On May 6th, Congressman Peter King (NY-2) introduced H.R. 1009, the Volunteer Emergency Services Recruitment and Retention Act.  The legislation clarifies the tax treatment of length of service award programs (LOSAPs). 

LOSAPs are an important incentive for the volunteer fire service, providing retirement savings plans and allowing thousands of departments to offer incentives to retain veteran firefighters.  Unfortunately under current law, contributions into certain LOSAPs cannot be guaranteed to volunteers, meaning that they are vulnerable to creditors if the department goes bankrupt. Additionally, a federal cap established in 1996 on annual contributions into a LOSAP has never been adjusted for inflation, reducing the value of the LOSAP funds for many departments. Finally, a large number of volunteer fire departments are quasi-governmental but have their LOSAPs treated as private plans, subject to unnecessarily stringent reporting requirements.  VESRRA would address each of these issues, simplifying the tax treatment of LOSAPs without increasing or reducing taxes.

On May 7th, Senator Susan Collins (ME) and Senator Charles Schumer (NY) introduced S. 506, companion legislation to H.R. 1009.  Additionally, on May 7th, Senator Schumer, with Senator Collins, introduced S. 501, the Volunteer Responder Incentive Protection Reauthorization Act, a distinctly separate piece of legislation.  This measure would exempt from federal income tax any property tax benefit and up to $600 per year of any other type of benefit that a state or local unit of government provides to volunteer emergency responders as a recruitment or retention incentive.   recently established 11 working groups to review current federal income tax law and to seek input from stakeholders, advocacy groups and the public.  As the process moves forward CFSI will continue to provide updates as we work with the bill sponsors, the national fire service organizations and the relevant House and Senate committees on these important bills.  

Congress is expected to consider comprehensive tax reform legislation later this year.  The House Ways and Means Committee recently established 11 working groups to review current federal income tax law and to seek input from stakeholders, advocacy groups and the public.  As the process moves forward CFSI will continue to provide updates as we work with the bill sponsors, the national fire service organizations and the relevant House and Senate committees on these important bills.