The Volunteer fire departments that serve communities all over the country are not government entities. They are not exempt from federal income taxes, state income taxes, or social security. Neither are they compensated for their work. So, what is their purpose? Why do they serve their communities? The answer may surprise you.
Volunteer fire departments are not exempt from federal income tax
A recent congressional debate about whether volunteer fire departments are exempt from federal income tax may have major implications for the fire service. While a majority of members of Congress support the idea of exempting volunteer firefighters and emergency medical technicians from employer shared responsibility, a minority is opposed. The House recently voted 410-0 to exempt volunteer firefighters and EMTs from FICA and employer shared responsibility. A bill sponsored by Rep. Lou Barletta (R-PA) has a similar goal. In addition, the Internal Revenue Service has issued exemptions for volunteers of non-profit and governmental organizations.
The exemption applies to all members of an incorporated volunteer fire department or ambulance service. The governing body determines the procedure for applying for the exemption. A person who has ten or more years of active service can claim an exemption for the entire lifetime of his or her membership. If a volunteer has more than twenty years of continuous service, he or she may also claim the exemption for his or her spouse, if they are still married.
However, payments made to volunteers for participating in drills and other volunteer activities must be reported on a form W-2, even if the volunteer does not receive any money from the reimbursements. The payment can be treated as a nominal sum per unit of voluntary service or as a reimbursement under an “accountable” plan. In either case, however, it is necessary to keep adequate records to support the claim.
The Patient Protection and Affordable Care Act may have major implications for volunteer fire departments. The PPACA could require fire departments to offer health insurance. In response to this issue, the IAFC filed comments with the House Committee on Ways and Means. It recommended improvements, including incentives for property owners to install fire sprinkler systems, and the continued tax-exempt status of municipal bonds.
While some volunteer fire departments may claim to be tax-exempt, the IRS has determined that their volunteer benefits should be reported on a 1099-MISC form. These fire departments have heard from members who were audited by the IRS and told to file 1099-MISC forms.
They are not exempt from state income tax
As the 115th Congress works on tax reform, there is a growing sense that the fire service could be one of the most affected. This is especially true in light of the recent House vote to exempt volunteer firefighters and EMTs from employer shared responsibility. The measure, H.R. 3979, was sponsored by Rep. Lou Barletta (R-PA). It would also allow volunteers to work for nonprofit organizations that are tax exempt.
In order for a fire department to be exempt, it must be organized and actively engaged in firefighting or disaster relief. It must also own firefighting equipment and provide medical and death benefits to its members. Additionally, it must serve an area that lacks another firefighting organization. Moreover, it must meet the requirements outlined in Section 501(c)(4) of the Internal Revenue Code.
In addition, volunteer fire departments must file their annual reports. They are required to report the benefits they provide to their members using the 1099-MISC form. Unfortunately, some fire departments have been audited by the IRS, and the IRS found that their volunteers are contractors, not employees.
However, volunteers must submit a completed “Renewal Application” each year, in order to keep their exemption. The exemption must be renewed every year by March 1st and verified by the department chief. If approved, the exemption will automatically be extended for the following year. If it is not renewed by January 1st, 2023, the department must contact the assessor’s office and apply for a new exemption.
In addition, incorporated volunteer fire departments must file a list of their members with the Assessor. The State Board of Real Property Services prescribes a form for these filings. An incorporated volunteer fire department may be eligible for exemption from taxes for its members. A volunteer fire department that is not exempt from tax can also file its own bonds.
While the IRS has not provided much guidance on VRIPA, the NVFC has sought guidance from the agency. In a letter sent on January 20, the NVFC asked the IRS to engage with the volunteer emergency service community to understand the impact of the law. Because VRIPA is a permanent fixture of the Tax Code, the agency is obligated to provide clear, concise guidance to the emergency services community.
They are not exempt from social security
Volunteer fire departments are not exempt from social Security and Medicare taxes, but they do pay firefighters the appropriate wages. Depending on the circumstances, firefighters may be paid hourly, monthly, or call-based wages. These wages may also include cash bonuses and other benefits provided by the employer. Typically, firefighters report their earnings on Form W-2, which is provided by the employer.
To qualify for a social security retirement, a volunteer firefighter must have served for at least 20 years and be over 50 years of age. If a firefighter does not meet this age requirement, he or she may take a leave of absence until they reach that age. If the district or municipality is actuarially sound, the board may still decide to pay a retirement benefit even if the firefighter has fewer than 20 years of service. In addition, a firefighter must have worked for at least 10 years to be eligible for retirement funds. Additionally, the municipality or district must have contributed tax revenue to the volunteer firefighter pension fund for the year of application.
Firefighters are subject to higher rates of cancer and other diseases, and their life expectancies are shorter than those of the general population. Moreover, firefighters are three times more likely to die on the job. In addition, firefighters face both physical and mental stress, as well as exposure to toxic and carcinogenic substances in smoke. A CalPERS study compared firefighters to law enforcement, probation and court employees.
Generally, firefighters are non-exempt from social security benefits, but they are eligible for overtime compensation. However, the Internal Revenue Code provides an exception for certain emergency situations, including the hiring of temporary workers for a specific job. Those individuals must be hired for a specific purpose, such as an emergency, and must return any excess expenses within a reasonable period of time.
Some volunteer fire departments have become incorporated. They then pay their executive officers on the same basis as other volunteer firefighters. In addition to being paid by the volunteer fire department, they do not receive indemnity benefits.
They receive no compensation
Volunteer fire departments are defined as those that are not paid a wage. According to the Department of Labor, these volunteers receive only nominal compensation, which can range anywhere from 20% of the full-time firefighter’s salary to nothing at all. Generally, however, these firefighters are eligible for worker’s compensation, health and disability insurance, pension plans, and length of service awards. In addition, they may be paid on a per-call basis or according to specific service requirements, though not an hourly wage.
While most volunteer fire departments receive no compensation for their work, some pay their firefighters a nominal fee per call. While this is far from being a full-time salary, it can help to cover the cost of gas. In many cases, departments pay volunteers a flat fee of $2 per call or less. However, this is still only intended to supplement the volunteer’s income and does not reflect the quality of his or her services.
Volunteer fire departments are exempt from federal income taxes if they pay their firefighters under an accountable plan. However, they may still be subject to Social Security and Medicare taxes if they pay their firefighters at a flat cash amount without documentation of expenses. In addition, some fire departments may be eligible to receive tax credits or rebates from their local governments. If this is the case, the volunteer should be paid minimum wage for all hours worked.
Volunteer fire departments are often made up of part-time or on-call volunteers who may have jobs elsewhere. Some departments operate as combination departments that employ full-time career firefighters and part-time volunteer firefighters. Some volunteer fire departments are self-supporting and are supported by the municipality, while others are funded by fundraising activities and income from local events.
Volunteer fire departments are required to provide certain benefits for those living within their communities. These benefits include a weekly cash benefit for the surviving spouse and dependent children. However, the amount of these benefits cannot exceed the maximum amount permitted under state law regardless of the number of dependents.