A political subdivision is a separate legal entity of a State that has governmental
powers and functions. It also includes an instrumentality wholly owned by a State,
or one or more political subdivisions of a State, or of a State and one or more of
its political subdivisions. An instrumentality is organized to carry on some function
of government for the State or political subdivision. It is an independent legal entity,
with power to hire, supervise, and discharge its own employees, and generally to sue
and be sued in its own name, to contract, to hold and convey real and personal property.
A “political subdivision” ordinarily includes counties, cities, townships, villages,
schools, sanitation, utility, irrigation, drainage and flood-control districts, and
similar governmental entities.
SSA is in accord with IRS Revenue Rulings 57-128 and 65-26. These rulings provide
that the following factors, among others, are considered in determining the status
of an organization:
whether there are any private interests involved, or whether the States or political
subdivisions involved have the powers and interests of an owner;
whether control and supervision of the organization is vested in public authority
if express or implied statutory or other authority is necessary for the creation and/or
use of such an instrumentality and whether such authority exists; and
the degree of financial autonomy and the source of its operating expenses.
Generally, SSA considers provisions of State law when determining whether an organization
is a separate and distinct political subdivision for coverage purposes. While political
subdivisions are generally identified in State law as bodies "corporate and politic,"
this is not universally true. Libraries and hospitals are illustrative of organizations
whose status is often not apparent from either title or statute. They may be integral
parts of a political subdivision such as a city or county, instrumentalities of a
State or political subdivision and therefore separate political subdivisions, or they
may be private nonprofit organizations.