Volunteer Firefighter/EMT Tax Hike Hits Pocketbooks Across Country
April 16, 2012
Volunteer firefighters and emergency medical responders are feeling the impact of an increase in the taxes they owe on service-related benefits. The volunteer firefighter/EMT tax hike took effect beginning in 2011 when Congress failed to extend an exemption on taxation of recruitment and retention incentives for volunteer emergency responders. In the course of filing their 2011 income taxes, thousands of firefighters and EMTs found themselves having to pay the federal government more for the right to serve their communities as volunteers.
“This year I had to pay about $300 more in taxes on the benefits I get for being a volunteer firefighter,” said Lew Clark, an active volunteer firefighter and past-chief with the Morris Volunteer Fire Department in Connecticut. “Between training, responding to emergencies, and helping raise money to keep the fire department going, I donated more than 1,000 hours of my time to the department last year. It doesn’t feel right that I am being taxed more for the services I provide.”
Many departments are finding that recruiting and retaining personnel is becoming increasingly difficult. More stringent training and certification requirements mean that becoming a volunteer emergency responder requires a greater time commitment than ever before. In many parts of the country, six months of night and weekend training is required before personnel can respond to emergencies in any capacity.
In an effort to bolster recruitment and retention, many communities provide incentives including dress uniforms, annual awards ceremonies, reduced property taxes, and other benefits that cost little but demonstrate appreciation for the services donated by volunteer firefighters and EMTs. Even modest rewards show volunteers that their service is recognized by the community. The IRS considers all volunteer benefits to be taxable as income, however, reducing their incentive value and creating administrative headaches for the communities that provide them.
“We’ve been providing benefits ever since we started having trouble replacing retiring personnel,” said H. William Sundberg, President of the North Scituate Fire Department in Rhode Island. “Guys have to spend so much time training these days it’s almost like having a second job, so we give them a little something to show appreciation. It’s hard enough to get people in the door, and now we have to pay the federal government more just to maintain our incentive program. It doesn’t make a lot of sense.”
According to the National Fire Protection Association’s (NFPA’s) U.S. Fire Department Profile Through 2010 report, there were 768,150 volunteer firefighters in the United States in 2010, a reduction of 44,000 from 2009 and the lowest number on record going back to 1986. Additionally, a review of NFPA Profile reports over the years shows that the average age of firefighters in communities served by predominantly volunteers has been increasing steadily. In communities with a population of 2,500 or less, 28.7 percent of firefighters were over the age of 50 in 2010, up from 18.7 percent just 10 years ago. Meanwhile, the number of firefighters under the age of 40 in those same communities is down 28,437 (13.5 percent) over that same period of time.
In 2007 Congress passed the Volunteer Responder Incentive Protection Act (VRIPA), exempting property tax benefits and up to $360 per year of any other type of benefit that a volunteer firefighter or emergency medical responder receives as a reward for their service from being taxed by the federal government as income. A few months later Congress passed another bill clarifying that benefits exempted under VRIPA were not subject to federal withholding or reporting requirements. VRIPA expired at the end of 2010, and as volunteer emergency responders file their 2011 income tax returns they are feeling the impact of the new, higher tax rate. Some volunteers, unaware of the volunteer firefighter/EMT tax hike, could face additional problems.
“There is a great deal of confusion right now with regard to the expired income tax exclusion,” said Steve Hirsh, the National Volunteer Fire Council’s (NVFC) Kansas Director and a lawyer who prepares tax returns. “I find that some fire departments are not even aware that VRIPA has expired and are issuing W-2’s as though it had not. The result is that firefighters are caught in the middle. Fire departments will very likely find themselves paying both employer and employee share of the payroll taxes plus penalties. Unfortunately this will lead to less money for fire departments to provide for firefighter safety. Congress needs to act to extend VRIPA to avoid this tax increase on volunteer agencies and emergency responders.”
There is active legislation in the House and Senate, the Volunteer Responder Incentive Protection Reauthorization Act (VRIPRA), that would renew the income tax exclusion on property tax benefits and up to $600 per year of any other type of benefit that a volunteer firefighter or EMT receives as a reward for their service. You can use the NVFC’s online Capwiz service to contact your U.S. Representative and Senators to ask them to co-sponsor VRIPRA.