[SchoolFinance] PFML question

Wed Jan 8 07:37:34 EST 2025

our auditors say post tax

On Wed, Jan 8, 2025 at 7:32 AM Adam Hanson <
ahanson at lewistonpublicschools.org> wrote:

> Hi everyone,
> After learning that ADS Profund's research led them to set up their new
> deduction code for PML as pre-tax, I reached out to the director of the
> PFML program for clarification. Based on the email he sent me below, we
> will be changing our setup and withholding the deduction pre-tax. The
> example that he gave is clear enough that I feel we can move ahead
> with this as a pre-tax deduction and fall back on his answer if the IRS
> ever questions it. Below is his response to me:
>
> "When calculating PFML wages – it is not “gross wages” but calculated
> similar to State Unemployment Wages (also FUTA wages).  This means that
> certain payment types are not included in subject payments.  The best
> example is health insurance premiums to an employer sponsored plan are not
> included in subject wages.  Employers should use IRS Publication 15 2025
> Publication 15 <https://www.irs.gov/pub/irs-pdf/p15.pdf> with focus on
> calculating FUTA wages when calculating what subject wages are (section 125
> plans are mentioned).
>
>
>
> PFML premiums are then calculated on subject wages before taxes come out.
>
>
>
> The question of whether PFML premiums are themselves taxable – that is,
> whether they are a pre-tax or a post-tax deduction, is not a question PFML
> can legally answer – as it depends on the guidance and processed of the
> IRS.   This is the amount of imputed taxable wages that an employer would
> enter for other federal and state tax programs.
>
>
>
> An example.
>
>
>
> Someone makes $1000 a week and pays $100 health premiums towards an
> employer sponsored plan.  Subject wages are $900 for PFML (ignoring that
> there may be other subject wages to consider).  PFML premium is $4.50 (for
> employee).   Then the question if taxable wages for other state and federal
> tax programs becomes $900 or $896.50 is the question on taxability of
> premiums (question #6 in our FAQ).
>
>
>
> We also have a new customer service line at 621-5024 if needed."
>
> On Fri, Dec 6, 2024 at 3:19 PM Adam Hanson <
> ahanson at lewistonpublicschools.org> wrote:
>
>> After attending webinars, reading the latest rules and updated FAQ, this
>> is how we are planning to proceed until we hear otherwise from the state or
>> the IRS:
>> 1. We will be treating the employee share of PFML deductions as
>> "post-tax", so withheld on full gross pay, not reduced by any other
>> deductions, even if they fall under a Section 125 agreement.
>> 2. We will be including anything we otherwise treat as "taxable" wages in
>> the 1% calculation. So that will include cash in lieu, travel stipends and
>> cell phone stipends.
>>
>> FYI, I fully agree with everyone who has expressed their opinions about
>> the insanity of this law, particularly the fact that it includes public
>> school departments.
>> We have Enterprise ERP (AKA Munis) software, and they have provided no
>> guidance as to how we will produce our quarterly files for upload, or how
>> we will exclude from the reports the employee groups to whom the law does
>> not yet apply because of the October 2023 "temporary grandfathering" rule.
>> They are "looking into it".
>>
>> Good luck to everyone.
>>
>> On Thu, Dec 5, 2024 at 10:27 AM Field, Stacie <sfield at rsu16.org> wrote:
>>
>>> Yes, that is what they are all saying.
>>> But, it is not right to disregard IRS reduction agreements for the
>>> employee portion.
>>> That is my argument.
>>>
>>> Stacie Field
>>> Business Manager
>>> RSU 16 - Poland, Mechanic Falls, Minot
>>> 207.998.2727 ext 102
>>>
>>>
>>> On Thu, Dec 5, 2024 at 10:02 AM Deb Roberts <DRoberts at msmaweb.com>
>>> wrote:
>>>
>>>> I was on a zoom meeting with Reggie presenting to our local Chamber
>>>> this morning. I asked about deducting section 125 amounts before
>>>> calculating the tax – his answer was to calculate the tax on gross wages
>>>> before any taxes.
>>>>
>>>>
>>>>
>>>> Deb
>>>>
>>>>
>>>>
>>>> *From:* SchoolFinance <schoolfinance-bounces at maillist.informe.org> *On
>>>> Behalf Of *Lisa Harkin
>>>> *Sent:* Thursday, December 5, 2024 8:46 AM
>>>> *To:* Moderated information sharing for school business managers <
>>>> schoolfinance at maillist.informe.org>
>>>> *Subject:* Re: [SchoolFinance] PFML question
>>>>
>>>>
>>>>
>>>> Thanks Stacie for the clarification about SUTA and FUTA being employer
>>>> taxes.  Although a portion of FICA is employer, but we won't go there!
>>>>
>>>> This really is a bad situation.
>>>>
>>>>
>>>>
>>>> On Wed, Dec 4, 2024 at 3:41 PM Field, Stacie <sfield at rsu16.org> wrote:
>>>>
>>>> Yes, I looked at the Circular E, and pub 15-A and 15-B. Also spoke
>>>> directly with Tim Applegate, and the IRS last week.
