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1992
PLR/TAM 9221061 - 9221001
PLR 9221035 -- IRC Sec(s). 3121, 2/21/1992
Private letter Rulings
Private Leger Ruling 9221035, 2/21/1992, IRC Sec(s). 3121
UIL No. 3121,04 -00; 3306.05 -OD; 3401.04 -00
Headnvte:
Reference(s): Code Sec. 3121;
ELECTED CITY COUNCILMAN IS AN EMPLOYEE.
An elected member of a city council attends meetings, enacts resolutions and ordinances, and sets city
policy. In return, the municipality pays him a salary,
• The Service has ruled that the council member is an elected official and an employee under section
3401(c), and his wages are subject to income tax withholding. The council member is exempted From
the definition of employee as to FUTA under section 3306(c)(7), and as to FICA under section 3121(b)
(7),
Electronic Citation: 92 TNT 1I.Q -58
Geographic Identifier: United States
Index Tern1: FICA definitions
Copyright 1992, Tax Analysts.
Full Text:
Date: February 21, 1992
CC: EE: 6 — TR- 31- 2446 -91
SSN: * **
EIN: * **
Dear Sir or Madam:
•
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This is in response to a request for a ruling submitted by the worker concerning his status for federal
employment tax purposes with respect to the services he performed for the firm.
• The federal employment taxes are those imposed by the Federal Insurance Contributions Act (FICA),
the Federal Unemployment Tax Act (FUTA), and the Collection of Income Tax at Source on Wages. In
cases that involve a possible employer- employee relationship, it Is our practice to solicit comments
from all of the parties involved, so we requested Information from the firm. The information was
furnished as requested. Therefore, our decision in this case is based on the information submitted by
both parties.
According to the information submitted, the firm Is a municipality. The worker was an elected member
of the city council. His duties included attending council meetings, enacting resolutions and ordinances,
and establishing city policy. He received a salary from the firm for the performance of his services,
Section 1.1402(c) -2(b) of the Income Tax Regulations provides that the term "public office" includes
any elective or appointive office of a state or political subdivision thereof..
Section 3401(c) of the Code, pertaining to the Collection of Income Tax at Source on Wages, defines
the term "employee" as including an officer, employee, or elected official of the United States, a State,
or any political subdivision thereof.
Section 31.3401(c) -1(a) of the Employment Tax Regulations provides that the term "employee"
Includes officers and employees, whether elected or appointed, of a state or political subdivision
thereof.
Section 1402(x) of the Internal Revenue Code, pertaining to the self - Employment Contributions Act
(SECA), defines the term "net earnings from self - employment" as the gross income of an individual
from any trade or business carried on by him, less the income tax deductions allowed which are
• attributable to such trade or business.
Section 1402(c)(1) of the Code provides that the term "trade or business," when used with reference to
self - employment income or net earnings from self- employment, shall not include the performance of
functions of a public office, other than the functions of a public office of a state or a political subdivision
thereof with respect to fees received in any period in which the functions are performed in a position
compensated solely on a fee basis and in which such functions are not covered under an agreement
pursuant to section 218 of the Social Security Act.
Rev. Rul. 74 -608, 1974 -2 C.I3. 275, concerns an individual elected to collect the county, township and
school district taxes within his electoral district. He accounts for and turns over all collections to the
treasurer of each taxing authority, and is compensated from state funds on the basis of a fixed
percentage of each tax. The ruling provides that when a public official receives his remuneration in the
form of fees directly from the members of the public with whom he does business, such remuneration
is "fees" within the meaning of section 1402(c)(1) of the Code. When, however, a public official
receives his remuneration or salary from a government fund and no portion of the monies collected by
him belongs to or can be retained by him as compensation, the remuneration is not "fees" under
section 1402(c)(1), The ruling concludes that the individual is not engaged In a trade or business and
does not have net eamings from self- employment for purposes of section 1402 of the Code.
