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Legal Q & A


Payroll Taxes for Elected Officials, Public Bidding and Gifts

Deborah M. Kole
League Staff Attorney

Deborah M. Kole, League Staff Attorney

Q Our municipality has been reporting and paying payroll taxes for our elected officials just as we do for our other employees. However, I have been told that we should not be doing this. Is this so? If it is, can we get a refund of the amounts we paid in error?

A Elected officials are excluded from coverage under the New Jersey Unemployment Compensation Law. They cannot collect unemployment compensation based on their salaries as elected officials when they leave office. Therefore, the wages of elected officials should not be reported to the New Jersey Department of Labor and Workforce Development (LWD), and payroll taxes should not be paid on these wages. Federal and state income taxes, however, must still be withheld and remitted on these salaries.

If you have mistakenly reported and made unemployment contributions on such wages, you may file for a refund of any payments made this year and during the previous two calendar years by filing Form UC-9 with the Division of Employer Accounts, PO Box 076, Trenton, NJ 08625-0076. This form may be downloaded by going to the New Jersey Department of Labor’s website at and then clicking on “Forms and Publications” on the left side of the site.

Any questions regarding the refund process should be directed to the Department’s Refund Unit at (609) 633-6400, extension 2215.

Q I am a newly elected councilwoman. Several months ago, the municipality solicited bids for garbage collection services. Company X was the lowest responsible bidder, and we therefore accepted its bid and entered into a contract with that company. A few months later, it was brought to our attention that an officer of Company X worked part-time for the municipality, so we terminated the contract, solicited bids, and awarded a temporary contract to Company Y.

We started the process for public solicitation of bids. However, shortly before the bid opening date, we found out that the part-time employee was actually a different person from and unrelated to the Company X officer! We then postponed the bid date. We really were very happy with the services of Company X, and we would like to reinstate our contract with it, rather than go through the bidding process again, since our termination of the contract was based on a mistake. Can we do so?

A An Appellate Division case with a similar fact pattern indicates that you cannot do so. In Inter-Regional Disposal & Recycling Services v. the Housing Authority of the City of Newark, Docket No. A-3756-05T1 (2006), an unreported case, the Court pointed out than when private parties in a similar situation want to reinstate a contract between themselves on exactly the same terms, they can do so, but “(r)ules governing private contracts do not govern in this circumstance.” Public bidding laws must be strictly construed, because they “exist for the benefit of the taxpayers” (National Waste Recycling, Inc. v. Middlesex Improvement Authority, 150 NJ 209, 1997), to ensure that public funds are spent as efficiently as possible. The Local Public Contracts Law (LPCL) seeks to achieve this end through the open bidding process.

The Court said that the Authority’s postponement of the bid opening date and subsequent reinstatement of the earlier contract “…did not comport with the purpose of the LPCL to promote unfettered competition and guard against favoritism and corruption…(Their actions) did not leave all bidders on equal footing and, thus, violated the spirit and purpose of the LPCL.”

Therefore, it would seem that in this situation you must continue with the public bidding process concerning this contract to meet the law’s requirements.

Q I understand that the acceptance of a gift or other benefit by a public official is a crime if the gift is not “trivial” and is given to influence his or her official behavior. Aside from the lack of clarity of what constitutes a “trivial” benefit under the statute, how can a public official be certain of the intent behind a gift in such a situation?

A The presence of the intent to influence official behavior under NJSA 2C:27-10 in a specific situation depends on all the facts. One basis for evaluation of the risk of influence would be to ask yourself whether the gift or benefit would be given to you if you were not in an official position where you have the power to have an impact on the donor of the gift or benefit.

This column is for informational purposes only, and is not intended as legal advice.

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