State Congressman Earl Pomeroy introduced last Friday a bill that would exempt small town governments from paying Social Security and payroll taxes for employees making under $1,300 annually.
The Local Official Tax Relief Act of 2008 is designed to assist these governments in meeting all the requirements of the law without having to file extensive paperwork, said Pomeroy.
"We wanted to do this as a way of helping preserve the most local units of government... where the responsibilities are important but not extensive, and the compensation is at best nominal," Pomeroy added.
If bill HR6603 passes, the Internal Revenue Code and the Social Security Act would be amended to excuse those in local governing boards, commissions, or committees from paying these taxes when they receive less than $1,300 a year, according to Pomeroy. In 2003, the Internal Revenue Service (IRS) informed Ken Yantes, executive secretary of the North Dakota township officers association, that a ruling change had made township officers employees of such entities. His office, along with several across the state, were therefore not in compliance.
"This information almost floored me," said Yantes, adding he was compelled to address the issue. He proceeded to inform township officers through newsletters, annual meetings, workshops, and the Grassroots Report (the official newsletter of the North Dakota Township Officers Association).
Then, Yantes approached Pomeroy with a local poll of 400 letters against the paperwork burden. Yantes said Pomeroy became adamant about helping them.
"Little North Dakota got one in there," said Yantes.
IRS officers also helped the townships become informed, according to Yantes. Currently, over 90 percent of this local governments are in compliance.
"This year more and more signed on and became tax payers," Yantes said.
Still, he believes the tax relief bill would significantly help township officers, who have to fill out payroll reports that cost more to fill out than the taxes collected by them.
A larger bill will likely be the vehicle for the initiative, said Pomeroy, adding he is hopeful it will pass this calendar year. Representatives Patrick Tiberi, Stephanie Herseth-Sandlin, and Tim Walberg co-sponsored the bill.
"We'll be looking for opportunities in the remaining months of this congress," Pomeroy said. "The bill provides an exemption to the smaller players of the political subdivision," so they can conduct their business without the "bureaucratic overlay."
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