We believe that the facts presented in this case are substantially similar to the facts in Rev. Rul, 74-
608. The worker was an elected official of the municipality who received remuneration from a
government fund. Therefore, such remuneration did not constitute fees under section 1402(c)(1) or
1402(c)(2)(E). Accordingly, we conclude that the worker was not engaged in a trade or business for
purposes of section 1402(c) of the Code. Because the worker was an elected official of a state or its
political subdivision, he was an employee within the meaning of section 3401(c) of the Code and the
• regulations cited above, and the wages paid to the worker.are subject to income tax withholding.
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Section 3306(c)(7) of the Code, pertaining to the FUTA, provides that services performed in the employ
of a state, political subdivision, or instrumentality thereof are excepted from the definition of
employment,
• Services performed in the employ of a state or Its political subdivisions are excepted from employment
for purposes of the FICA by section 3121(b)(7) of the Code. However, there is liability for the FICA
taxes if the services are included under an agreement entered Into pursuant to section 218 of the
Social Security Act. See, section 3121(b)(7)(E).
If a worker was not covered under a section 218 agreement, then section 3121(u)(2) of the Code
provides that individuals who begin performing services after March 31, 1956, are subject to the
Medicare taxes Imposed under sections 3101(b) and 3111(b).
Under section 3121(b)(7)(F) of the Code, services performed after July 1, 1991, in the employ of a
state, of any political subdivision thereof, or of any instrumentality of any one or more of the foregoing
which is wholly owned thereby, by an Individual who is not a member of a retirement system of such
state, political subdivision, or instrumentality, will be subject to the FICA taxes.
This ruling is applicable to any other individual engaged by the city under similar circumstances. A copy
of this ruling is being forwarded to the local IRS District Director's office.
This ruling is directed only to the taxpayer to whom it is addressed, Section 6110(j)(3) of the Code
provides that it may not be used or cited as precedent,
Sincerely,
Harry Beker
• Chief, Branch b
Office of the Associate
Chief Counsel
(Employee Benefits and
Exempt Organizations)
Enclosure:
Copy for section 6110 purposes
END OF DOCUMENT -
0 2007 Thomson /RIA. All rights reserved.
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COMPENSATION OF MUNICIPAL OFFICIALS
Tequesta Section 2.01, Selection, Term and Compensation
Palm Beach Section 3.08, Compensation
Jupiter Island Section 3.7, Compensation
Manalapan Section 3.06, Compensation and Expenses
Model Charter Section 6.05, Schedule, (e) Initial Salary of Councilmembers
ARTICLE ll. THE VILLAGE COUNCIL
Section 2.01. Selection, Term and Compensation.
The Village Council of the Village of Tequesta shall consist of five (5) members who shall be
elected at large to Seats 1, 2, 3, 4 and 5. The Councilmembers in Seats 1, 3 and 5 shall be elected in
the even years, and the Councilmembers in Seats 2 and 4 shall be elected in the odd years. The
election shall be held on the second Tuesday in March of each year. Only qualified electors, as
prescribed herein, shall be entitled to vote at such elections.
The term of office of each Councilmember shall commence at the next Council meeting
subsequent to the date of the Councilmember's election and shall continue for two (2) years thereafter
and /or until the Councilmember's successor is elected and qualified.
Each Village Councilmember shall be entitled to an annual salary to be fixed by ordinance;
provided, however, a Councilmember shall not be entitled to any increase in salary adopted during the
term for which such Councilmember was elected.
The candidate for each seat receiving the highest number of votes cast for such office shall be
deemed elected to such office regardless of whether or not such candidate shall have received a
majority of votes cast. In the event of a tie vote between the candidates receiving the highest number of
votes cast for any office, the names of all tied candidates shall be placed on the ballot and shall be
voted upon at an ensuing runoff election to be held on the fourth (4th) Tuesday in March. Such election
shall be held in the same manner and by the same election officials holding the previous election.
Section 2.02. Qualifications and Disqualifications.
No person shall be eligible to any elective office of the Village unless said person shall be a
registered voter and resident of the Village. Any Village Councilmember who ceases to possess these
qualifications shall forthwith forfeit his or her office.
Any candidate seeking election as Councilmember shall file with the Village Clerk a written
notice to such effect from and including noon on the last Tuesday in January to and including noon on
the second Tuesday in February in the year of the election, and shall pay such filing fee as set by
ordinance. Such notice shall be signed by at least fifty (50) registered voters of the Village of Tequesta
and shall state the seat number to which said candidate seeks to be elected, the candidate's place of
residence, the candidate's age and any other data required by law.
