H.R. 6124, TRIBAL SOCIAL SECURITY FAIRNESS ACT OF 2018


 

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Floor Situation

On Tuesday, July 24, 2018, the House will consider H.R. 6124, the Tribal Social Security Fairness Act of 2018under suspension of the rules.  H.R. 6124 was introduced on June 15, 2018 by Rep. David Reichert (R-WA) and was referred to the Committee on Ways and Means, which ordered the bill reported by voice vote on June 21, 2018.


Summary              

H.R. 6124 amends Title II of the Social Security Act to allow tribal councils to voluntarily enter into coverage agreements with the Social Security Administration (SSA). The bill also allows tribal council members to receive Social Security credit for FICA taxes paid erroneously, prior to the establishment of the coverage agreement, if these taxes were paid timely and not subsequently refunded.


Background

When Social Security was established, state and local government employees were excluded from Social Security coverage due to concerns that the 10th Amendment prohibited the federal government from requiring states to join Social Security. The Social Security Amendments of 1950 added Section 218 to the Social Security Act, which allowed state and local governments to extend Social Security (and later Medicare) coverage to their employees through a voluntary agreement, known as a 218 agreement, between the state and the SSA. Under Section 218, the state/local government may only extend coverage following a vote by members of the retirement system through a referendum process. The agreements generally cover all positions within a coverage group, not just specific individuals. Once a group is covered, the employer may not revoke coverage and employees filling the covered positions may not decline coverage.[1]

The services performed by members of tribal councils are not covered by Social Security. In 1959, the Internal Revenue Service (IRS) ruled that services performed by tribal council members in their role as council members do not constitute ‘‘employment’’ for FICA tax purposes, meaning that these earnings are not subject to Social Security and Medicare taxes.[2]

In the early 2000s, the SSA began receiving inquiries regarding the Social Security coverage status of tribal council members, as some members may have been paying Social Security taxes erroneously and believed their earnings would count toward future benefits. In 2006, the SSA updated its program instructions to clarify that tribal council members’ earnings do not count toward Social Security benefits, consistent with the 1959 revenue ruling. The SSA’s instructions state that the SSA will provide benefit credits for payroll taxes paid erroneously prior to 2006. However, some tribal council members may have paid payroll taxes after this date.[3]


Cost

The Joint Committee on Taxation (JCT) and the Congressional Budget Office (CBO) estimate enacting H.R 6124 would increase revenues by $13 million and would increase direct spending by an insignificant amount over the 2019-2028 period.


Staff Contact

For questions or further information please contact Jake Vreeburg with the House Republican Policy Committee by email or at 2-1374.


[1] See House Report 115-801 at 4.
[2] Id.
[3] Id. at 5.
115th Congress

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