The Secretary would seem to concede that because of the reciprocal responsibilities ascribed the IRS and the HEW in the case of private employers (i.e., that the two services are working on opposite sides of the same coin in collecting taxes and paying benefits) that it would be contrary to the spirit of the Act for those agencies to have interpretations of the term "wages" which differed significantly. Amidon v. Flemming, 285 F.2d 718 (1st Cir. 1960).

Unlike the bifurcated system in respect to private employers, however, the Secretary maintains that as to public employers, HEW is the sole administrator of the Act. Hence, while payments by the State under a §418 plan are to be made at an "equivalent" rate to the taxes imposed on private employers under §3121 this does not necessarily mean that HEW is bound by the definition of "wages" established in the private employment sector, nor that the IRS is the only agency empowered to interpret such term. HEW is the agency which assesses the States for payments due [§418(q)]. It is, furthermore, the agency possessing the experience and expertise in administering the statute. Its interpretation, according to the Secretary, should therefore be accorded due weight.

In further support of the contention that HEW is authorized to make the contested interpretation, the Secretary contends that: (a) the language of §418(a) indicates that the definition of "wages" under §409 does not exist merely for purposes of computing benefits to be paid; (b) that the legislative, history of the 1958 amendment to §409(i) indicates that Congress viewed the definitions of Sections 409 and 410 as being applicable in computing payments due under §418(e), citing State of Montana v. United States, 489 F.2d 522 (9th Cir. 1973); and (c) that this 1958 amendment implicitly recognized the practice of HEW of including as "wages," continuation of salary during a State employee's absence from work because of sickness, citing Graves v. Gardner, 280 F.Supp. 666 (S.D.N.Y. 1968).

While we have been presented no cases directly in point with the challenge presented here, we think that under the Social Security Act the Secretary has been given the authority, albeit limited, to interpret "wages" in respect to contributions to be made by public employers. In addition to the arguments made by the Secretary in his brief, we find support for this conclusion in 42 U.S.C. § 418(i). As noted, supra, that section, entitled "Regulations" provides than any regulations made by the Secretary to "carry out the purposes" of Section 418 shall be designed to "make the requirements imposed on States... the same, so far as practicable, as those imposed on [private] employers..." It would seem clear from this language that where it is not "practicable," the Secretary may issue regulations as to the requirements to be placed upon the States which are not "the same" as those placed on private employers, i.e., the limitation here implies the power.

Having found the existence of authority in the Secretary, in limited situations, to make interpretations which may result in private and public employers not being treated the "same" insofar as their liability for contributions [is] concerned, we cannot hold, under the circumstances

of this case, that the Secretary's decision that this was an instance where it was not "practicable" to conform his Regulation to those promulgated under §3121, or to interpret wages differently for public employers, was not reasonable. Udall v. Tallman, 380 U.S. 1 (1965); Gardner v. Brian, 369 F.2d 443 (10th Cir. 1966).

The Secretary's "variant" interpretation was here predicated apparently upon a literal interpretation given to §409(b), i.e., that to be excluded from "wages," sick leave payments must be paid solely on account of sickness. Such payments by a State - as opposed to a mere continuation of wages during periods of absence due to illness-would allegedly amount to an improper "donation" of State funds absent express legal authority for the State to appropriate funds for such use." See, SSR 72-56, supra.

Such a consideration would not be of concern in the administration by the IRS of the provisions taxing private employers; hence the need for different treatment of sick leave payments in respect to public employers, i.e., the additional requirement imposed upon the States that such authorization in fact exists.

We think this constitutes a situation wherein it is not "practicable" for private and public employers to be treated "the same" under the Act as to the requirements imposed upon them.

In Gardner v. Hall, 366 F.2d 132 (10th Cir. 1966), we held:

The Secretary has, without question, the authority and the duty to pierce any fictitious arrangements ... when the arrangement is not in accord with reality. 366 F.2d 132 at 135.

If, by analogy, the State here has no authority to make "payments on account of sickness" such as would qualify to be excluded from "wages" under the Act, we hold that the Secretary has the authority to bar the exclusion from "wages" of such payments irregardless of how they are denominated or treated under the State's "plan."

