T.Tullos - May 18, 2023 - Withholding of Social Security and Taxes from Salary

550 HIGH STREET • SUITE 1200 • JACKSON, MISSISSIPPI 39201 POST OFFICE BOX 220 • JACKSON, MISSISSIPPI 39205 TELEPHONE (601) 359-3680 May 18, 2023 Thomas L. Tullos, Esq. Attorney, Town of Louin Post Office Drawer 567 Bay Springs, Mississippi 39422 Re: Withholding of Social Security and Taxes from Salary Dear Mr. Tullos: The Office of the Attorney General has received your request for an official opinion. Question Presented Is the town of Louin (“Town”) required to withhold Social Security, federal taxes, state taxes, and Medicare taxes from the compensation paid each month to the aldermen and town attorney? Brief Response This office is unable to opine on questions of federal law; therefore, we offer no opinion on the questions of Social Security, federal taxes, and Medicare. With regard to state taxes, compensation paid to aldermen would be considered wages paid to a salaried employee of the Town for purposes of taxation. However, whether an attorney working for a municipality is employed as a city employee or as an independent contractor is a determination of fact to be made by the governing authorities based on the circumstances surrounding employment. Applicable Law and Discussion The Office of the Attorney General may not interpret or opine on federal law; therefore, we are unable to answer your questions about federal income tax, Social Security, and Medicare. We refer you to the appropriate federal officials for assistance with these questions. However, please note that the IRS defines employee as “an officer, employee, or elected official of the United States, a State, or any political subdivision thereof, or the District of Columbia, or any agency or instrumentality of any one or more of the foregoing.” 26 U.S.C.A. § 3401(c) (emphasis added). Thomas L. Tullos, Esq. May 18, 2023 Page 2 550 HIGH STREET • SUITE 1200 • JACKSON, MISSISSIPPI 39201 POST OFFICE BOX 220 • JACKSON, MISSISSIPPI 39205 TELEPHONE (601) 359-3680 Mississippi Code Annotated Section 21-3-5 authorizes the governing authorities of a municipality to hire employees, set their compensation, and prescribe their duties. Consequently, this office has opined that Section 21-3-5 provides authority for the governing authorities to establish all reasonable policies relative to compensation of the mayor and board of aldermen. MS AG Op., Greer at *1 (Jan. 12, 1994); see also MS AG Op., McCreary at *1 (July 29, 2005) (opining that an alderman’s salary is set and determined by the municipal governing authorities). This office has also opined that for purposes of workers’ compensation coverage, even though aldermen “are elected rather than hired under a contract of employment, elected officials receive a salary and perform official duties on behalf of the municipality, and this being the case, are to be considered ‘employees’ of the municipality. . . .” MS AG Op., Tullos at *2 (Dec. 19, 2003) (emphasis in original). Section 21-15-25 authorizes a municipality to hire an attorney for the municipality and states, in pertinent part: The governing authorities may annually appoint an attorney-at-law for the municipality, prescribe his duties and fix his compensation, and/or they may employ counsel to represent the interest of the municipality, should the occasion require. For services and duties which the regular city attorney is not required to perform as a result of his employment as such, and which are not covered by the regular compensation paid him, such municipal attorney may be employed and compensated additionally. Appointing an attorney to perform work for the municipality is discretionary. MS AG Op., Pepper at *1 (May 29, 2015). An attorney may be hired and paid under a regular contract for employment, making him a municipal employee, or hired by the municipality as an independent contractor on a temporary basis, “should the occasion require.” Miss. Code Ann. § 21-15-25. “An attorney employed to represent the City and paid a specified amount each month, for which compensation the attorney at all times represents the City, is a city employee and the compensation paid is salary.” MS AG Op., Blackwell at *3 (Nov. 6, 1980) (internal quotation marks and citation omitted). Whether an attorney working for a municipality is employed as a city employee or as an independent contractor is a determination of fact to be made by the governing authorities based on the circumstances surrounding employment. Blackwell at *4. The State income tax withholding provisions are found in Section 27-7-305, which provides that employers shall deduct and withhold from wages paid to employees an amount to be “credited against the tax liability of the employee. . . .” Id. at (1) (emphasis added). It is the opinion of this office that aldermen are employees of the municipality for state income tax purposes, as are salaried attorneys who are city employees. Whether an attorney working for a municipality qualifies as an employee is a determination of fact to be made by the governing authorities. We recommend seeking further guidance on questions of income tax withholding from the Department of Revenue. Thomas L. Tullos, Esq. May 18, 2023 Page 3 550 HIGH STREET • SUITE 1200 • JACKSON, MISSISSIPPI 39201 POST OFFICE BOX 220 • JACKSON, MISSISSIPPI 39205 TELEPHONE (601) 359-3680 If this office may be of any further assistance to you, please do not hesitate to contact us. Sincerely, LYNN FITCH, ATTORNEY GENERAL By: /s/ Gregory Alston Gregory Alston Special Assistant Attorney General