DISTRICTS ‑- IRRIGATION ‑- COMMISSIONERS ‑- SOCIAL SECURITY ‑- OASI COVERAGE FOR IRRIGATION DISTRICT COMMISSIONERS
(1) Per diem compensation received by irrigation district commissioners under RCW 87.03.460 is subject to employees' contributions for federal social security under Chapter 41.48 RCW.
(2) The fact that a given commissioner of an irrigation district may have paid the maximum amount due for OASI contributions for a given year on his self-employment income does not affect the liability of the district for payments in accordance with (1), supra, instead, the remedy of any individual who has thus overpaid his social security taxes is then to claim a refund or tax credit on his federal income tax return.
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November 16, 1977
Honorable Sid W. Morrison
State Senator, 15th District
Route 1, Box 220AA
Zillah, Washington 98953 Cite as: AGLO 1977 No. 53
By letter previously acknowledged you have requested our opinion on the following two questions:
(1) Is an irrigation district liable for OASI contributions on behalf of its directors who receive only a nominal fixed fee?
(2) Are any contributions due to the State OASI Administration for previous years wherein the individuals in question have already paid the maximum amount on their self-employment income and, if they were to be liable for back payments to the OASI Administration, they in turn would be entitled to a refund from the federal government?
[[Orig. Op. Page 2]]
We answer both questions in the affirmative for the reasons set forth in our analysis.
RCW 87.03.460 provides that the directors of an irrigation district
". . . shall each receive not to exceed twenty-five dollars per day in attending meetings and while performing other services for the district, to be fixed by resolution and entered in the minutes of their proceedings, and in addition thereto their travel expenses in accordance with RCW 43.03.050 and 43.03.060 as now existing or hereafter amended. . . ."
Your first question is whether such compensation (as distinguished from travel expense reimbursement) as is thereby received by the directors of an irrigation district is subject to employees' contributions for federal social security under chapter 41.48 RCW. Based upon the reasoning of AGLO 1977 No. 22 [[to Donn Charnley, State Representative, on June 2, 1977, an Informal Opinion, AIR-77522]], copy enclosed, our answer is in the affirmative.
RCW 41.48.040, which deals with employees' contributions for federal social security in the case of state employees, reads as follows:
"(1) Every employee of the state whose services are covered by an agreement entered into under RCW 41.48.030 shall be required to pay for the period of such coverage, into the contribution fund established by RCW 41.48.060, contributions, with respect to wages (as defined in RCW 41.48.020), equal to the amount of employee tax which would be imposed by the federal insurance contributions act if such services constituted employment within the meaning of that act. Such liability shall arise in consideration of the employees' retention in the service of the state, or his entry upon such service, after the enactment of this chapter.
[[Orig. Op. Page 3]]
"(2) The contribution imposed by this section shall be collected by deducting the amount of the contribution from wages as and when paid, but failure to make such deduction shall not relieve the employee from liability for such contribution.
"(3) If more or less than the correct amount of the contribution imposed by this section is paid or deducted with respect to any remuneration, proper adjustments, or refund if adjustment is impracticable, shall be made, without interest, in such manner and at such times as the state agency shall prescribe."
For the purposes of this statute the term "employee" is defined by RCW 41.48.020(3) to include:
". . . all officers and employees of the state or its political subdivisions except officials compensated on a fee basis;"
Also to be noted is the definition of "wages" in RCW 41.48.020(1); i.e.,
". . . all remuneration for employment as defined herein, including the cash value of all remuneration paid in any medium other than cash, except that such term shall not include that part of such remuneration which, even if it were for 'employment' within the meaning of the federal insurance contributions act, would not constitute 'wages' within the meaning of that act;"
In AGLO 1977 No. 22 we applied the foregoing statutes to the similar situation of members of our various state college and university boards of regents or trustees. Prior to its amendment by § 72, chapter 34, Laws of 1975-76, 2nd Ex. Sess., RCW 28B.10.525 read as follows:
"Each member of a university board of regents or college board of trustees of a state institution of higher education, shall be entitled to receive, in lieu of per diem or any other payment, for each day or major portion thereof in which he is actually engaged in business of the board, notwithstanding any laws to the [[Orig. Op. Page 4]] contrary, twenty-five dollars per day, plus mileage allowance at the rate of ten cents per mile."
