2012 Tax Treatment of Service Award Programs

The Firemen’s Association of the State of New York was asked by the membership to pursue legislation for the equitable treatment of LOSAP awards.  The FASNY Legislative Committee has found an opinion from the New York State Tax Department, TSB-M-03(5)I, that the service award programs are tax exempt under certain conditions.  This opinion is the start to what FASNY is trying to get for its membership and the equitable treatment of LOSAP awards.

Being New York State tax exempt, generally depends upon the awards being paid after the age of 59 and a half and that the proceeds are not paid in a lump sum and that the proceeds are not otherwise included as taxable income for New York State income tax purposes.

Therefore we urge you to go to the FASNY website and download the three page opinion, TSB-M-03(5)I and bring it to your tax preparer for interpretation.  The opinion is also on the New York Department of Taxation and Finance website at www.tax.state.ny.us.