Finally, while the State's argument for consistency of interpretation is appealing and the result desirable, such consistency has not always been found controlling where overriding considerations exist. Compare, Ludeking v. Finch, 421 F.2d 499 (8th Cir. 1970). We find F. C. C. v. American Broadcasting Co., 347 U.S. 284 (1954) to be inapposite. Our holding is consistent with the Congressional policy underlying Federal Social Security legislation which requires courts to interpret the Act liberally,

"While the State categorizes HEW's concern in this regard as "absurd quibble" and an "erroneous notion." It does not specifically contend that under New Mexico law the State is empowered to make payments "solely on account of sickness.” We also note that the New Mexico Attorney General's opinion dated February 15, 1971 (T. R. Vol. I, Exhibit D), is supportive of HEW's contention. On a question of state law, courts generally give careful consideration to, and regard as highly persuasive, an opinion to the State's Attorney General where there is no other State precedent directly in point. 7 Am. Jur. 2d, Attorney General §8.

and to resolve any doubts in favor of coverage. Rasmussen v. Gardner, 374 F.2d 589(10th Cir. 1967); Dvorak v. Celebrezze, 345 F.2d 894 (10th Cir. 1965). AFFIRMED.

SECTION 218(s) (42 U.S.C. 418(s)) STATE AND LOCAL COVERAGE-COMMISSIONER'S RULING ON STATE'S REQUEST FOR REVIEW - MISSOURI-STATUS OF SERVICES AND FEES OF MOTOR VEHICLE LICENSE AGENTS

20 CFR 404.1004(c) and 404.1026(a) (3)

(SSR 72-7 Rescinded)

SSR 80-19

SSR 72-7 (C.B. 1971-1975, p. 357), which incorporated the Commissioner's decision on the status of services and fees of motor vehicle license agents in the State of Missouri, is rescinded without replacement. Subsequent development in connection with a court review under section 218(t) of the Social Security Act indicates that SSR 72-7 may not accurately describe the factual situation and is, therefore, misleading.

SECTIONS 209 and 218(s) (42 U.S.C. 409 and 418(s)) STATE AND LOCAL COVERAGE-WAGES-IN-KIND-IOWA

20 CFR 404.1026(a) (6) and 404.1220

SSR 77-18

The Social Security Administration determined that the fair market value of housing furnished to certain State employees was wages-in-kind and therefore, contributions were due. The State of Iowa contended that the housing was not provided as payment for labor or services and, therefore, not covered wages under the State's section 218 agreement. Held, since houses were furnished and employees required to occupy them as a condition of employment, the housing has a value for wage purposes equal to the amount the employees would be required to pay for comparable housing in the area.'

The Commissioner of Social Security has been requested to review pursuant to Section 218(s) of the Social Security Act, as amended, a statutory contribution assessment dated April 14, 1975. The contributions were determined due by the Social Security Administration on wages-in-kind covering fair market value of housing furnished to certain employees of the Iowa Conservation Commission, during the period

'Under Section 218(t) of the Social Security Act, a State may, within two years after the mailing of the Notice of the Commissioner's Decision, file a civil action in the Federal District Court for a redetermination of the correctness of the assessment of the amount due.

July 1, 1971, through December 31, 1974. It is the State's view that the housing was not provided as a payment for labor or services and is, therefore, not covered wages under the State's section 218 agreement.

The requested review has been made by the Commissioner pursuant to authority delegated by the Secretary of Health, Education and Welfare. The evidence submitted shows that park rangers employed by the Iowa Conservation Commission are required by the conditions of their employment to live in housing furnished by the State Commission on property for which the rangers are responsible. The Commission at one time charged employees a flat $25 per month for such housing but discontinued this charge beginning July 1, 1971, because the presence of rangers living on Commission property was considered to be of value for the convenience of the public and for protection of the property. The General Policies Section of the Iowa Conservation Commission provides that housing may be furnished to Commission employees and requires that they occupy the housing as a condition of employment.

