coverage of fees of state and local government employees as self-employment income

coverage of fees of state and local government employees as self-employment income Sec. 122. (a) (1) Section 211(c)(1) of the Social Security Act is amended to read as follows: “(1) The performance of the 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 entered into by such State and the Secretary pursuant to section 218;”. (2) Section 211(c)(2) of such Act is amended (A) by striking out “and” at the end of subparagraph (C); (B) by striking out the semi-colon at the end of subparagraph (D) and inserting in lieu thereof “, and”; and (C) by adding after such subparagraph the following new subparagraph: “(E) service performed by an individual as an employee of a State or a political subdivision thereof in a position compensated solely on a fee basis with respect to fees received in any period in which such service is not covered under an agreement entered into by such State and the Secretary pursuant to section 218;”. (b) (1) Section 1402(c)(1) of the Internal Revenue Code of 1954 is amended to read as follows: “(1) the performance of the 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 entered into by such State and the Secretary of Health, Education, and Welfare pursuant to section 218 of the Social Security Act;”. (2) Section 1402(c)(2) of such Code is amended (A) by striking out “and” at the end of subparagraph (C); (B) by striking out the semicolon at the end of subparagraph (D) and inserting in lieu thereof “, and”; and (C) by adding after such subparagraph the following new subparagraph: 81 Stat. 844 “(E) service performed by an individual as an employee of a State or a political subdivision thereof in a position compensated solely on a fee basis with respect to fees received in any period in which such service is not covered under an agreement entered into by such State and the Secretary of Health, Education, and Welfare pursuant to section 218 of the Social Security Act;” (c) (1) The amendments made by subsections (a) and (b) of this section shall apply with respect to fees received after 1967. (2) Notwithstanding the provisions of subsections (a) and (b) of this section, any individual who in 1968 is in a position to which the amendments made by such subsections apply may make an irrevocable election not to have such amendments apply to the fees he receives in 1968 and every year thereafter, if on or before the due date of his income tax return for 1968 (including any extensions thereof) he files with the Secretary of the Treasury or his delegate, in such manner as the Secretary of the Treasury or his delegate shall by regulations prescribe, a certificate of election of exemption from such amendments. (d) Section 218 of the Social Security Act is further amended by adding the following new subsection: “Positions Compensated Solely on a Fee Basis “(u) (1) Notwithstanding any other provision in this section, an agreement entered into under this section may be made applicable to service performed after 1967 in any class or classes of positions compensated solely on a fee basis to which such agreement did not apply prior to 1968 only if the State specifically requests that its agreement made applicable to such service in such class or classes of positions. “(2) Notwithstanding any other provision in this section, an agreement entered into under this section may be modified, at the option of the State, at any time after 1967, so as to exclude services performed in any class or classes of positions compensation for which is solely on a fee basis. “(3) Any modification made under this subsection shall be effective with respect to services performed after the last day of the calendar year in which the modification is agreed to by the Secretary and the State. “(4) If any class or classes of positions have been excluded from coverage under the State agreement by a modification agreed to under this subsection, the Secretary and the State may not thereafter modify such agreement so as to again make the agreement applicable with respect to such class or classes of positions.”