Section 1570.5  Introduction

 

a)         The following rules are designed to carry out the provisions of Title 11, Section 218 of the Federal Social Security Act (42 USC. 418) and federal regulations adopted pursuant thereto.

 

b)         In accordance with the provisions of the Illinois Revised Statutes, ch. 108½, Art. 21, Section 128 of the Social Security Enabling Act of the State of Illinois which authorizes the State Agency to "make and publish such rules and regulations, not inconsistent with the provisions of this Article, as it finds necessary or appropriate to the efficient administration of the functions with which it is charged", the State Agency does hereby resolve, establish and promulgate and declare effective the following revised rules to implement the provisions of said Act.

 

Section 1570.10  Expenses Incurred Establishing Social Security Coverage

 

The Social Security Unit, referred to hereafter as the "State Agency" does not assume obligation for the cost of any legal services, actuarial studies, professional consultation fees or administrative costs incurred by a political subdivision or a public retirement system coverage group related to entering into a social security coverage agreement.

 

Section 1570.20  Resolution of Legal Question Coincident to Adoption of Social Security Coverage

 

If, in the preliminary stages of the establishment of social security coverage for a political subdivision or a public retirement system group, there shall arise legal questions requiring clarification, the State Agency shall be guided by the legal determinations of the Attorney General of the State of Illinois in questions involving State's statutes and by the Office of the General Counsel of the Social Security Administration in matters involving interpretation of the Social Security Act.  The governing body of the political subdivision or the Board of Trustees of a public retirement system is not relieved of the responsibility to obtain legal advice from their own counsel. Legal opinions and advice of independent counsel shall be furnished to the State Agency upon request.

 

Section 1570.30  Employer's Tax Liability, When Does It Begin

 

Coverage does not begin until an entity's agreement has been approved by the Social Security Administration.  During the period between adoption of the Social Security agreement by the entity's governing body and federal approval, the employer has no legal authorization to make social security deductions from the employee's wages under the coverage agreement.  However, the employer, with consent of the employees, may make deductions and hold them in an escrow account pending receipt of the Notice of Approval from the State Agency.  If an employee resigns during the interim period, and before the date on which federal approval is given, the employee shall be refunded the deductions withheld from his wages for social security purposes. In the event a question arises as to whether final wages of an employee are subject to being included upon initial wage reports, the State Agency shall determine whether tax liability upon said wages has occurred.

 

(Source:  Amended at 8 Ill. Reg. 15903, effective August 16, 1984)

 

Section 1570.40  Employer's Identifying Information

 

a)         There shall be one employer's identification number issued for each political entity under coverage.  The designated reporting official shall file one consolidated report of wages for all departments within the entity for retroactive coverage under a new coverage agreement for periods prior to January 1, 1987. Functional units of administration which are integral parts of the entity, even though maintaining separate divisional payrolls, shall not report wages separately to the State Agency unless such functional units have been authorized for reporting purposes by the State Agency.

 

b)         The employer identification number and mailing address shall not be changed or altered upon the preprinted wage report.  If a change of address or appointment of a new reporting official has occurred, the State Agency shall be notified immediately in writing.  If, through mailing error one entity receives another entity's report forms, it shall be the responsibility of the reporting official to immediately contact the State Agency.

 

(Source:  Amended at 13 Ill. Reg. 1577,  effective January 23, 1989)

 

Section 1570.50  Employees' Social Security Account Number

 

At the beginning of an employment relationship, the reporting official shall request to see the employees' social security card and enter into the payroll records of the entity, the employees' full name and social security number exactly as it appears upon the employees' social security card.  Every employee whose position is covered under the entity's social security coverage agreement, must have a social security number.  If an employee does not have a number, the reporting official shall direct him to the nearest Social Security Office to apply for a number and return the receipt issued by the Social Security Administration to the local reporting official.  If an employee has not been issued a social security number by the time the next wage report is due, a duplicate of the receipt issued by the Social Security Office to the new employee must be attached to the wage report.  If an employee has changed his name, the employee should be directed to the nearest Social Security Office to obtain a new social security card showing his new name.

 

(Source:  Amended at 5 Ill. Reg. 7237, effective July 1, 1981)

 

Section 1570.60  Employer's Responsibility to Withhold Social Security Contributions (Repealed)

 

(Source:  Repealed at 13 Ill. Reg. 1577, effective January 23, 1989)

 

Section 1570.70  Due Dates for Social Security Contributions Payments and Wage Reports

 

a)         Retroactive Payments of Social Security Contributions Under a New Coverage Agreement.