Section 2.03. Oath of Office.
Each Councilmember, before entering upon the discharge of the duties of office, shall take and
subscribe the following oath before the Village Manager or presiding officer of the Council, viz:
"I do solemnly swear (or affirm) that I will support, protect and defend the Constitution, and
Government of the United States and of the State of Florida against all enemies, domestic or
foreign, and that I will bear true faith, loyalty and allegiance to the same and that I am entitled to
hold office under the Constitution and that I will faithfully perform all the duties of the office of
on which I am about to enter so help me God."
Section 2.04. Removal/Recall.
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Council vacancy; provided, however, that a Mayor or Town Council member so chosen shall
serve only until the next regular Town election, at which time any unexpired term of the Mayor
or Town Council member whose vacancy was so filled shall be submittedto the electors for the
election of a successor; and provided further that the individual so chosen by the Town Council
to fill such vacancy shall be disqualified from running for elected office at such next regular
Town election. In filling any such vacancy, the Town Council shall first consider former elected
officials of the Town as candidates to fill such vacancy. In the case of a tie vote to fill a Town
Council vacancy, the Mayor shall have the right to vote to break the tie.
Notwithstanding any quorum requirements established in this Charter, if at any time the
membership of the Town Council is reduced to less than a quorum, the remaining members shall, by
majority vote, appoint additional members in the manner provided above and the Mayor shall have the
right to vote to break a tie.
(d) Extraordinary Vacancies. In the event that all members of the Town Council are removed
by death, resignation, removal from office in any manner prescribed by law, or by forfeiture, the
Governor of the State of Florida shall appoint an interim Town Council which shall call a special
election to be held no sooner than sixty (60) days, or more than ninety (90) days, following the
occurrence of said extraordinary vacancies.
(Ord. No. 18 -99, § 1, 12- 14 -99)
Sec. 3.07. Procedure.
(a) Meeting. The Town Council shall meet regularly at least once in each month at such times
and places as the Town Council may prescribe by rule. Special meetings may be held when
called by the President of the Town Council, or by the President Pro Tem of the Town Council,
or by any two (2) members of the Town Council, or by the Mayor. Whenever practical, such call
shall be upon no less than twelve (12) hours' notice to each Council member, to the Mayor and
to the public.
(b) Rules. The Town Council shall adopt its own rules and order of business.
(c) Voting. Voting on final action of all ordinances, resolutions and motions shall be by roll call
and shall be recorded. A majority of the Town Council shall constitute a quorum, but a lesser
number may adjourn from time to time and may compel the attendance of absent members
pursuant to the rules of the Town Council. No action of the Town Council except as otherwise
provided in the preceding sentence and in Section 3.06(c) shall be valid or binding unless
adopted by the affirmative vote of the majority of the quorum present.
(Ord. No. 18 -99, § 1, 12- 14 -99)
State law references: Procedure for adoption of ordinances and resolutions, F.S. § 166.041.
Sec. 3.08. Compensation.
No elected official of the Town shall receive any compensation for his or her services to the
Town except reimbursement of direct out -of- pocket expenses legitimately incurred on Town business
and as prescribed by law.
(Ord. No. 18 -99, § 1, 12- 14 -99)
State law references: Per diem and travel expenses for public officers and employees, F.S. §
112.061.
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§ 3.6 JUPITER ISLAND CHARTER AND REALTED LAWS
(b) Rules. The Town Commission may adopt its own rules of procedure and order of
business.
(c) Quorum. A majority of the Town Commission shall constitute a quorum, but a lesser
number may adjourn from to time and may compel the attendance of absent members
pursuant to the rules of the Town Commission. No action of the Town Commission except as
otherwise provided in the preceding sentence or as otherwise required in this Charter or
applicable law shall be valid or binding unless adopted by the affirmative vote of the majority
of the quorum present.
Section 3.7. Compensation.
No elected official of the Town shall receive any compensation for services to the Town or any
other monetary benefit whatsoever except reimbursement of direct out -of- pocket expense
legitimately incurred on Zbwn business and as prescribed by law.
