by Lisa Colangelo
Two recent announcements came as welcome relief for many city workers. On Veterans Day, Mayor Bloomberg announced the city would deduct the housing and food allowance from the amount of money owed by soldiers who received pay for both their city and military jobs. In addition, the city's Law Department reached a settlement with the IRS, which will reimburse civil servants who paid Social Security and Medicare taxes on their line-of-duty payments. That means more than 70,000 cops, firefighters and other uniformed city workers will share a $140 million settlement. But for some people, the devil is in the details. City workers who were called to active duty had a choice - keep their city pay and benefits, or take the military pay. Most decided to keep their city pay, and agreed to reimburse the city for the lesser of the two salaries. About 85% of the 1,720 city employees called to active duty decided to sign up for the program and keep their city pay, but many city agencies never followed up, and the debts mounted. After years, those workers started receiving bills from the city for tens of thousands of dollars. City officials said that amount will now be reduced by about 40%. One person the decision hasn't helped is NYPD Detective David Goodman, who has served as a city cop for 14 years and in the military reserves for 25 years. He has been activated three times since 2002. Goodman, 44, told my colleague Frank Lombardi he opted to give back his civilian pay because he earned more in his military rank of major during most of the time he was on active military duty. He is now a lieutenant colonel in the Army Reserves. He said he got socked with a $126,000 bill based on his cumulative gross Police Department salary. Goodman said he never received credit for having paid all the income and other taxes on that amount. "It's really good news, but it's not over," said City Councilman Michael McMahon (D-S.I.), who has been pushing the city to ease the penalties on returning soldiers. "I thank the mayor for listening to us and recognizing the service of the city's heroes in fighting terrorism both home and abroad," McMahon said. "We must continue to work to address the tax problems that many of our reservists face, because they have to pay back their gross pay but only received their net pay." Tax settlement The Social Security/Medicare announcement marks the end of a protracted battle between the city and the IRS over the taxation of uniformed workers - police officers, firefighters, sanitation workers and correction officers - who are injured in the line of duty. But it's not clear whether and how this settlement will affect retired workers who are receiving Social Security. One retiree is now fretting that his monthly payments will be reduced if he accepts the reimbursement. Since 1992, the city has told the IRS it should not be taking Social Security and Medicare taxes from line-of-duty injury payments. The city argued those payments are similar to workers' compensation payments, which are exempt from Social Security and Medicare taxes and apply to other city workers. The city eventually sued the IRS. "It's a fascinating legal issue, and a thrill to prevail at the end," said Karen Griffin, a senior counsel in the Law Department's appeals division who has worked on the case for more than 10 years. "Uniformed forces will be treated as they should be treated. They are in high-risk industries as it is."
 |