>>>>
>>>> I keep arguing you cannot tax an employee on Section 125 or 403(b)
>>>> reduction agreements. Not getting anywhere.
>>>>
>>>> SUTA and FUTA are employER taxes, not employEE, so none of this
>>>> matters.
>>>>
>>>>
>>>>
>>>> We have to honor reduction agreements, which are under IRS regulations.
>>>>
>>>> I do not believe the State of Maine can override the IRS.  I don't feel
>>>> I have gotten anywhere. I am just hoping for a lawsuit down the road. If I
>>>> can find an attorney willing to take it on, I'll start one.   My two cents,
>>>> less .5% of course.
>>>>
>>>>
>>>>
>>>> Stacie Field
>>>>
>>>> Business Manager
>>>>
>>>> RSU 16 - Poland, Mechanic Falls, Minot
>>>>
>>>> 207.998.2727 ext 102
>>>>
>>>>
>>>>
>>>>
>>>>
>>>> On Wed, Dec 4, 2024 at 3:02 PM Lisa Harkin <lharkin at kitteryschools.com>
>>>> wrote:
>>>>
>>>> OK, me again, last post I promise.
>>>>
>>>> Has anyone looked at the Circular E?
>>>>
>>>> Exempt from FUTA (ie PFML?)
>>>>
>>>> Government employment:
>>>>
>>>> 1. State/local governments and political subdivisions, employees of:
>>>>
>>>> a. Salaries and wages (includes
>>>>
>>>> payments to most elected and appointed officials). See
>>>>
>>>> chapter 3 of Pub. 963.
>>>>
>>>>
>>>>
>>>> AND
>>>>
>>>>
>>>>
>>>> Insurance for employees:
>>>>
>>>> 1. Accident and health insurance
>>>>
>>>> premiums under a plan or system for
>>>>
>>>> employees and their dependents generally or for a class or classes of
>>>>
>>>> employees and their dependents
>>>>
>>>>
>>>>
>>>> On Wed, Dec 4, 2024 at 2:34 PM Andrea Disch <adisch at msad11.org> wrote:
>>>>
>>>> Yes, Lisa, my apologies for not being clearer.
>>>>
>>>> It was clarified during yesterday's PFML portal webinar that PFML does
>>>> not allow for the carve-out earnings exemptions that are available under
>>>> unemployment.
>>>>
>>>>
>>>>
>>>>
>>>>
>>>>
>>>> Andrea Disch
>>>> Business Manager
>>>>
>>>>
>>>>
>>>> Maine School Administrative District No. 11
>>>> 150 Highland Avenue • Gardiner, Maine 04330
>>>>
>>>>
>>>>
>>>> 207-582-5346
>>>>
>>>> *aDisch at msad11.org <aDisch at msad11.org>*
>>>>
>>>> *www.msad11.org <http://www.msad11.org>*
>>>>
>>>>
>>>>
>>>>
>>>>
>>>>
>>>>
>>>> On Wed, Dec 4, 2024 at 1:12 PM Lisa Harkin <lharkin at kitteryschools.com>
>>>> wrote:
>>>>
>>>> I heard that PFML has the same exemptions as SUTA and FUTA, so I am
>>>> deducting Health and Dental from gross wages.
>>>>
>>>> Reading your reply again, you are talking about earnings, not
>>>> exemptions to gross earnings, so Health exemptions are a completely
>>>> different subject.  Apologies.
>>>>
>>>>
>>>>
>>>> Some volunteers get paid, oxymoron, I know.
>>>>
>>>>
>>>>
>>>> On Wed, Dec 4, 2024 at 10:59 AM Andrea Disch <adisch at msad11.org> wrote:
>>>>
>>>> MSAD 11 will be deducting PFML from all school board
>>>> member compensation, as well.
>>>> It was stated again at yesterday's meeting that PFML does not have the
>>>> earnings exemptions that SUTA has, including school board members.
>>>>
>>>>
>>>>
>>>>
>>>>
>>>>
>>>>
>>>>
>>>>
>>>>
>>>> Andrea Disch
>>>> Business Manager
>>>>
>>>>
>>>>
>>>> Maine School Administrative District No. 11
>>>> 150 Highland Avenue • Gardiner, Maine 04330
>>>>
>>>>
>>>>
>>>> 207-582-5346
>>>>
>>>> *aDisch at msad11.org <aDisch at msad11.org>*
>>>>
>>>> *www.msad11.org <http://www.msad11.org>*
>>>>
>>>>
>>>>
>>>>
>>>>
>>>>
>>>>
>>>> On Wed, Dec 4, 2024 at 9:12 AM Coulombe, Jessica <
>>>> jessica.coulombe at rsu4.org> wrote:
>>>>
>>>> Hello!
>>>>
>>>>
>>>>
>>>> A question I have is for School Board members. I am thinking that PFML
>>>> wages would be subject to the PFML deduction., as we consider them
>>>> volunteers that receive an honorarium stipend.  Your thoughts?