 

1)         Each entity which enters into a new coverage agreement shall prepare on prescribed forms, a report of covered wages paid to all covered employees for each period and shall remit to the State Agency the related amount of Social Security Contributions due thereon for periods prior to January 1, 1987, if any, as determined by the effective date of coverage specified by the entity in the coverage agreement.  The State Agency will notify the entity of its payment and reporting responsibility to the Internal Revenue Service (IRS) for retroactive periods beginning January 1, 1987.

 

2)         The entity should refer to Internal Revenue Service Publications (such as Circular E, "Employer's Tax Guide") for instructions for subsequent payments and reports.  The entity's wage reporting and contribution liability begins as of the effective date specified in the coverage agreement and continues until such time as the entity is dissolved or ceased to maintain a legal existance due to dissolution, annexation, or consolidation with another political entity.

 

b)         Penalties for Failure to Meet Prescribed Due Dates.

Upon notification to the State Agency by the Social Security Administration of reports and deductions due, the State Agency shall notify the entity within ten (10) business days of receipt of such notice. Failure to pay contributions by the designated due date will result in the failure by the State Agency to deposit contributions by the Federal due dates.  Federal interest penalties assessed the State for such delinquent contributions will be subsequently charged to the entity.  Such interest charges will be due and payable upon receipt of the notice of assessment from the State Agency.

 

(Source:  Amended at 13 Ill. Reg. 1577, effective January 23, 1989)

 

Section 1570.80  Adjustment of Wage Reports

 

The primary responsibility to report an employee's wages rests upon the employer.  This responsibility requires that the employer shall take immediate action to correct errors in reported wages as soon as such errors are discovered.  For periods prior to January 1, 1987, local officials shall comply with the following as soon as reporting errors are discovered.

 

a)         All adjustments shall be filed on forms prescribed by the State Agency.

 

b)         Whenever a reporting error is discovered, either by the State Agency or upon receipt of notice from the entity, the State Agency shall forward adjustment forms to the entity and shall set a due date by which the entity must return the completed adjustment form with payment of additional contributions, if required.  Any federal interest penalties that arise because of the entity's failure to comply with the due dates set by the State Agency shall be assessed directly against the entity.

 

c)         An adjustment decreasing the amount of wages previously reported must be accompanied by an explanation of the error to justify removal of the erroneous wage credits from the employee's earnings records by the Social Security Administration.  The State Agency shall refuse to process a decrease adjustment if the entity has failed to include an adequate explanation.

 

d)         If a reporting error is discovered at the federal level, the employing entity must comply with all State and Federal requirements to resolve the discrepancy.  The employing entity will be responsible to report and pay any contributions and interests determined payable by the Social Security Administration.

 

e)         If a refund of contributions reflects both employee and employer contributions, it shall be the employer's responsibility to make appropriate refunds to all employees involved.

 

(Source:  Amended at 13 Ill. Reg. 1577, effective January 23, 1989)

 

Section 1570.90  Annual Statements to Employees, Form W-2 Wage and Tax Statement

 

a)         Not later than January 31, or not later than 30 days after the date of the last payment of wages is made to an individual whose employment has been terminated each employing entity is required to furnish to each employee a Form W-2, Wage and Tax Statement for the applicable calendar year.  Covered entities shall obtain supplies of Form W-2 from the Internal Revenue Service (IRS) district office servicing their local area, or from a private vendor who prints such forms upon order in accordance with IRS specifications.

 

b)         Compliance with the regulations issued to employers by the Internal Revenue Service regarding Form W-2, applicable to the particular calendar year, shall constitute compliance with this rule.

 

c)         Each entity that has adopted social security coverage through the State Agency is required to insert upon the W-2 Form in the appropriate block as specified by IRS instructions, the entity's social security account identification number referred to in Section 1570.40.

 

d)         Covered entities shall not file with the State Agency copies of W-2 Forms issued to their employees; however, the employer's copy of the W-2 Forms shall be made available to the State Agency upon request, to confirm annual totals of wages paid to employees for purposes of social security credit under the entity's coverage agreement for periods prior to January 1, 1987.

