DESCRIPTION OF H.R. 6124,

THE “TRIBAL SOCIAL SECURITY FAIRNESS ACT OF 2018”

Scheduled for Markup

by the

HOUSE COMMITTEE ON WAYS AND MEANS

on June 21, 2018

Prepared by the Staff

of the

JOINT COMMITTEE ON TAXATION

June 20, 2018

JCX-35-18
i

CONTENTS

Page

INTRODUCTION .......................................................................................................................... 1

A. Voluntary Agreements for Coverage of Services by American Indian Tribal

Council Members................................................................................................................ 2

B. Estimated Revenue Effect of the Proposal.......................................................................... 5
1

INTRODUCTION

The House Committee on Ways and Means has scheduled a committee markup of 

H.R. 6124, the “Tribal Social Security Fairness Act of 2018,” on June 21, 2018. The bill allows 

Indian tribes to enter into agreements with the Commissioner of Social Security to obtain Social 

Security and Medicare coverage for services performed by tribal council members. This 

document,1 prepared by the staff of the Joint Committee on Taxation, provides a description of 

the bill.

 1

 This document may be cited as follows: Joint Committee on Taxation, Description of H.R. 6124, the 

“Tribal Social Security Fairness Act of 2018” (JCX-35-18), June 20, 2018. This document can also be found on the 

Joint Committee on Taxation website at www.jct.gov. All section references herein are to the Internal Revenue 

Code of 1986, as amended (herein “Code”), unless otherwise stated.
2

A. Voluntary Agreements for Coverage of Services by

American Indian Tribal Council Members

Present Law

Federal Insurance Contributions Act (“FICA”) 

Federal Insurance Contributions Act (“FICA”) taxes on employers and employees 

finance the Old-Age, Survivors, and Disability Insurance (“OASDI”) and Medicare (“HI”) 

programs.2 The OASDI tax rate is 6.2 percent on both the employee and employer (for a total 

rate of 12.4 percent) and applies to employee wages up to the OASDI wage base ($128,400 for 

calendar year 2018). The HI tax rate is 1.45 percent on both the employee and the employer (for 

a total rate of 2.9 percent) and applies to all wages.3

FICA taxes (and coverage under the OASDI and Medicare programs) generally are 

mandatory, that is, employers and employees generally cannot choose whether FICA taxes 

apply. However, as discussed below, in the case of State and local government employees 

covered by a State or local government retirement system, a State may enter into an agreement 

with the Social Security Administration to cover one or more groups of such employees under 

the OASDI and Medicare programs. In that case, services of such employees constitute 

employment for FICA purposes and their wages are subject to FICA.4

FICA taxes apply to wages, defined as remuneration for employment, which in turn is 

defined as service performed by an employee.5 Remuneration for service performed by an 

individual who is not an employee does not constitute wages for FICA purposes and is not 

subject to FICA. Guidance issued by the Internal Revenue Service holds that services performed 

by members of Indian tribal councils in their capacities as such do not constitute employment for 

FICA purposes.6

 As a result, amounts paid to members of tribal councils for services as council 

members are not wages subject to FICA.

 2

 Sections 3101-3128 of the Internal Revenue Code of 1986, as amended (the “Code”). Statutory 

references herein are to the Code unless otherwise indicated. The employee portion of the taxes is collected through

withholding by the employer.

3

 The employee portion of the HI tax (not the employer portion) is increased by an additional tax of 0.9 

percent on wages received in excess of a threshold amount. The threshold amount is $250,000 in the case of a joint 

return, $125,000 in the case of a married individual filing a separate return, and $200,000 in any other case.

4

 Sec. 3121(b)(7)(E). In addition, under section 3121(b)(7)(F), State and local government employees who 

are not covered by a retirement system are generally subject to FICA. Also, generally State and local government

employees are subject to the Medicare tax unless an exception applies (for example, section 3121(u)(2)(C) provides 

a continuing employment exception with various requirements, including employment prior to April 1, 1986).

5

 Sec. 3121(a) and (b). Employee is defined in section 3121(d).

