Volunteers and the long arm of the IRS
Firefighting can be taxing enough...and now, along comes the IRS :rolleyes:
WASHINGTON (AP) - Needing to attract volunteer firefighters,
some northeastern towns are looking to tax breaks. But they've run
into a major stumbling block: the Internal Revenue Service.
The IRS considers local property tax abatements provided to
volunteers in exchange for services as income subject to federal
That ruling, spelled out in a memorandum written earlier this
year in a Massachusetts case, has exasperated local fire officials,
who would rather the abatements be federally tax-exempt.
"These are all blue-collar working people, and they're going to
come after us for the nickel and dime," said William Lanning, a
retired fire chief from South Windsor, Conn., which recently
rescinded its tax abatement program. It is now considering other
options for its volunteers.
Volunteer firefighters are often eligible for stipends and other
compensation, depending on where they work. Some get paid per call
- anywhere from $5 to $32 per hour - while others get lump-sum
payments for a year's work, retirement awards, state income tax
credits or death benefits.
But at a time when fire chiefs are struggling to fully staff
stations, they want to keep property tax abatements in the arsenal
of options, even though such abatements typically don't exceed
"Everyone's trying to find something to give them an edge in
getting fire service personnel," said Johnny Dennis, who has tried
to develop a retirement plan for volunteer firefighters in Alabama.
Dennis' Underwood Petersville Volunteer Fire Department, which
has lost half its staff since 1979, is still manned around the
clock, but with fewer people per shift than before. The station
puts on monthly fish fries to raise more than half its yearly
budget of $80,000 and can't afford an all-paid service.
Beyond practical concerns, fire officials argue that more - not
less - should be done for emergency personnel, especially given the
anti-terrorism demands placed on them in wake of the Sept. 11
attacks and the anthrax mailings.
Then there is President Bush's emphasis on greater volunteerism.
"If it's necessary to give out a small token to these people to
make it happen, that's what government should be doing," said John
McAuliffe, Connecticut director for the National Volunteer Fire
Council, the main organization of volunteer firefighters.
The ranks of volunteer firefighters have decreased over 10
percent in the last 20 years, but they still make up nearly
three-fourths of the nation's nearly 1.1 million firefighters.
Small towns are especially reliant on volunteers, with larger ones
often supplementing their forces with paid personnel.
"Nobody wants to give up their little turf, but we haven't got
the money," said Mike Bird, a captain in the Wareham, Mass., fire
department, which has both paid and volunteer firefighters.
"That's the only way to survive."
The decline in volunteers is attributed mostly to the fact that
the job requires more training, more fund-raising and responses to
more and varied calls than ever before - at a time when many are
already strapped by jobs, family commitments and longer commutes.
"I spend more time in the back of an ambulance than anything,"
said Joe Maruca, a captain in the West Barnstable Fire Department.
Many calls are for automobile accidents, medical emergencies,
rescue operations and terrorism scares.
Concerned about the decline, Connecticut in 1999 adopted a law
enabling towns to provide tax abatements to volunteer emergency
responders, and at least a dozen have done so, according to the
Connecticut Conference of Municipalities. A similar law was
recently passed in New York.
But in January, the IRS ruled that property tax abatements of up
to $500 given to senior citizen volunteers in Massachusetts could
not be considered tax-exempt.
"The payments are compensation for services rendered and,
therefore, includible in the participants' gross income," wrote
Heather C. Maloy, IRS associate chief counsel.
Subsequently, Connecticut towns were informed that the
Massachusetts ruling would apply to tax breaks for volunteer
emergency responders, said Rep. John Larson, D-Conn., who next
month plans to propose legislation that would make such breaks
Unless that legislation passes, states and towns may hold off on
any new abatement programs, despite the obvious appeal.
As Kirby Hannan of The Firemen's Association of the State of New
York, a volunteer group, puts it: "It sends a message that the
towns really, I think, want to have sent. ... `Here's four or five
hundred dollars. We know it isn't much. But we appreciate you."'
(Copyright 2002 by The Associated Press