At p. 4 of AGLO 1977 No. 22 we said:
"We do not believe that payments made to individual regents or trustees under RCW 28B.10.525,supra, prior to its amendment, are susceptible to be characterized as 'fees' as that term is used in RCW 41.48.020(3),supra. The term 'fee,' instead, denotes a form of compensation paid in return for the performance of a particular statutory or contractual service whereas, in this case, regents or trustees were entitled to be paid, under RCW 28B.10.525, supra, on the basis of given time periods during which they were '. . . actually engaged in business of the board.' On the other hand, we are equally unpersuaded that the payments in question, prior to the 1976 amendment, could properly be characterized as mere expense reimbursements. Contrast, in that regard, the current version of the statute which, as amended, is now clearly an expense reimbursement statute only.
"Therefore, it necessarily follows that the pre‑1976 payments constituted a form of 'wages' as defined in RCW 41.48.020, supra. And that, in turn, obviously meant that those payments were subject to the employee contribution procedures under RCW 41.48.040, supra."1/
[[Orig. Op. Page 5]]
We can see no basis whatsoever for distinguishing the instant question, involving irrigation district commissioners under RCW 87.03.460, supra, from this earlier one relating to college or university regents or trustees. Although political subdivisions are not all automatically covered by OASI at the outset, once they do, in fact, come into the system under chapter 41.48 RCW all of the same rules and procedures are then applicable. See, RCW 41.48.050 and particularly, subsection (3) which provides:
"(3)(a) Each political subdivision as to which a plan has been approved under this section shall pay into the contribution fund, with respect to wages (as defined in RCW 41.48.020), at such time or times as the governor may by regulation prescribe, contributions in the amounts and at the rates specified in the applicable agreement entered into by the governor under RCW 41.48.030.
"(b) Each political subdivision required to make payments under paragraph (a) of this subsection is authorized, in consideration of the employee's retention in, or entry upon, employment after enactment of this chapter, to impose upon each of its employees, as to services which are covered by an approved plan, a contribution with respect to his wages (as defined in RCW 41.48.020), not exceeding the amount of employee tax which is imposed by the federal insurance contributions act, and to deduct the amount of such contribution from his wages as and when paid. Contributions so collected shall be paid into the OASI contribution fund in partial discharge of the liability of such political subdivision or instrumentality under paragraph (a) of this subsection. Failure to deduct such contribution shall not relieve the employee or employer of liability therefor."
Your second question, in turn, assumes the foregoing affirmative answer to question (1) and asks:
"Are any contributions due to the State OASI Administration for previous years wherein the individuals in question have already paid the maximum amount on their self-employment income and, if they were to be liable for back payments to the OASI Administration, they in turn would be entitled to a refund from the federal government?"
[[Orig. Op. Page 6]]
Under RCW 41.48.040 and 41.48.050, supra, it is the responsibility of an employer to cause employees' contributions for federal social security to be collected and remitted to the state. The amount collected must equal the employees' tax imposed by the Federal Insurance Contributions Act, wherein the rate of tax and the portion of the employee's remuneration to be taxed are specified. 26 U.S.C. §§ 3103, 3121. The Federal Insurance Contributions Act does not, however, provide for adjustments in the amount of contributions collected by the employer due to the employees' payment on self-employment income. Instead, the remedy of any employee who has thus overpaid his social security taxes is then to claim a refund or tax credit on his federal income tax return pursuant to 26 U.S.C. § 31(b) and applicable regulations thereunder; see also 26 U.S.C. § 6413(c).
It is hoped that the foregoing will be of some assistance to you.
Very truly yours,
Assistant Attorney General
PHILIP H. AUSTIN
Deputy Attorney General
*** FOOTNOTES ***
1/RCW 28B.10.525 was, however, amended by § 72, chapter 34, Laws of 1975-76, 2nd Ex. Sess. to provide, instead, that
"Each member of a university board of regents or college board of trustees of a state institution of higher education, shall be entitled to receive travel expenses in accordance with RCW 43.03.050 and 43.03.060 as now existing or hereafter amended for each day or major portion thereof in which he is actually engaged in business of the board."