New Federal Law Confirms Public Safety Officers’ Benefits
Federal tax law has recently been amended to confirm that certain payments to or on behalf of a public safety officer who is disabled or dies from an injury sustained in the line of duty are nontaxable. On May 22, 2015, President Obama signed this legislation which was passed unanimously by Congress and is entitled the Don’t Tax Our Fallen Public Safety Heroes Act (the “Heroes Act”).
The Heroes Act provides that amounts paid under Section 1201 of the Omnibus Crime Control and Safe Streets Act of 1968 are nontaxable. The 1968 Act created federal programs known as the federal Public Safety Officers’ Benefits Programs (PSOB) which provide death and education benefits to survivors of fallen law enforcement officers, firefighters, and other first responders, and disability benefits to officers catastrophically injured in the line of duty. These benefits are paid by the Bureau of Justice Assistance of the U.S. Department of Justice to a public safety officer who has become permanently and totally disabled as the direct and proximate result of a personal injury sustained in the line of duty, or to the beneficiaries of a public safety officer who has died as the direct and proximate result of a personal injury sustained in the line of duty. The amount of the PSOB benefit is $339,310.00 for eligible deaths and disabilities occurring on or after October 1, 2014. The amount of the PSOB educational assistance benefit for one month of full-time assistance on or after October 1, 2015 is $1018.00. Further information on the PSOB can be found on the U.S. Department of Justice website.
The Heroes Act also provides that amounts paid under a program established under the laws of any state which provides monetary compensation for surviving dependents of a public safety officer who has died as a direct and proximate result of a personal injury sustained in the line of duty is not taxable, except that this exclusion does not apply if the amount would have been payable even if the death had not occurred in the line of duty. Of particular note, this specific statutory exclusion from taxable income for payments from programs established under the laws of any state does not apply to disability benefits paid to officers injured in the line of duty.
To learn more about this Act, click here to access this article in its entirety.
If you have any questions about the Heroes Act or any other Sheriff’s office employee benefit issues, please contact Frost Brown Todd attorney Michael Bindner, or any other member of Frost Brown Todd’s Employee Benefits practice group.
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Mark F. Sommer is FBT’s Tax, Benefits and Estates Practice Group leader, focusing on state, local and federal tax, incentives, tax controversy and litigation. He has successfully handled thousands of audits, protests, appeals, and transactional matters.