WASHINGTON, D.C. — Today Congressman David Wu introduced the Volunteer Firefighter Fairness Act, H.R. 5537, to help volunteer firefighters and emergency service personnel in Oregon and across the country.

“Volunteer firefighters and emergency personnel form a critical link in our public safety,” said Wu.  “Unfortunately, right now they are being subject to confusing, inconsistent taxation requirements that are hampering their ability to serve our communities.”

There is currently confusion about whether volunteer firefighters and emergency personnel are appropriately considered volunteers or employees for tax purposes, and thus how they should report any nominal payments or benefits that they receive.  

Volunteer first responders often get minimal compensation, usually based on how many incidents they respond to.  In some jurisdictions, they receive in-kind compensation, such as lowered water rates or reduced property taxes, and incidental compensation, such as uniforms and equipment.

Traditionally, volunteer first responders have reported this compensation on a Form 1099, which is also used by independent contractors.  However, the Internal Revenue Service (IRS) recently began arbitrarily requiring that some fire departments report on volunteer first responders as if they were “employees,” requiring a Form W-2.

In Oregon, the Sandy Fire Department was fined nearly $10,000 by the Internal Revenue Service (IRS) in early 2009 for providing its volunteer firefighters with the traditional Form 1099, instead of a W-2.  

“This IRS policy change has been applied subjectively and inconsistently, placing an undue burden on both fire departments and volunteers,” said Wu.  “This can have a devastating effect on public safety, especially in rural districts that rely heavily on volunteers.”

In May 2009, Congressman Wu led 18 other members of the U.S. House of Representatives in sending a letter to the IRS commissioner to request that the reporting rules be clarified for volunteer firefighters.

After receiving a response from the IRS that did not fully clarify this issue, Congressman Wu worked with the International Association of Fire Chiefs (IAFC) to develop legislation that specifies that fire departments may issue Form 1099s to their volunteers, rather than W-2s.

In addition to preventing stiff fines from the IRS, allowing fire departments to issue Form 1099s keeps them from being required to apply many federal and state employment laws that are not appropriate for a volunteer force.

The IAFC estimates that Congressman Wu’s bill will help more than 800,000 firefighters across the country.

“Congressman Wu’s bill will ensure that volunteer firefighters are classified properly as ‘volunteers’ by the IRS,” said Chief Jeff Johnson, president and chairman of the board of the IAFC and chief of Tualatin Valley Fire and Rescue located in Aloha, Oregon.  “America’s volunteer fire service protects local communities throughout the United States and Congressman Wu’s leadership on this legislation will defend against the erosion of this selfless example of neighbor helping neighbor.  His efforts also will make sure that local communities retain their critical emergency response capabilities.”

H.R. 5537 has been referred to the House Ways and Means Committee for consideration.