The definition of wages for purposes of social security coverage is determined under applicable provisions of Federal law and regulations. The applicable Federal laws as to what constitutes wages for purposes of a State's social security agreement are set forth in Section 209 (Definition of Wages) and Section 218 (Voluntary Agreements for Coverage of State and Local Employees) of the Social Security Act, as amended. The applicable Federal regulations are contained in Social Security Regulations No. 4, Section 404.1026 (Wages). Under Section 209 of the Act, the term "wages" is defined as all remuneration for employment, including the cash value of all remuneration paid in any medium other than cash, unless such remuneration is specifically excluded under one of the subsections of section 209. The fair value of housing furnished by an employer is not excluded from wages as defined in section 209 of the Act. The lowa Section 218 coverage agreement provides that the State will pay the appropriate contributions due on wages paid for covered services. Pursuant to Social Security Regulations No. 4, section 404.1026(a) (6) (i), the value of lodging furnished to an employee is wages where it is agreed as part of the employment contract that the employer is to furnish regular lodging.

After considering this matter in light of the aforementioned criteria, the Commissioner concluded that the State is liable for contributions on wages-in-kind for the value of housing furnished to employees of the State Conservation Commission for the period July 1, 1971, through December 31, 1974. The housing furnished may not be viewed as being particularly advantageous or desirable to the employees as contended by the State. However, the employees are required to occupy the housing as a condition of employment and the fact remains that if the housing were not provided, the employees would be required to furnish housing at personal expense. Therefore, the housing has a value for wage purposes equal to the amount the employees would be required to pay for comparable housing in the area. On the basis of this finding, the assessment of contributions is affirmed.

SECTION 210(j) and 218(c) (6) (B) (42 U.S.C. 410) and 418(c) (6) (B)) STATE AND LOCAL COVERAGE-STATUS OF SERVICES PERFORMED BY PATIENTS AND OTHER INDIVIDUALS IN STATE OWNED AND OPERATED SHELTERED WORKSHOPS – MISSOURI

20 CFR 404.1004(c)

SSR 77-5

Where a rehabilitation program (sheltered workshop) has been established by the State Division of Vocational Rehabilitation to train patients at State mental hospitals in gainful occupations and the State contracts with business firms for the work to be performed, supplies the materials used, furnishes the place of employment, establishes the hours worked and wages paid, supervises the worker, and accepts or rejects the finished product, HELD, services performed by individuals who are patients in the hospital in the rehabilitation program for therapeutic or rehabilitation purposes do not constitute employment under the Social Security Act. FURTHER HELD, services performed by individuals who are not patients in the hospital but who are participating in the rehabilitation program on a permanent basis would constitute employment and such individuals would be employees of the State. FURTHER HELD, the services of those individuals in the hospital or out of the hospital who are still classified as "patients" but who are given employment in the rehabilitation program because they could never progress to working outside the hospital would be mandatorily excluded from coverage under section 218(c) (6) (B) of the Social Security Act.

The facts at hand indicate that the Missouri Division of Vocational Rehabilitation and the Missouri Division of Mental Health have established a program to provide rehabilitation services of a social and vocational nature to patients at State mental hospitals whose illnesses have responded sufficiently to psychiatric treatment to warrant planning toward the person's return to the community. The Division of Vocational Rehabilitation (hereinafter referred to as the Division) evaluates the needs of the patient and develops a concise plan to enable the patient to become a contributing and independent individual when he leaves the hospital. The Division is also responsible for the overall administration of the rehabilitation program at the State mental hospitals, determines the eligibility of a patient and his potential for vocational rehabilitation, and the nature and scope of the rehabilitative services to be provided. The State hospitals furnish the physical facilities and provide all the necessary equipment and supplies that are required for the care of the patient while in the rehabilitation unit.

A workshop manager is responsible for planning and directing the production and procurement phases of the workshop. He also obtains work contracts with business firms. Examples of the work contracts would be: tinting and labeling of whiskey bottles, assembling and mailing of advertising books, cutting of aluminum foil and plastic parts for use as packaging materials for various products, manufacturing of fishing lures, assembling of black powder, concrete nails, etc. The contracts are bid by the workshop manager using a complicated formula which considers twice the minimum wage divided by the anticipated piecework production. Supervisory employees in the workshop are employees of the Division of Mental Health or the Division of Vocational Rehabilitation. The individuals referred to as "lineworkers" are mostly