Section 3.8. Reserved.
Editor's note —Ord. No. 303, § 1, adopted Feb. 15, 2006, repealed § 3.8, which pertained to
holding other office and derived from Ord. No. 243, adopted March 10, 1999.
Section 3.9. Interference with Administration.
The Town Manager shall be the administrative head of the municipal government under the
laws of the Town as enacted by the Tbwn Commission and under general supervision of the
Town Commission. Except for the purpose of inquiries and investigations, neither the Town
Commission nor its members shall deal with Town employees who are subject to the direction
and supervision of the Town Manager, or with contractors, suppliers or vendors of the Town,
except through the Town Manager, and the Town Commission members shall not give orders
to any such employees, contractors, suppliers or vendors either publicly or privately. Nothing
in the foregoing is to be construed to prohibit the Town Commission from closely scrutinizing
by questions and personal observations, all aspects of Town government so as to obtain
independent information to assist them in the formation of sound policies to be considered by
the Town Commission.
ARTICLE IV ELECTION PROCEDURE
Section 4.1. General Election.
General elections shall be held on the third Tuesday in March in each year that any Town
Commissioner's full term is set to expire.
Section 4.2. Nonpartisan Elections.
All elections for the Town Commission shall be conducted on a nonpartisan basis without
regard to the designation of political party affiliation.
Supp. No. 3 6
Charter, who resides at least seven (7) months out of twelve (12)
months of each year and who is available to attend Town Commission
meetings during said period shall be eligible to run for and hold the
office of Town Commissioner or Mayor in Seats 1., 2. and 7.
respectively. In addition to being a qualified Town elector meeting the
above residency requirements, any person desiring to qualify for
Town Commissioner in Seats 3. and 4. must also reside in the part of
the Town of Manalapan known as the Ocean (the portion of the Town
on the barrier island of the Town of Manalapan between the North
corporate limits of the Town of Manalapan at the Town of Lantana
and the South corporate limits of the Town of Manalapan at the South
Lake Worth Inlet) while any person desiring to qualify for Town
Commissioner in Seats 5. and 6. must also reside in the part of the
Town of Manalapan known as the Point (the portion of the Town of
Manalapan consisting of the South part of Hypoluxo Island and all of
Audubon Key within the corporate limits of the Town of Manalapan).
Any Commissioner who, during his or her term, is or becomes
ineligible or unqualified to hold his or her office or seat shall be
deemed to have forfeited this office and his or her seat shall be
deemed vacated. The Town Commission shall be the judge of
elections, eligibility and qualifications of its Commissioners and
Mayor and of the grounds for forfeiture or vacation of office or seat.
A Commissioner or Mayor charged with conduct constituting grounds
for forfeiture of his or her office or seat shall be entitled to a public
hearing on demand, and notice of such hearing shall be published in
one (1) or more newspapers of general circulation in the Town at least
one (1) week in advance of the hearing.
(Amended, June 11, 2002)
See. 3.05. Election.
The Town Commission election shall be held on the date and in the
manner provided in Article V of this Charter for regular Town
elections.
(Amended, June 11, 2002)
Statutory reference:
Electors and elections, see Fla. Stat. Ch. 97 et seq.
See. 3.06. Compensation and Expenses.
The Town Commission may determine the salary, if any, of
Commissioners by ordinance, but no ordinance establishing,
increasing, diminishing or deleting such salaries shall become
effective until the date of the second next regular Town election after
the effective date of such ordinance. Commissioners shall be
reimbursed for their actual and necessary expenses incurred in the
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performance of their duties of office as provided by law.
Sec. 3.07. Mayor, Vice Mayor and Mayor Pro -tem.
