                  T.C. Summary Opinion 2009-161



                      UNITED STATES TAX COURT



      ROBERT T. AND MARGARET M. FITZPATRICK, Petitioners v.
           COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 1075-08S.             Filed October 19, 2009.



     Robert T. Fitzpatrick, pro se.

     Daniel Ryan, for respondent.



     GOLDBERG, Special Trial Judge:   This case was heard pursuant

to the provisions of section 7463 of the Internal Revenue Code in

effect at the time the petition was filed.   Pursuant to section

7463(b), the decision to be entered is not reviewable by any

other court, and this opinion shall not be treated as precedent

for any other case.   Unless otherwise indicated, subsequent
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section references are to the Internal Revenue Code in effect for

the year in issue.

     Respondent determined a deficiency of $2,852 in petitioners’

Federal income tax for 2005.   The sole issue for decision is

whether Robert T. Fitzpatrick (petitioner) is subject to

self-employment tax on the fee-based income that he received

as a bail magistrate.

                            Background

     Some of the facts have been stipulated and are so found.

The stipulation of facts, the supplemental stipulation of facts,

and the attached exhibits are incorporated herein by this

reference.   Petitioners resided in the Commonwealth of

Massachusetts (Commonwealth) when the petition was filed.

     During 2005 petitioner was employed as a salaried assistant

clerk magistrate for the West Roxbury District Court in Forest

Hills, Massachusetts.   Petitioner rightly did not pay employment

taxes on this salary income because as an employee of the

Commonwealth he participated in its retirement system.    At the

time of trial petitioner was eligible for maximum retirement

benefits under the Commonwealth’s retirement system.

     As an assistant clerk magistrate, petitioner had the option

of also serving as a bail magistrate.    Bail magistrates are

authorized under Mass. Ann. Laws ch. 276, sec. 57 (Lexis Nexis

2002), and petitioner was sworn in as a bail magistrate by a
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superior court judge.    Petitioner worked as a bail magistrate for

many years, and he was compensated for his work with fee-based

income received from the public.      The fee-based income was paid

to petitioner, by those being held in custody, for determining

the terms of bail.    Petitioner received $40 in cash each time he

performed this service.    Petitioner did not participate in the

retirement system of the Commonwealth by virtue of this position.

     Before 2005 petitioner reported his fee-based income on

Schedule C, Profit or Loss From Business, of his Federal income

tax return and paid self-employment taxes on the net income.       He

stopped paying self-employment tax on this income in 2005 on the

basis of a newsletter that he received from an association of

clerks.   The newsletter stated that fee-based income received by

bail magistrates for setting bail might not be subject to self-

employment tax.

                               Discussion

     In order for individuals to be liable for payment of the

self-employment tax they must have “‘net earnings from self-

employment’, * * * [which is] the gross income derived by an

individual from any trade or business carried on by such

individual”.    Sec. 1402(a).    For purposes of self-employment

income, the term “trade or business” has “the same meaning as

when used in section 162 (relating to trade or business

expenses)”.    Sec. 1402(c).
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     Those who derive income from the performance of the

functions of a public office are generally not subject to self-

employment tax because the income is not derived from a “trade or

business”.   See sec. 1402(c)(1); Ekren v. Commissioner, T.C.

Memo. 1986-509; see also Porter v. Commissioner, 88 T.C. 548, 561

(1987), revd. 856 F.2d 1205 (8th Cir. 1988), affd. sub nom. Adams

v. Commissioner, 841 F.2d 62 (3d Cir. 1988).    However, those who

perform the functions of a public office, “with respect to fees

received in any period in which the functions are performed in a

position compensated solely on a fee basis and in which such

functions are not covered under an agreement entered into by such

State and the Commissioner of Social Security pursuant to section

218 of the Social Security Act”, 42 U.S.C. sec. 418 (2006), are

required to pay self-employment tax on the fee-based income

received, sec. 1402(c)(1).

     A public office for this purpose “includes any elective or

appointive office of the United States or any possession thereof,

of the District of Columbia, of a State or its political

subdivisions, or a wholly-owned instrumentality of any one or

more of the foregoing.”   Sec. 1.1402(c)-2(b), Income Tax Regs.

The examples provided in the regulations include a judge, a

justice of the peace, a county or city attorney, and a notary

public.   Id.   Petitioner was sworn into office as a bail

magistrate by a superior court judge, and his position was
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authorized under the laws of the Commonwealth.    We find that

petitioner does hold a public office.

     It is clear that as a bail magistrate petitioner received

fee-based income for performing the duties of a public office;

however, in order for petitioner to be exempt from paying self-

employment tax on this income, it is necessary that this

position be covered by an agreement between the Commonwealth

and the Social Security Administration “pursuant to section 218

of the Social Security Act” (SSA).    Although petitioner holds

two public offices, each position is treated separately.      See

sec. 1.1402(c)-3(f)(1)(i), Income Tax Regs.

     The Commonwealth and the Social Security Administration

established an agreement to extend Social Security coverage to

employees of instrumentalities of the Commonwealth of

Massachusetts, pursuant to SSA section 218, on August 13, 1952.

This agreement extended the insurance system established by SSA

title II to services performed by individuals as employees of

specific instrumentalities of the Commonwealth.    The original

agreement has been amended 11 times.

     The instrumentalities covered by the original SSA section

218 agreement and subsequent amendments include:    (1) The

Greenfield and Montague Transportation Area; (2) the

Massachusetts Market Authority; (3) the Mystic River Bridge

Authority; (4) the Nashoba Associated Boards of Health; (5) the
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Massachusetts Turnpike Authority (coverage terminated by the

second amendment); (6) the Boston Arena Authority; (7) the

Massachusetts Health and Educational Facilities Authority; (8)

the Massachusetts Board of Bar Overseers; (9) the Springfield

Parking Authority; (10) the Pioneer Valley Transit Authority;

(11) the North East Solid Waste Committee; (12) the Greater

Lawrence Sanitary District; (13) the Montachusett Regional

Planning Board; (14) the Southeastern Regional Planning and

Economic Development District; and (15) the Pioneer Valley

Planning Commission.

     We find that petitioner did not work for an instrumentality

of the Commonwealth that is covered under the original SSA

section 218 agreement and subsequent amendments.      Therefore,

petitioner is required to pay self-employment tax on the

fee-based income that he received as a bail magistrate.

See sec. 1402(c)(1).

     To reflect the foregoing,


                                              Decision will be entered

                                         for respondent.
