Montana Attorney General Opinion 16-269

Opinion No. 269. Taxation-Income Tax-WP A Employees. HELD: Employees of the Works Progress Administration are in real- ity employees of the United States and salaries or wages of WP A em- ployees are not subject to Montana in- come tax. Hon. Elmer Holt Governor of Montana The Capitol April 17, 1936. Your letter to us of April. 13, is as follows: "The State Board of Equalization has seen fit to require that the earn- ings of the employees of the WP A be accounted for through the Mon- tana Income Tax Department. The WP A employees claim that inas- much as they are Federal and not State employees, this is unjust and illegal. Will you please give me your opinion as to whether or not the State Board of Equalization is cor- rect in maintaining their position?" The Emergency Relief Appropria- tion Act of 1935 was approved by the President on Amil 8, 1935. It appro- priated $4,000,000,000 to be used in the discretion and under the direction of the President for the purpose of furnishing relief and work relief and increasing employment by providing for useful projects of a public char- acter. This sum is made available for use only in the United States and its Territories and possessions. The pro- visions of the Act of February 15, 1934 (48 Stat. 351), relating to dis- ability or death compensation and benefits shall apply to those persons receiving from the appropriation, for services rendered as employees of the United States, security payments in accordance with schedules established by the President. The Pre!'!ident may appoint, without regard to the provi- sions of the civil service laws, such officers and employees as may be ne- cessary, prescribe their authorities, duties, responsibilities, and tenure, and fix their compensation. Any administrator or other officer, or the members of any central 'board, or other agency, named to have gen- eral supervision at the seat of govern- ment over the program and work con- templated under the appropriation and receiving a salary of $5,000 or more per annum from such appropria- tion, and any state or regional admin- istrator receiving a salary of $5,000 or more per annum from such appro- priation shall be appointed by the President, by and with the advice and consent of the Senate. The President is authorized to prescribe such rules and regulations as may be necessary to carry out the provisions of the act. He shall require to be paid such rates of pay for all persons engaged upon any project financed in whole or in part, through loans or otherwise, by funds appropriated by the act, as will in his discretion accomplish the pur- poses .sought, and not affect adverse- ly or otherwise tend to decrease the going rates of wages paid for work of a similar nature. He may fix differ- ent rates of wages for various types of work on any project, which rates need not be uniform throughout the United States. Any person who knowingly and with intent to defraud the United States makes any false statement in connection with any ap- plication for any project, employment, or relief aid under the provisions of the Act, or diverts, or attempts to divert, or assists in diverting for the benefit of any person or persons not entitled thereto any moneys appro- priated by the Act, shall be deemed guilty of a misdemeanor and shall be fined not more than $2,000 or im- prisoned not more than one year, or both. No part of the funds appro- priated shall be expended for the ad- ministrative expenses of any depart- ment, bureau, board, commission, or independent agency of the govern- ment if such administrative expenses are ordinarily financed from annual appropriations, unless additional work is imposed thereon by reason of the Act. On May 6, 1935, the President, pur- suant to the authority vested in him by the Act, issued Executive Order No. 7034, establishing among other things the Works Progress Adminis- tration. This order provides that the Works Progress Administration shall be responsible to the President for the honest, efficient, speedy and c09rdi- 284 OPINIONS OF THE ATTORNEY GENERAL nated execution of the work relief program as a whole, and for the ex- ecution of that program in such man- ner as to move from the relief rolls to work on projects or in private employ- ment the maximum number of per- sons in the shortest time possible. It vests the Works Progress Administra- tion with the following powers: (1) To establish and operate a Division of Progress Investigation and to coordi- nate pertinent work of existing in- vestigative agencies of the govern- ment, so as to insure the honest ex- ecution of the work relief program. (2) With the approval of the Presi- dent, to require uniform periodic re- ports of progress, recommend appro- priate measures for eliminating delay, and recommend termination of proj- ects if they do not economically af- ford the amount of employment war- ranting their continuance. (3) With the approval of the President, to pre- scribe rules and regulations to assure that as many persons employed on all work projects as is feasible shall be persons receiving relief, and to govern the selection of such persons. (4) To formulate and administer a system of uniform periodic reports of the em- ployment on such projects of relief and non-relief persons. (5) To in- vestigate wages and working condi- tions and to make and submit to the President such findings as will aid the President in prescribing working con- ditions and rates of pay on projects. Under the Act the President ap- pointed an Administrator of the Works' Progress Administration and also an Administrator for each State. Every employee who receives compen- sation for services from the fund cre- ated by the Act is chosen by the Pres- ident or by some agent acting in his behalf. The pay checks received by employees are issued against the United States Treasury. From all that has been said the conclusion is inevi- table, therefore, that employees of the Works Progress Administration are in reality employees of the United States. Chapter 181, Laws of 1933, provides for the imposition of an income tax. Section 7 thereof, however, exempts from this form of taxation salaries, wages and other compensations re- ceived from the United States of offi- cials and employees thereof. (Pome- roy v. State Board of Equalization, 99 Mont. 534.) Such being the mandate of the stat- ute, it is clear that salaries or wages of WPA employees are not subject to our state income tax.