Could Connecticut recover deputy sheriffs’ FICA taxes after paying their share to the IRS?

Plain-English summary

In November 1997, Connecticut’s AG advised the comptroller about Social Security tax amounts the state had failed to withhold from special deputy sheriffs’ pay. Federal law made the employer liable to the IRS for tax it should have withheld, while treating the employees as ultimately liable for their own share. On the facts supplied, the AG said that once the state paid that employee share, it had a reimbursement claim against the deputies.

The opinion identified collection routes available to the state’s collection office, including direct requests, small claims proceedings for qualifying debts, probate claims and a possible state income tax refund offset with an opportunity to contest the claim. The AG also discussed cancelling debts found uncollectible after appropriate investigation.

A footnote placed a substantial limit on the answer. If the IRS had instead billed the state under a federal provision imposing a reduced employer assessment, the state could not recover that payment from employees. The AG assumed the bill here did not arise under that provision because the state’s failure concerned FICA withholding alone. He also assumed the sheriffs had not independently paid the IRS.

Comptroller and collection staff at the time

The AG allowed pursuit of reimbursement on the specified assumptions and listed existing collection procedures. He treated the federal reduced-assessment scenario differently.

Deputies at the time

The opinion said employee liability for the tax remained relevant after the state paid the IRS, while the precise form of the IRS assessment could change the state’s reimbursement right.

Currency note

This opinion was issued in 1997. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Common questions

Q: Did the state’s payment to the IRS automatically erase the deputies’ employee-share tax obligation?
A: The AG said no on the stated facts; the state could seek reimbursement after paying that share.

Q: Was reimbursement allowed for every kind of IRS assessment against the employer?
A: No. The footnote described a reduced federal assessment for which the state could not recover its payment from employees.

Q: Could a deputy challenge a state tax refund offset?
A: The opinion said the affected deputy would have an administrative hearing right to contest the claim’s validity or amount.

Background and statutory framework

The comptroller asked who bore the employee FICA share after missed withholding and how the state could collect it. The AG compared federal tax liability with Connecticut’s debt collection tools and qualified his answer for a separate IRS billing rule.

Citations and references

Statutes: 26 U.S.C. § 3102(a); 26 U.S.C. § 3102(b); Conn. Gen. Stat. § 12-742.

Source

• Landing page: https://portal.ct.gov/AG/Opinions
• Opinion page: https://portal.ct.gov/ag/opinions/1997-formal-opinions/the-honorable-nancy-wyman-comptroller-1997017-formal-opinion-attorney-general-of-connecticut

Original opinion text

The Honorable Nancy Wyman, Comptroller, 1997-017 Formal Opinion, Attorney General of Connecticut

Attorney General's Opinion

Attorney General Richard Blumenthal

November 20, 1997

The Honorable Nancy Wyman

Comptroller

55 Elm Street

Hartford, CT 06106

Dear Ms. Wyman:

We have reviewed your request for guidance concerning questions you have raised regarding Social Security (FICA) payments for Special Deputy Sheriffs. Your letter to us states that the State was deemed liable to the Internal Revenue Service (IRS) for the employees' (deputies') share of FICA payments which the State failed to withhold from their wages for the period from December 27, 1991 through April 30, 1992. Your inquiry raised the following questions:

1. Given that the State is liable to the IRS for the employee share of FICA payments, if the State pays the Deputies' share of the obligations to the IRS, can the Comptroller, or the Bureau of Collection Services as its agent, still seek reimbursement from the Special Deputy Sheriffs for those payments?

