Purpose

To explain processing of the 2009 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 2009 W-2 Statement.|

Affected Employees

Employees represented by District Council 37 in Bargaining Unit SK who reside within the following zip codes:

Also affected are all employees who are represented by Communication Workers of America (CWA), Local 1180.

Note: Zip code criteria only apply to members of District Council 37.

Effective Date(s)

Paychecks dated December 9, 2009 (Administration)

OSC Actions

OSC will automatically apply the Prepaid Legal Service Benefit for the 2009 calendar year for employees in a status of Active or Paid Leave who received a paycheck in 2009. Listed below are the unions, bargaining units, values of the Prepaid Legal Service Benefit and the Earnings Codes:

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:

Agency Actions

Agencies should notify affected employees.

Control-D Report

Control-D report NPAY771 (Time Entry Payment Report) will list all employees for whom the Prepaid Legal Service Benefit was processed.

Questions

Questions regarding this Bulletin may be directed to the Tax and Compliance mailbox.