NYC not required to make “increased-take-home-pay" retirement contributions for police officers and firefighters appointed after June 30, 2009

NYC not required to make “increased-take-home-pay" retirement contributions for police officers and firefighters appointed after June 30, 2009

Lynch v City of New York, 2014 NY Slip Op 04873, Court of Appeals

The bottom line of a very comprehensive opinion in which the Court of Appeals addressed whether Retirement and Social Security Law §480 (b) requires the City of New York (the City) to make "Increased-Take-Home-Pay" (ITHP) pension contributions on behalf of New York City police officers and firefighters appointed on or after July 1, 2009 -- the City is not required to make such contributions.

The Court of Appeals ruled that “For the reasons that follow, we conclude that section 480 (b) only encompasses temporary programs in place as of 1974 for tier 1 and 2 members of a public employee retirement system. Stated another way, section 480 (b) does not obligate a public employer to pay any portion of a tier 3 public employee's statutorily required pension contribution. Accordingly, the City has properly deducted 3% from the gross annual wages of its tier 3 police officers and firefighters as mandatory employee pension contributions.”

The text of the decision is posted on the Internet at:

http://www.nycourts.gov/reporter/3dseries/2014/2014_04873.htm

2014 End-of-Session Legislative Review.

2014 End-of-Session Legislative Review.  

NYMUNIBLOG has posted an article by Jillian D. Kasow, Esq. – 2014 End-of-Session Legislative Review.  

Ms. Kasow notes that on June 20th, the New York State Legislature concluded the second year of its 2013-14 legislative session and lists some key legislation passed during the Session.

You may view the latest post at
http://nymuniblog.com/2014-end-of-session-legislative-review/

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Internal Revenue Service severance pay advisory update

Internal Revenue Service severance pay advisory update

Source: Office of Federal, State and Local Governments

In its July 2013 newsletter,*the Internal Revenue Service’s Office of Federal, State and Local Governments [FSLG] addressed the tax treatment of severance payments made by government entities to terminated employees by the Internal Revenue Service [IRS]. The article, Severance pay and FICA, noted that under Internal Revenue Code §61 severance pay is included [1] in the gross income of the recipient and normal income tax withholding rules apply and [2] severance pay is generally wages for purposes of FICA taxes.

In its decision in United States v. Quality Stores, 134 S.Ct. 1395 [2014], the United States Supreme Court held that severance payments made to involuntarily terminated employees were wages subject to Social Security and Medicare (FICA) taxes. Accordingly, IRS advises it will disallow all claims for refunds of FICA taxes on severance pay.

However, IRS Revenue Ruling 90-72 provides a limited administrative exception for certain payments that supplement state unemployment compensation, sometimes referred to as “SUB-pay.” The Ruling provides for an exception for a stream of payments coordinated with the receipt of unemployment compensation and specifically points out that a lump-sum payment would not qualify for the exception. IRS said that as the Supreme Court decision did not address the provisions of Revenue Ruling 90-72, payments that meeting Ruling 90-72 requirements stated in that ruling continue to be excluded from wages for FICA purposes.

Questions about severance pay should be directed to one of the following Federal, State and Local Government [FSLG] Specialists for New York State: Dave Coulon [(315) 233-7305]; Jean Redman [(607-378-0069] or Granville Shannon [(212) 436 -1492].

* The July 2013 is posted on the Internet at: http://www.irs.gov/pub/irs-tege/p4090_0713.pdf. The FSLG Newsletter is asemiannual newsletter published by the Internal Revenue Service’s office of Federal, State and Local Governments (FSLG) to assist in FSLG’s mission to ensure compliance by Federal, state, and local governmental entities with Federal employment and other tax laws through educational and compliance review activities.

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