2. If so, what legal means can be used to collect such reimbursement?

In response to your first question, once the State pays the employee share of FICA payments to the IRS on behalf of the deputies,1 the Comptroller may seek reimbursement directly from the deputies for the FICA payments or through the Department of Administrative Services Business Center for Collection Services (formerly Bureau of Collection Services) pursuant to the provisions of Conn.. Gen. Stat. § 4a-12(a)(4), and through a referral to the Attorney General for collection assistance if the employment of the former procedures have not proven successful.2

Under federal law, an employee is primarily liable for his share of Federal Insurance Contributions Act, or FICA payments, and the employer is secondarily liable. See Central Illinois Publishing Service Co. v. United States, 435 U.S. 21, 32 (1978). Federal income taxes and FICA taxes are imposed upon earnings of the employee, and are collected by the employer by deducting for the benefit of the IRS the amount of those taxes from the employee's wages at the time the wages are paid. 26 U.S.C. § 3102(a). Every employer required to deduct the FICA tax is liable to the IRS for the payment of the tax, 26 U.S.C. § 3102(b), regardless of whether the employer actually deducted the tax from the employee's wages. 26 C.F.R. 31.3102-1(c). Consequently, "both the employee and employer are liable for the employee's [unpaid] share of FICA taxes, although the intent is that the employer will collect it from the employee, [and] the employee is ultimately liable for [his/her share of] the tax imposed by section 3101." Rev. Rule. 86-111, 1986,38 I.R.B. 5, citing 26 C.F.R. § 31.3102-1(c).

The above federal law creates a situation wherein both the employer and employee are liable to the IRS for the employee's share of FICA taxes, but with ultimate recognition of the employee's primary liability for his/her own share of those taxes.

With the exception of § 3509 of the IRC (see footnote 2), neither federal nor state statutes expressly address the employer's right to seek reimbursement from the employee where the employer has failed to initially withhold, and then is required to pay the employee's share of the FICA tax out of the employer's own funds to the IRS. Because federal law, however, lays the primary and ultimate liability for the FICA debt upon the employee, the State, as employer herein, has a valid claim against the deputies for reimbursement of the debt it paid in their behalf.

In response to your second question, the Department of Administrative Services' Business Center for Collection Services (BCCS) has legal authority to institute extra-judicial collection efforts, and, if necessary, to seek collection assistance from the Office of the Attorney General; to bring suit itself in small claims court for debts under $2,500.00; or to file claims against probate estates. Additionally, BCCS may notify the Commissioner of Revenue Services to withhold payment of any state income tax refund due to any of the deputies; in this latter case, any such deputy would have the right to contest the validity or amount of the claim at an administrative hearing. Conn. Gen. Stat. § 12-742.

Finally, if after an appropriate investigation is conducted by your office, you determine that the individual debts owed by deputy sheriffs are, as a practical matter, uncollectible, then your office may consider availing itself of the cancellation of debts procedure outlined in Conn.. Gen. Sec. § 3-7. If this procedure is to be followed, your investigations and conclusions should set forth the circumstances for your conclusions, as for example, that the deputy sheriff cannot be located; has died and his/her estate is closed or insolvent; he/she has no ascertainable assets or income; or only assets or income that are legally exempt from legal process.

We trust that the foregoing discussion is sufficient for your needs, but please feel free to contact us should you or your staff have any further need for our assistance.

Very truly yours,

RICHARD BLUMENTHAL

ATTORNEY GENERAL

Judith A. Brown

Assistant Attorney General

RB/JAB/lmg

Footnote:

1 It is our understanding that your office has previously been advised by the IRS that any such payment will result in additional income taxable to the deputies. Old Colony Trust Co. v. Comm'r of Internal Revenue, 279 U.S. 716 (1929).

2 This opinion assumes that the sheriffs did not make the requisite payments to the IRS on their own. Additionally, please note that if the unpaid $116,730.21 employee share noted in your letter was billed to the State by the IRS under 26 U.S.C. § 3509(a)(2), which assesses only a 20% billing against the employer, the State cannot thereafter recover the monies it paid to the IRS from the employees. See 26 U.S.C. § 3509(d)(1)(B). We are assuming, however, that this $116,730.21 sum was not billed to you under that section by the IRS because the section does not apply where an employer deducts income taxes but not FICA taxes, and it is our understanding, based on further communications from your office, that it was only FICA taxes that were not deducted by the State. Also, the 20% liability imposed under Section 3509 represents the employer's modified liability for the employee's share of FICA taxes, while the employee's liability to the IRS remains unaffected by the employer's payment of the 20% billing.