6

 Rev. Rul. 59-354, 1959-2 C.B. 24. In 2006, the Social Security Administration (“SSA”) updated its 

program instructions to clarify that earnings of Indian tribal council members do not count toward Social Security 

benefits. However, the program instructions include a note stating that earnings posted for members of Indian tribal 
3

Social Security and Medicare Benefits

The OASDI program under the Social Security Act provides for the payment of benefits 

(“Social Security benefits”) to individuals based on wages earned as an employee and credited to 

the employee’s earnings record.7

 Eligibility for Medicare coverage under the Social Security 

Act generally is based on eligibility for Social Security benefits and, thus, on wages credited to 

an employee’s earnings record.8 Similar definitions of wages and employment apply for these 

purposes as for FICA purposes.9 Thus, remuneration for service performed by an individual who 

is not an employee does not constitute wages for purposes of earning credits for OASDI or 

Medicare benefits.

Coverage under the OASDI and Medicare programs generally is mandatory. However,

coverage generally does not apply in the case of State and local government employees covered 

by a State or local government retirement system. In that case, if a referendum process and 

certain criteria are met, then at the request of a State, the Commissioner of Social Security will

enter into an agreement with the State with respect to one or more coverage groups of such 

employees under the OASDI and Medicare programs.

10 Generally, such an agreement 

encompasses all positions within such a coverage group and once covered, the employer may not 

revoke such coverage and employees filling such covered positions may not decline coverage.

Description of Proposal

The proposal amends the Social Security Act to provide that, at the request of an Indian 

tribe, the Commissioner of Social Security will enter into an agreement with the Indian tribe to 

cover services performed by individuals as members of the Indian tribe’s tribal council under the 

OASDI and Medicare programs. Accordingly, service of a member of a tribal council under 

such an agreement constitutes employment. For purposes of the proposal, the term “tribal 

council” means the governing body of a Federally recognized Indian tribe. In addition, the term 

“member” means, with respect to a tribal council, (1) an individual who is serving as a member 

of the tribal council, or (2) the head of the tribal council. 

An agreement with an Indian tribe under the proposal applies to all members of the tribal 

council and must include all services performed by individuals in their capacity as members of 

the tribal council. An agreement will be effective with respect to services performed after an 

 

councils for tax years prior to 2006 should remain on earnings records and be used in applicable benefit 

computations. SSA POMS: RS 01901.700.

7

 OASDI benefits are provided by Title II of the Social Security Act (42 U.S.C. secs. 401ff.). 

8

 Sec. 226 of the Social Security Act (42 U.S.C. sec. 426).

9

 Secs. 209 and 210 of the Social Security Act (42 U.S.C. secs. 409 and 410).

10 Generally, the State or local government may only extend coverage following a referendum process in 

which a vote occurs that satisfies various conditions, and if the governor of the State, or an official of the State 

designated for this purpose, certifies to the Commissioner of Social Security that such conditions have been met. Sec. 218 of the Social Security Act (42 U.S.C. sec. 418).
4

effective date specified in the agreement, provided that the date may not be earlier than the first 

day of the next calendar month in which the agreement is executed by both parties. At the 

request of the Indian tribe at the time of the agreement, the agreement may apply with respect to 

services performed before the effective date for which there were timely paid in good faith (and 

not subsequently refunded) to the Secretary of the Treasury amounts equivalent to the sum of the 

employee and employer OASDI and Medicare taxes which would have been imposed by the 

Code had such services constituted employment for purposes of the Code. No agreement under 

the proposal may require payment to be made after the effective date of any taxes with respect to 

services performed before the effective date. No agreement under the proposal may be 

terminated on or after the effective date of the agreement.

The proposal also amends the FICA rules to provide that a tribal council member covered 

by an agreement under the proposal is an employee for FICA purposes. Therefore, services of a 

tribal council member covered by an agreement constitute employment for FICA purposes, and 

wages of the tribal council member are subject to FICA.11

Effective Date

The proposal is effective on the date of enactment. 

 11 Nothing in the proposal is to be construed to affect the application of any Federal income tax 

withholding requirements.
5

B. Estimated Revenue Effect of the Proposal

Fiscal Years

[Millions of Dollars]

Item 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2018-23 2018-28

H.R. 6124 [1]... --- [2] 1 1 1 1 1 2 2 2 2 4 13

NOTE: Details do not add to totals due to rounding.

[1] Estimate contains the following budget effects:

2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2018-23 2018-28

 On-budget... [2] [2] [2] [2] [2] [2] [2] [2] [2] [2] [2] 1 3

 Off-budget... [2] [2] 1 1 1 1 1 1 1 1 1 3 10

[2] Gain of less than $500,000.