 

(Source:  Amended at 13 Ill. Reg. 1577, effective January 23, 1989)

 

Section 1570.100  Recovery of Administrative Expenses of the Social Security Unit

 

a)         General Conditions for Recovery of Administrative Expenses

 

1)         Each entity electing participation in the Social Security insurance program shall reimburse the State Agency for the benefit of the State Treasury a pro rated share of the State Agency's total operational expenses.

 

2)         For purposes of recovering the operational expenses incurred by the State of Illinois in administering the federal social security program, the State Agency shall allocate the amounts to be assessed according to the two classifications of participating entities, Absolute Coverage Group and Retirement System Coverage Group.

 

3)         The administrative charge to be assessed upon the two classifications of participating entities shall be based upon the established costs of operating the State's Social Security program for the fiscal year ending June 30 as determined by the official accounts and records of the State Employees' Retirement System, Social Security Unit.

 

4)         The pro rated share of operating expenses shall be based on the allocation of time spent in administering coverage for the two classifications of participating entities.

 

b)         Absolute Coverage Group

 

1)         For the first year of participation (or fraction thereof) and annually thereafter, each absolute coverage group shall be assessed a yearly charge of $40 for maintenance of the coverage contract between the State Agency and the Social Security Administration.  Entities in an inactive status for a full calendar year shall not be assessed a contract maintenance charge for that year.

 

2)         In addition to the annual contract maintenance charge, each entity under an absolute coverage group agreement shall be assessed a pro rata share of the remainder of the State Agency's annual operating costs after amounts allocated to each retirement system coverage group and the amounts recovered under the contract maintenance charge have been subtracted from the total.  The pro rata share shall be expressed in terms of the ratio which each entity's total annual social security contribution payment bears in relation to the total social security contributions paid into the State Agency for the calendar year 1986.

 

c)         Annual Statement.

            Except for the State Employees' Retirement System, the administrative charge shall be included upon an annual statement forwarded to each participating entity in the month of December and shall become payable on or before April 5 of the following year.

 

d)         Penalty.

            There shall be added to each such assessment remaining unpaid more than 30 days after date of Notice of Delinquency has been given a penalty of 5% of the amount of the assessment or a penalty of $10, whichever is greater.

 

(Source:  Amended at 13 Ill. Reg. 1577, effective January 23, 1989)

 

Section 1570.110  Termination of Coverage for Reason of Entity's Financial Condition (Repealed)

 

(Source:  Repealed at 13 Ill. Reg. 1577, effective January 23, 1989)

 

Section 1570.120  Privacy and Confidentiality of Information Contained in Records of the State Agency

 

a)         A statement of the wages or other information reported under an individual's social security number shall be considered confidential and subject to release only upon written request from the account number holder or his legal representative. All other information maintained by the Social Security Unit shall be considered public information open to inspection upon request during normal business hours.

 

b)         The Social Security Unit may release any information in its files reported under an individual's social security number to a federal or state agency or department without the authorization of the individual if the information is for the purpose of conducting an investigation or prosecution.  The request must be submitted in writing and must state the reason for the request. The request must be directed to the Executive Secretary of the System for his approval or denial.  The Executive Secretary will approve the request if he determines it is a bonafide request from such agency.

 

(Source:  Added at 4 Ill. Reg. 21, p. 68, effective July 1, 1980)

 

Section 1570.130  Sick Pay Plans (Repealed)

 

(Source:  Repealed at 7 Ill. Reg. 8822, effective July 15, 1983)

 

Section 1570.140  Amendments

 

This Part may be changed or amended at any regular or special meeting of the Board of Trustees of the State Employees' Retirement System by a majority vote of the membership of the Board.

 

Section 1570.150  Noncorporate Public Entity - Special Reserve Fund (Repealed)

 

(Source:  Repealed at 13 Ill. Reg. 1577, effective January 23, 1989)

 

Section 1570.160  Audit For Failure to Pay Contributions - Reimbursement of Expenses

 

If the State Agency audits an entity due to failure or refusal by the entity to pay contributions and submit wage reports on a timely basis for periods prior to January 1, 1987, the entity shall reimburse the State Agency for the necessary expenses incurred by the State Agency to conduct the audit. Such expenses are the necessary travel expenses actually incurred by the State Agency in traveling to the office of the entity or any other location away from the office of the State Agency.

 

(Source:  Amended at 13 Ill. Reg. 1577, effective January 23, 1989)