>>>>
>>>>
>>>>
>>>> Thanks
>>>>
>>>> Jessica
>>>>
>>>>
>>>>
>>>> On Wed, Dec 4, 2024 at 9:01 AM Andrea Disch <adisch at msad11.org> wrote:
>>>>
>>>> I have not received any specific guidance regarding but we are being
>>>> told that there are few exceptions to PFML, fewer exceptions than for SUTA.
>>>> My guess would be that if the wage flows through payroll, and you would
>>>> withholdSUTA, you will also need to withhold PFML taxes.
>>>>
>>>>
>>>>
>>>>
>>>>
>>>>
>>>> Andrea Disch
>>>> Business Manager
>>>>
>>>>
>>>>
>>>> Maine School Administrative District No. 11
>>>> 150 Highland Avenue • Gardiner, Maine 04330
>>>>
>>>>
>>>>
>>>> 207-582-5346
>>>>
>>>> *aDisch at msad11.org <aDisch at msad11.org>*
>>>>
>>>> *www.msad11.org <http://www.msad11.org>*
>>>>
>>>>
>>>>
>>>>
>>>>
>>>>
>>>>
>>>> On Mon, Dec 2, 2024 at 2:44 PM Krol, Gabrielle <
>>>> gabrielle.krol at msad52.org> wrote:
>>>>
>>>> Good Afternoon,
>>>>
>>>>
>>>>
>>>> I am wondering if anyone has seen or heard any guidance on if we are
>>>> imposing this tax to Cash in Lieu, or Travel stipends.  I may have missed
>>>> this guidance.
>>>>
>>>>
>>>>
>>>> Thank you!
>>>>
>>>>
>>>>
>>>> --
>>>>
>>>> Gabrielle Krol
>>>>
>>>> Business Manager
>>>>
>>>> MSAD 52
>>>>
>>>> 486 Turner Center Road
>>>>
>>>> Turner, ME 04282
>>>>
>>>> 207-225-1006
>>>>
>>>> _______________________________________________
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>>>>
>>>> _______________________________________________
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>>>>
>>>>
>>>>
>>>>
>>>> --
>>>>
>>>> *Jessica Coulombe*
>>>>
>>>> Payroll Specialist
>>>>
>>>> Wellness Coordinator
>>>> RSU 4
>>>> 971 Gardiner Rd
>>>> Wales, Me 04280
>>>> 207-375-4273 ext 175  or Option 2
>>>>
>>>> fax:207-375-2522
>>>> jessica.coulombe at rsu4.org
>>>>
>>>>
>>>>
>>>>
>>>>
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>>>>
>>>>
>>>> --
>>>>
>>>> Lisa Harkin
>>>>
>>>> Finance Manager
>>>>
>>>> _______________________________________________
>>>> SchoolFinance mailing list
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>>>> http://maillist.informe.org/mailman/listinfo/schoolfinance
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>>>>
>>>> --
>>>>
>>>> Lisa Harkin
>>>>
>>>> Finance Manager
>>>>
>>>> _______________________________________________
>>>> SchoolFinance mailing list
>>>> SchoolFinance at maillist.informe.org
>>>> http://maillist.informe.org/mailman/listinfo/schoolfinance
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>>>>
>>>>
>>>> --
>>>>
>>>> Lisa Harkin
>>>>
>>>> Finance Manager
>>>> _______________________________________________
>>>> SchoolFinance mailing list
>>>> SchoolFinance at maillist.informe.org
>>>> http://maillist.informe.org/mailman/listinfo/schoolfinance
>>>>
>>> _______________________________________________
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>>
>>
>>
>> --
>> Adam Hanson
>> Controller
>> Lewiston Public Schools
>> 36 Oak Street
>> Lewiston, ME 04240
>> Phone: (207) 795-4100, ext. 4051
>> Fax: (207) 795-4177
>>
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>> error, please notify me and delete this message. Thank you.
>>
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>
> --
> Adam Hanson
> Controller
> Lewiston Public Schools
> 36 Oak Street
> Lewiston, ME 04240
> Phone: (207) 795-4100, ext. 4051
> Fax: (207) 795-4177
>
> LEGAL CONFIDENTIAL: The information in this email, and any attachment, may
> contain legally privileged information. It is intended only for the
> attention and use of the named recipient. If you are not the intended
> recipient, you are not authorized to retain, disclose, copy or distribute
> the message and/or any of its attachments. If you received this email in
> error, please notify me and delete this message. Thank you.
>
> 1-855-938-0657 لترجمة هذه الوثيقة، يرجى الاتصال
>
> Haddii aad rabto in lagu turjumo warqadani, fadlan soo wac 1-855-938-0657
>
> Pour vous faire interpréter cet email, prière d'appeler le 1-855-938-0657
>
>
> Para receber uma interpretação deste email, faz favor de ligar
> para 1-855-938-0657
>
> For interpretation in Kiswahili (Swahili), Shqip (Albanian), Farsi, Kreyòl
> Ayisyen (Haitian Creole), 普通话 (Mandarin), ਪੰਜਾਬੀ(Punjabi), and Русский
> (Russian), please call 1-855-938-0656
>
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> Ikinyarwanda (Kinyarwanda), please call 1-855-938-0657
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-- 
Lisa Harkin
Finance Manager
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