Purpose
To explain processing of the 2010 Prepaid Legal Service Benefit for tax purposes.
Background
In accordance with the Internal Revenue Code, Section 61, it is required that the value of employer-funded group legal service benefits be considered as reportable income for each covered employee. Therefore, the value of this benefit will be added to the employee’s earnings and reflected on the 2010 Form W-2 (Wage and Tax Statement).
Affected Employees
Employees represented by District Council 37 in the bargaining units listed below who reside within the following zip codes:
| New York City | Zip Codes |
|---|---|
| Brooklyn | 112XX |
| Bronx | 104XX |
| Queens | 110XX, 111XX, 113XX, 114XX |
| Manhattan | 100XX, 101XX, 102XX |
| Staten Island | 103XX |
| New York State | Zip Codes |
| Nassau County | 110XX, 115XX, 116XX, 117XX, 118XX |
| Suffolk County | 117XX (except 11719, 11764, 11778, 11786, 11789 & 11792) |
| Westchester County | 105XX, 106XX, 107XX, 108XX |
| Rockland County | 10901, 10911, 10913, 10920, 10923, 10927, 10931, 10952, 10954, 10956, 10960, 10962, 10964, 10965, 10968, 10970, 10974, 10976, 10977, 10980, 10982, 10983, 10984, 10986, 10989, 10993, 10994 |
Also affected are all employees who are represented by Teamsters-Local 237 and SEIU-Local 300 in the bargaining units listed below.
Note: Zip code criteria only apply to members of District Council 37.
Effective Date(s)
Paychecks dated December 16, 2010 (Institution)
OSC Actions
OSC will automatically apply the Prepaid Legal Service Benefit for the 2010 calendar year for employees who were in a status of Active or Paid Leave and received pay from a position in one of the bargaining units at any time during calendar year 2010. Listed below are the unions, bargaining units, values of the Prepaid Legal Service Benefit and the Earnings Codes:
| Union | Bargaining Units | Value | Earnings Code |
|---|---|---|---|
| District Council 37 | CC, CD, SF, SJ, T9, TG, TH, TJ, TK, TL, TM, TO,TP, TR, TU, TW, TX, U3, U6 | $107.00 | PL3 |
| Teamsters- Local 237 | SB, SC, SE, SL, SM, SP,ST, SU, SV, SW, SX, SZ, TS, TT | $87.75 | PL1 |
| SEIU, Local 300 | S6 | $78.00 | PL2 |
DC 37 has determined that nonresident aliens are eligible to receive this benefit. Earn Codes to process the benefit for nonresident aliens who meet the criteria above are as follows:
| Earn Code | NRA Income Code |
|---|---|
| XPL | IC 17 |
| YPL | IC 18 |
| ZPL | IC 19 |
If an employee is inactive at the time the benefit is applied, a social security and Medicare tax deficiency will be incurred. OSC will set up Social Security and Medicare tax deficiency deductions in 2011 for these employees. Should the employee return to the payroll, the deficiency will be recovered through a deduction from their paycheck.
Control-D Report
Control-D report NPAY771 (Time Entry Payment Report) will list all employees for whom the Prepaid Legal Service Benefit was processed.
Agency Actions
Agencies should notify affected employees.
Payroll Register and Employee’s Paycheck/Advice
The applicable earnings code and the value will be displayed on the payroll register and the employee’s paycheck stub or direct deposit advice.
Questions
Questions regarding this bulletin may be emailed to the Tax and Compliance mailbox.