TROY, Mich. – Becoming a volunteer firefighter has gotten a little harder in the city of Troy after the IRS officially ruled the incentive program for the department is not an actual length of service award plan. It’s been an ongoing tax dispute for several years now.
“Basically, at this point, the IRS has said no matter how wonderful your firefighters are in the city of Troy, we can not allow you to not have them pay taxes on the money they’re accruing for the volunteer firefighter incentive plan,” said Troy Mayor, Ethan Baker.
Baker said this now means the current incentive program must end.
“The money they are accruing when they vested 10 years, they’re going to have to pay income tax on that even though they won’t actually be getting the benefit of that yet until retirement age. So, what that means is our firefighters would be faced with having to get big tax bills while they’re receiving no money from the city of Troy,” Baked explained.
Either way, Ed Ross, a Troy volunteer firefighter, has a problem with the newly proposed plan.
“While we realize the old plan has huge problems, the new plan’s got to be something way better than what was proposed,” said Ross.
The dispute is also in a way, forcing the city to pay $5 million on top of back payroll taxes to the IRS. Regardless, retirement benefits are a big deal to the 100+ volunteer firefighters on the squad.
With the old plan, After 10 years of service, a retired volunteer firefighter can earn at least $8,000 a year. Without that, some firefighters are considering other options.
“People have talked about whether are people gonna quit. Are people gonna stay? Are we having problems with retaining people? And we don’t know. People are torn. Like how do you give up doing good things when that’s what you wanna do,” Ross insisted.
“This is difficult for them especially. It’s difficult for us because I know it affects their bottom line and their plans. So, we want to work with them,” said Baker.
Local 4 is told the city is working on another plan that’s officially approved for the IRS. If and when the volunteer fire department will ever be the same is now the true question.