At each annual reorganizational meeting, the new Town
Commission shall elect from among its members a Vice Mayor and a
Mayor Pro -tem. The mayor shall preside over meetings of the Town
Commission, shall be recognized as head of Town government for all
ceremonial purposes, by the Florida Governor for purposes of military
law, for service of process and execution of contracts, deeds and other
instruments and documents, and as the Town official designated to
represent the Town in all agreements with other governmental entities
or certifications to their governmental entities, but shall have no
administrative duties except as required to carry out the
responsibilities herein. The Vice Mayor shall act as Mayor during the
absence, unavailability or disability of the Mayor and upon the office
of the Mayor becoming vacant, shall act as the Mayor until the office
of Mayor is filled. The Mayor Pro -tem shall only act as Mayor at
Town Commission meetings not attended by the Mayor or Vice
Mayor. The Mayor shall have a vote only in the event of a tie. The
Vice Mayor and Mayor Pro -tem shall be entitled to a regular vote
even when acting as Mayor, but shall not have any additional vote in
the event of a tie. If the office of Vice Mayor becomes vacant, then
the Mayor Pro -tem shall become the Vice Mayor and the Town
Commission shall elect a new Mayor Pro -tem.
(Amended, June 11, 2002)
Sec. 3.08. Vacancies; Filling Of Vacancies; Extraordinary
Vacancies.
A. Vacancies. The office and seat of a Town Commissioner or
Mayor shall become vacant upon a Commissioner's or Mayor's death,
resignation, removal from office in any manner authorized by law,
forfeiture of office or seat (such forfeiture to be declared by a majority
of the remaining members of the Town Commission), or as otherwise
provided in this Charter. An elected or seated Commissioner or Mayor
shall forfeit his or her office and seat if he or she lacks at any time
after qualifying to run for office or during his or her term of office
either eligibility or any qualification for the office and seat prescribed
by this Charter or by law.
B. Filling of vacancies. The remaining members of the Town
Commission shall have the power by resolution to fill and shall fill
any vacancy of any office and seat on the Town Commission for the
unexpired term by appointing a person eligible and qualified to fill
said office and seat no later than forty-five (45) days after the seat or
office becomes vacant. Notwithstanding any quorum requirement
established here, if at any time the membership of the Town
Commission is reduced to less than a quorum, the remaining members
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S6.04 - Pending Matters
I
All rights, claims, action, orders, contracts and legal
or administrative proceedings involving the city shall continue
except as modified pursuant to the provisions of this charter.
I §6.05 - Schedule
(a) First Election At the time of its adoption, this
charter shall be in effect.to the extent necessary in that
the first (1st) election of members of the city council* may be
1 conducted in accordance with the P rovisions herein. The first (lst)
election shall be held on the of
The city council elected under the former charter shall prepare
f and adopt by resolution temporary regulations applicable only to
the first (1st) election and designed to insure its proper conduct
I and to prevent fraud. (At the first (lst) election under this
charter, all five (5) councilmembers shall be elected; the two (2)
candidates receiving the greatest number of votes shall serve
for terms of four (4) years and the three (3) candidates receiving
;he next greatest number of votes shall serve for terms of two (2)
years. Thereafter, all elections shall be for terms of four (4)
years.) ** The terms of councilmembers shall begin the
day of after their election.
*(Add "and mayor" if alternative 2 of 33.05 is selected)
f
* *[See alternatives for bracketed section]
15
(b) Time of Taking Full Effect This charter shall
be in full effect for all purposes on and after the date and
I time of the first (lst) meeting of the newly elected council.
I 7 (c) First Council Meeting On the of
1 following the first (lst) election of councilmembers
under this charter, the newly elected members of the council shall
meet at (time) at (place) and
shall organize under the provisions of article III of this charter.
1 (d) Transition Ordiances The council shall adopt
ordinances and resolutions required to effect the transition.
Ordinances adopted within sixty (60) days of the first (13t)
,council meeting under this charter for the purpose of facilitating
the transition may be passed as emergency ordinances following
the procedures in article III except that transition ordinances
l shall be effective for up to ninety (90) days after enactment..
Thereafter, such ordinances may be readopted, renewed or otherw se
continued only in the manner prescribed for normal ordiances in
article III.
(e) Initial Salary of Councilmembers Members of
the council.shall receive an annual salary in the amount of
S ** until such is changed by the council in accordance
with the provisions of this charter.
*[Add "and mayor" if alternative 2 of SJ-05
is selected)
* *[Add "and mayor shall receive an annual salary in the
amount of $ " if alternative 2 of 53.05
is selected]
16
