Wednesday, April 16, 2014

Covering Dallas, Monmouth, Independence, Falls City and surrounding areas since 1868

Fire agencies seek to change IRS rule

POLK COUNTY — City fire departments and fire districts across the country may be breathing a little easier now that a provision in the Affordable Care Act (ACA) has been revised not to include them.

January 14, 2014

POLK COUNTY — City fire departments and fire districts across the country may be breathing a little easier now that a provision in the Affordable Care Act (ACA) has been revised not to include them.

But not all issues involving volunteers — including the little pay they receive for responding to emergencies in their communities — have been solved with the preliminary ruling, however.

The ACA states that all organizations with 50 or more employees must offer health insurance or pay a penalty for all employees working more than 30 hours per week. Fire departments had feared that would include their volunteer firefighters and EMTs, until the U.S. Department of Treasury issued a statement Friday excluding them from the requirement.

"… the forthcoming final regulations relating to employer shared responsibility generally will not require volunteer hours of bona fide volunteer firefighters and volunteer emergency medical personnel at governmental or tax-exempt organizations to be counted when determining full-time employees," the statement read in part.

Local officials were pleased, but cautious, about the anticipated ruling.

Dallas Fire Chief Fred Hertel said the statement is preliminary and the final ruling has yet to be issued. Once it is, the city — which has several departments in addition to the fire department that use volunteers — will decide what its policy will be moving forward.

Fred Hertel

Fred Hertel

"We are looking at all of our avenues before making a decision," he said.

However, the reference to "bona fide volunteers" in the Treasury Department statement brings to light another key issue.

The Internal Revenue Service definition of "employee" includes anyone receiving payment — including nominal volunteer stipends, Hertel said. That means those stipends are considered taxable income, a policy that has forced fire departments nationwide to change their volunteer programs.

Starting Jan. 1, Polk County Fire District No. 1 and the Dallas Fire Department ended their volunteer reimbursement program to make sure their volunteers were truly volunteers according to IRS statutes. Hertel said he has seen departments receive fines because of the practice.

"There is some pressure, nationwide from the fire service, to change that," he said. But, "As a fire service, we are trying to address that issue before receiving fines."

The stipends were small — very small — but it meant something to offer them to the volunteers.

"It is unfortunate," Polk No. 1 interim chief John Stein said. "They give their time, so it was nice to give something back to them in return."

Adding to the frustration is that clarification was requested from the IRS about its definition of volunteer a year ago, Kevin Henson, the Marion County Fire District No. 1 chief and member of the Oregon Fire Chiefs Association (OCFA), said.

John Stein

John Stein

Henson added other federal and state agencies have conflicting definitions for volunteers, including Oregon Bureau of Labor and Industries (BOLI) and the U.S. Department of Labor (DOL), making compliance impossible. What's more, he said Oregon Public Employees Retirement System (PERS), in addition to the IRS, wants a piece of what little compensation volunteers receive.

"The definition of volunteer should not be arbitrary, leaving fire departments with an unknown potential liability and reduced ability to protect and serve our community," said Henson in an OFCA statement on the issue.

"We support legislation that provides a mechanism for nominal compensation of volunteers without creating unintended consequences with PERS and the IRS."

Perhaps what could be considered a silver lining in an otherwise frustrating situation is that what everybody says about volunteers is proving true: they do volunteer to serve the community, and not for the money.

"The part that is really rewarding is that we didn't have a single one of our volunteers decide to step down because of this," Stein said. "It shows their dedication. … I was very impressed by that."