Purpose
The purpose of this bulletin is to inform agencies of the processing of the 2020 Prepaid Legal Service Benefit.
Affected Employees
Employees represented by Communication Workers of America (CWA), Local 1180 in bargaining unit SD will be affected.
Employees represented by District Council 37 in bargaining unit SK who reside within the zip codes identified below are affected:
|
New York City |
Zip Codes |
|
Brooklyn |
112XX |
|
Bronx |
104XX |
|
Queens |
110XX, 111XX, 113XX, 114XX, 116XX |
|
Manhattan |
100XX, 101XX, 102XX |
|
Staten Island |
103XX |
|
New York State |
Zip Codes |
|
Nassau County |
110XX, 115XX, 117XX, 118XX |
|
Suffolk County |
005XX, 06390, 117XX (except 11719, 11764, 11778, 11786, 11789, 11792), and 119XX |
|
Westchester County |
105XX (except 10509, 10512, 10516, 10524, 10537, 10541, 10542, and 10579), 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 |
Note: The Zip code criteria is only applicable to members of District Council 37.
Background
Pursuant to Internal Revenue Code Section 61, certain fringe benefits including employer-funded group legal service benefits are considered taxable income. Therefore, the value of this benefit will be added to the employee’s taxable gross wages, for tax withholding purposes, and reflected on the 2020 Form W-2 (Wage and Tax Statement).
Effective Dates
Effective as of paychecks dated November 10, 2020 (Administration).
OSC Actions
OSC will automatically apply the Prepaid Legal Service Benefit for the 2020 calendar year for employees who were in a status of Active or Paid Leave and received salary from a position in Bargaining Unit SK or SD at any time during calendar year 2020.
Unions, bargaining units, values of the Prepaid Legal Service Benefit and the Earnings Codes are listed below:
|
Union |
Bargaining Units |
Value |
Earnings Code |
|
District Council 37 |
SK |
$107.00 |
PL3 |
|
CWA, Local 1180 |
SD |
$96.27 |
PL5 |
District Council 37 has determined that nonresident aliens are also eligible to receive this benefit. The Earnings Codes used to process the benefit for nonresident aliens who meet the criteria stated above are listed below:
|
Earnings Code |
NRA Income Code |
|
XPL |
IC 18 |
|
YPL |
IC 19 |
|
ZPL |
IC 20 |
Effective in 2020, inactive employees who incur a current year Social Security and/or Medicare tax deficiency as a result of the application of the prepaid legal benefit, will not have their Form W-2 (Wage and Tax Statement) wages (Federal, State, and Local, if applicable) grossed up (increased) for any outstanding balance. Agencies are responsible for notifying their employees of these deficiencies. An alternative method of recovering Social Security and/or Medicare tax deficiencies for inactive employees will be identified.
Agency Actions
Agencies must notify affected employees.
Control-D Report
Control-D report NPAY771 (Time Entry Payment Report) identifies all employees for whom the Prepaid Legal Service Benefit was applied.
Tax Information
The Prepaid Legal Service benefit is supplemental taxable income, will be added to the employee’s taxable gross wages, for tax withholding purposes, and is subject to employment and income taxes.
Federal, State, and New York City income tax withholding will be calculated using the Aggregate method. Yonkers income tax withholding will be calculated using the Flat Rate method. Yonkers Flat Rate Withholding is 1.61135% for Yonkers residents and 0.50% for Yonkers non-residents.
Payroll Register and Employee’s Paycheck/Advice
The applicable earnings code and associated value will be displayed on the agency’s payroll register and employee’s paycheck and/or direct deposit advice.
Questions
Questions regarding this bulletin may be directed to the Tax and Compliance mailbox.