When the U.S. Social Security Act was first adopted in 1935, state and local government (public) employees were excluded because of concerns related to the federal government’s authority to tax sovereign governments such as the states. The United States first permitted states to enter into voluntary Social Security coverage agreements with the Social Security Administration for their state and local governments in 1950. The voluntary coverage agreements are commonly referred to as Section 218 Agreements because that is the section number of the Social Security Act that permitted states to enter into such agreements on behalf of their state and local governmental (i.e., public) employers and their employees. Each state adopted its own legislation to implement those amendments to the Social Security Act, including naming a state agency or department to serve as the State Social Security Administrator. The Colorado Department of Labor and Employment has statutory responsibility for administering the applicable federal laws on behalf of the entire State of Colorado and its political subdivisions. Federal regulations (20 Code of Federal Regulations §404.1204) require the State to designate officials to act on behalf of the State as the State Social Security Administrator.
Due to the U.S. Constitution and various federal laws that have been adopted since the nation’s founding, the federal tax requirements that apply to state and local government (public) employers and employees associated with Social Security, Medicare, and public pension plans are different from those that apply to the private sector. This website provides information about those differences and who can assist with questions related to public employers’ and employees’ as well as public pension systems’ compliance requirements related to the U.S. Internal Revenue Code (including the Federal Insurance Contributions Act “FICA”) and the U.S. Social Security Act. For significant federal events and dates that apply to state and local governments in this area, see the “Key Dates” document.