July 10, 4:05 am
Military Reserves, the National Guard, and the maze at the IRS
The July 2007 issue of HR Magazine has an excellent piece by Carolyn Hirschman about companies supporting employees who are in the military reserves or serving in the National Guard and are called up to active duty. Although not required to do so, many companies provide what’s known as Military Differential Pay, which is the difference between what a person makes while serving in the military and what they would make working in their job.
Although the main focus of the article is on some of the screwy tax complications imposed by the IRS (I’ll get to that in a moment), Hirschman also mentions several companies that are going above and beyond in serving the troops.
Since I have a son currently serving in Baghdad and having served six years in the military myself, I’m all too familiar with some of the issues families face when someone is deployed.
I wanted to call attention to the companies that are going above and beyond:
Wachovia Corp., the financial services giant based out of Charlotte, North Carolina has paid full salary to employees called to active duty. The company used to have a one-year time limit on this benefit, but has since dropped that limit. Employees now receive full salary as long as they’re called up and are serving on active duty.
Verizon Communications Inc., based out of New York City, provides a pay differential for up to 36 months of deployment.
Hats off to these and other companies that are providing this benefit to our servicemen and women from the reserves and the National Guard.
Having and acting on these corporate values is a sure indicator of workplace excellence.
If you know of other companies that are providing these pay differentials or otherwise going above and beyond for our troops (even if the company is yours), please make a comment below so that we can thank them – they don’t have to do what they are doing.
Now, if I can ping on the IRS for a moment:
The Internal Revenue Service has long held that reservists and National Guard personnel who are called up to active duty must be classified as “terminated” by their employer – which means any military differential pay is not subject to withholding for federal income, Social Security, and unemployment taxes.
Yet the IRS treats military differential pay as wages for pension purposes.
All of this creates one heck of a tax mess for these people.
Will somebody at the IRS please come out of your maze and straighten this out?
Filed in Business, Opinion, Management, Leadership, Workplace, Corporate Culture
I am a Kenyan currently living in the U.S. I have no words to thank the young men and women who fight for this country. Every company is obligated to accommodate these folks when they’re called out for duty. If a foreigner can empathize with the men and women in uniform, why not American companies, whose well-being hinges on the sacrifice of these folks?
As a tax attorney focusing on representing taxpayers with IRS Problems, I sure have run into my share of the problems as described by the author. It’s a shame that the brave fighting men and women of the U.S. Armed Forces are forced to try to figure out our arcane system of taxation when they worry daily about their very lives! I believe it a travesty that the federal government fails to offer even more tax relief to these brave souls. I, for one, commend them and thank them for their sacrifices.
It seems as though the American Service man always gets a raw deal from our own government somewhere along the line. Look at the vets still dealing with Gulf War syndrome. They still have to jump through hoops even after all the supporting and empirical data that shows they were exposed to a variety of chemicals.
Whats worse is that many of these once proud patriots are bitter enough to wonder if they did the right thing in the first place. How sad for us!