News
Senator Collins Introduces Volunteer Emergency Services Recruitment and Retention Act
Published Date: 05.17.2010
Senator Susan Collins (R-ME), along with original co-sponsor Christopher Dodd (D-CT) introduced the Volunteer Emergency Services Recruitment and Retention Act (S. 3319) on May 5. The bill, which is companion legislation to H.R. 1792 in the House, would clarify the treatment of length of service award programs (LOSAPs) in the federal tax code. LOSAPs are pension-like programs for volunteer emergency services personnel. Nearly 20 percent of the volunteer firefighters in the United States participate in a LOSAP.
“This legislation is crucial for the volunteer fire and emergency services,” said National Volunteer Fire Council (NVFC) Chairman Philip C. Stittleburg. “LOSAPs have no clear place in the current federal tax structure. This creates problems for states and communities that want to provide LOSAP for their volunteers but face unnecessary complications in setting up programs. For this reason, LOSAP participation is lower than it would otherwise be, and the programs that do exist are more difficult to administer.”
The treatment of LOSAPs in the tax code is ambiguous at best and has not been updated legislatively since 1996. In 2002, the NVFC formed a LOSAP Committee to examine current law and come up with ideas for clarifying how LOSAPs were taxed – many of which are reflected in S. 3319, including:
- Increasing the federal limit on how much can be contributed into an individual’s LOSAP account annually from $3,000 to $5,500. The $3,000 cap was established in 1996 and has not increased since. Several states already have laws authorizing annual contributions higher than the federal cap.
- Allows LOSAP sponsors to elect to have plans be treated as ‘eligible deferred compensation’ for the purposes of taxation. This would make LOSAP contributions portable and guaranteed to individual volunteers.
- Allows independent, nonprofit volunteer fire departments that provide service based on a written agreement with a local unit of government to elect to have their LOSAP treated as ‘governmental’ for the purposes of taxation.
“S. 3319 does not decrease or eliminate taxation of LOSAPs or force any new requirements on existing LOSAPs,” Stittleburg said. “This bill simply clarifies how LOSAPs should be taxed and gives volunteer fire and EMS agencies a clear legal framework for administering their plans. I’d like to thank Senator Collins and Senator Dodd for introducing this important legislation. I encourage all NVFC members to contact their Senators and ask them to co-sponsor S. 3319.”
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