Court Opinion

ID: 4120396
Source: CourtListenerOpinion
Date Created: 2017-01-27 22:47:20.103225+00
Date Added: 2024-06-11T14:47:56.981602
License: Public Domain

August 9, 1978

78-44        MEMORANDUM OPINION FOR THE GENERAL
             COUNSEL, UNITED STATES WATER
             RESOURCES COUNCIL

              Status of the Pacific Northwest River Basin
              Commission Under the Federal Unemployment Tax
              Act

   This responds to your request for our opinion concerning the status of the
Pacific Northwest River Basin Commission (PNWRBC) under the Federal
Unemployment Tax Act (FUTA), 26 U.S.C. § 3301 et seq. We understand the
situation to be as follows: Pub. L. No. 94-566, 26 U.S.C. § 3309, requires that
States provide unemployment compensation for State and local government
employees in order to qualify for Federal benefits under FUTA. It also
authorizes them to tax local governmental units for this purpose. The State of
Washington has passed conforming legislation and contends that the PNWRBC
is a taxable local governmental unit under State law. The Water Resources
Council, on the contrary, contends that the PNWRBC is a “ wholly or partially
owned” Federal instrumentality exempt from State unemployment taxes under
26 U.S.C. § 3306(c)(6)(A).
   Whether the PNWBRC is exempted from State taxation under that provision
depends on whether its employees are eligible for unemployment compensation
under the Unemployment Compensation for Federal Employees Program
(UCFE), 5 U.S.C. §§ 8501 etseq'.^P ub. L. No. 94-566 was intended to extend
unemployment compensation to State and local government employees.2 Its
proponents understood that employees of the United States and wholly or
partially owned Federal instrumentalities were already covered by UCFE; the

   'U C FE provides for paym ent o f unem ploym ent com pensation, at Federal expense, to “ federal
em ployees” as if their “ federal service” has been em ploym ent covered by the unem ploym ent
com pensation law o f the State o f an em ployee’s last duty station. See 5 U .S .C . §§ 8502-8504. A
“ federal em ployee” includes, with exceptions not relevant here, a person “ in the em ploy o f the
United States o r an instrum entality which is wholly or partially ow ned by the U nited S tates.” 5
U .S .C . § 8501(1), (3). The language is identical to that in 26 U .S .C . § 3306(c)(6)(A).
   2See S. Rept. 94-1265, 94th C o n g ., 2d sess., at 7-8; H. Conf. Rept. 94-1745, 94th C o n g ., 2d
sess., at 11.

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bill was meant to provide equivalent treatment for State and local employees.3
Therefore, if PNWRBC employees are eligible for Federal benefits under
UCFE, the State has no obligation under 26 U.S.C. § 3309 to provide
unemployment compensation for them and has no collateral authority to collect
an unemployment tax from the Commission.
   The UCFE program is administered by the Department of Labor (Labor). We
requested Labor’s opinion on whether employees of the PNWRBC are eligible
for UCFE benefits. Labor has informed us that the PNWRBC “ is covered by
the UCFE program as a partially-owned federal instrumentality.” Having
reviewed Labor’s ruling, we concur in its view of the status of the PNWRBC.
Accordingly, it is our opinion that the Commission is exempted from the State
of Washington’s unemployment tax.

                                                     L eon U lm a n
                                          Deputy Assistant Attorney General
                                                        Office o f Legal Counsel

   >See 122 Cong. Rec. H. 7411-12 (July 20, 1976).

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