Publication 963 (Rev. October 1997) - Uncle Fed's Tax*Board

Determining Worker Status
NOTES
Public Officers
Generally, public officers are employees for FICA purposes. If there is any question whether
a person is a public officer, obtain a copy of, or a reference to, the pertinent statute or
ordinance relating to the establishment of the position.
The following normally are public officers:
1. tax collectors and assessors,
2. justices of the peace, and
3. members of boards/commissions.
Jurors are generally not public officers, nor are they employees under the common law.
Additionally, notaries public are not public officers.
If an elected official is not covered under a Section 218 Agreement (the position may be
excluded) the official is subject to the rules described below.
Important Reminders: As a result of legislative changes since 1986, workers for government
entities can also be employees for FICA purposes if they are employees under the
common-law rules, even though the worker’s services are not covered under a Section 218
Agreement.
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For services performed after July 1, 1991, both OASDI and the Medicare components
of FICA apply to State and local government employees, unless the employee is
covered by a public retirement system.
The Medicare portion of FICA taxes applies to wages of State and local government
employees hired after March 31, 1986, unless the employee meets the continuing
employment exception of IRC section 3121(u)(2)(C).
If the services to be provided are not covered under section 218, the service recipient must
determine if section 530 of the Revenue Act of 1978 is applicable. If it is, the employer is
relieved of federal employment tax obligations.
It is important to note that there is limited applicability of Section 530 to State and local
workers covered under a Section 218 Agreement (IRC Section 3121(d)(4)).
SECTION 530
Section 530 provides government entities with relief from federal employment tax
obligations if certain requirements are met. It terminates the government entity’s, not the
worker’s, employment tax liability under Internal Revenue Code (IRC) Subtitle C (Federal
Insurance Contributions Act (FICA) and Federal Unemployment Tax Act (FUTA) taxes (not
applicable to State or local government employers), federal income tax withholding, and
Railroad Retirement Tax Act taxes) and any penalties attributable to the liability for employment
taxes (Revenue Procedure 85-18, 1985-1 C.B. 518).
Section 530(e)(3) of the Revenue Act of 1978, as amended by the Small Business Job
Protection Act of 1996, clarifies that the first step in any situation involving whether the
government entity has the employment tax obligations with respect to workers is determining
whether the government entity meets the requirements of section 530. If so, the government
entity will not have an employment tax liability with respect to the worker at issue.
3-4 Federal-State Reference Guide (1997 Edition)