
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