Advisory Opinion 1989-54¹ (December 5, 1989)

SUMMARY

Whether taxes paid under the Federal Insurance Contributions Act, the Federal Unemployment Tax Act and the New York State’s unemployment insurance law are subject to the expenditure limits of the Act.

FULL TEXT

An advisory opinion has been requested whether taxes paid by an authorized committee of a participating candidate under the Federal Insurance Contributions Act (“F.I.C.A.”), the Federal Unemployment Tax Act (“F.U.T.A.”), and New York State’s unemployment insurance law are subject to the expenditure limits of New York City Administrative Code 3-706(1) and (2).

Campaign Finance Board Rule 105(b) (12) provides that “the payment of income taxes, including any interest and penalties therefor, and the cost of tax return preparation for income taxes” are not subject to the expenditure limits of the New York City Campaign Finance Act. (Emphasis added). Both F.I.C.A.² and F.U.T.A.³ require employers to pay taxes based on the wages of their employees. New York’s unemployment insurance law⁴ similarly requires employers to pay contributions to the unemployment insurance fund based on the wages of their employees. These are excise taxes, imposed upon the committee because it has individuals in its employ⁵. Like sales and other excise taxes, the amount of these taxes is based on expenditures made by the committee, not on income received by the committee.

F.I.C.A., F.U.T.A., and New York’s unemployment insurance law taxes are clearly not income taxes for purposes of Rule 105(b) (12). Therefore, payment of these taxes, including any related interest and penalties, and the cost of tax return preparation for these taxes are subject to the expenditure limits of the Act.

NEW YORK CITY CAMPAIGN FINANCE BOARD

¹ SUPERSEDED BY FORMER CFB RULE 1-08(e) (OMITS EXEMPTION FOR TAXES) (EXPENDITURES EXEMPT PURSUANT TO CFB RULES HAVE SINCE BEEN REPEALED ALTOGETHER).

² 26 U.S.C.A. §3111 provides in relevant part:

(a) Old-age, survivors, and disability insurance.--In addition to other taxes, there is hereby imposed on every employer an excise tax, with respect to having individuals in his employ, equal to [specified] percentages of the wages...paid by him with respect to employment...

(b) Hospital insurance.--In addition to the tax imposed by the preceding subsection, there is hereby imposed on every employer an excise tax, with respect to having individuals in his employ, equal to [specified] percentages of the wages...paid by him with respect to employment...

(Emphasis added).

³ 26 U.S.C.A. §3301 provides:

There is hereby imposed on every employer...for each calendar year an excise tax, with respect to having individuals in his employ, equal to [a specified percentage] of the total wages...paid by him during the calendar year with respect to unemployment...

(Emphasis added).

⁴ N.Y. Labor Law §§500-646 (McKinney 1988).

⁵ See Steward Machine Co. v. Davis, 301 U.S. 548, 578-583 (1937) and Helvering v. Davis, 301 U.S. 619, 635 (1937) (Social Security Act); Claim of Cassaretakis, 289 N.Y. 119, 44 N.E.2d 391 (1942), aff’d sub nom. Standard Dredging Co. v. Murphy, 319 U.S. 306 (1943) (New York unemployment insurance law).

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