To ensure accurate SSA and IRS Section 218 coverage records, a State should notify SSA and IRS of the existence of a new component that is an integral part of a political subdivision. The component is usually created by an existing political subdivision, such as a city or county, which has previously covered its employees under a Section 218 Agreement. Unlike other integral parts in the political subdivision, this component has its own payroll, bookkeeping, tax reporting system, employer identification number (EIN), etc. There is no need for a new modification, but still, SSA and IRS should know the political subdivision’s existing modification covers the new component.

For example, a city has executed a Section 218 Agreement that covers all services performed by city employees for Social Security purposes. The city subsequently creates a recreation board to oversee the city’s recreational facilities. However, the recreation board is not a separate political subdivision under state statute but constitutes a department of the city. The recreation board has a separate payroll system from the city, applies for and receives an EIN, withholds the appropriate employment taxes and reports such taxes and wages to the SSA and IRS.

To notify SSA of a new government component, the State completes and sends a Notification of a New Government Component form (see SL 40001.490F, Exhibit 24), with handwritten signature, in duplicate, along with establishing evidence to the Section 218 specialist. Alternatively, if the State has opted into the electronic signing process, it may submit the notice in PDF with electronic signature and electronic acknowledgement statement (see SL 40001.421), instead of submitting paper copies with handwritten signatures.

The Section 218 specialist will work with Program, Fiscal, and Disclosure Law (PFDL) to evaluate the evidence and confirm that a new component exists.

If SSA cannot confirm that a new component exists, the Section 218 specialist will notify the State that SSA cannot accept the notice.

If PFDL provides legal clearance to accept the notice, the Section 218 specialist will:

1. 1. 

   Notify the State that the notice has been approved and processed by returning a copy signed by the delegated official on behalf of the Commissioner of Social Security,

2. 2. 

   Append a signed copy of the notice to the existing modification that covers the new component,

3. 3. 

   Scan and save a copy of the new component notice packet for Agency records, and

4. 4. 

   E-fax a copy of the signed notice to the IRS at 855-243-4014.

The State must submit evidence legally sufficient to substantiate the establishment of a new government component that is an integral part of the political subdivision. The evidence may be in the form of a copy of the legal authority under which the new government component was established. This could be a copy of a city ordinance or a copy of the order of an authorized official, which effectuated the establishment of the new government component. Where legislative authority is involved, the State should provide either a reference to it or a copy of the legislation along with proof that this authority has been exercised. The documentation provided must show that the new government component is an integral part of the existing political subdivision.