Federal tax requirements generally apply to public employers in the same way that they do to private employers. However, there are special provisions in the laws governing Social Security and Medicare coverage for state and local government employees.
Under the original Social Security Act of 1935, state and local government employees were excluded from Social Security coverage. Beginning in 1951, states could enter voluntary agreements with the federal government to provide Social Security coverage to public employees. These arrangements are called “Section 218 Agreements” because they are authorized by Section 218 of the Social Security Act. Section 218 Agreements are irrevocable.
All states have Section 218 Agreements with the Social Security Administration (SSA). Because each state makes a separate agreement, Social Security coverage of government employees varies greatly from state to state.
