Masonry Magazine July 1974 Page. 32
Taxes
(Continued from page 29)
Thus, in the case presented, the employee received sick pay for Friday, Saturday, Sunday and Monday.
The provision in the plan permitting payment of wages on non-working days and the tax consequences of such payment brought this particular sick pay plan and employee before the IRS for a ruling. The IRS was asked whether the sick-pay exclusion would apply on the amounts received by this employee for Saturday and Sunday. In other words, does the sick-pay exclusion apply to wages paid for days that are usually not regular working days?
The IRS ruled that the exclusion does not apply to sick-pay received for Saturday and Sunday. Instead, payments received by the taxpayer for these two days are includible in his gross income.
The IRS went further and modified an earlier Ruling to remove any implication that the exclusion from gross income of sick-pay allowed by the Code applies to payments attributable to non-working days, such as Saturday and Sunday, during a continuing period of absence from work due to sickness or injury.
As a final note, the IRS indicated that if a normal holiday, say, July 4th, fell on a Saturday or Sunday, it should be considered a non-working day because it is the particular day of the week (le., Saturday) and not the event being commemorated that primarily accounts for the absence from work. Consequently, any wages paid for such a day would not be available for the sick pay exclusion. (Rev. Rul. 74-185.)
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DISMISSAL PAYMENT
An employee entered into an employment contract that stipulated that he would perform services for the company for a period of three years. The contract further stipulated that the employer could terminate the relationship at any time provided the employee was paid an amount equal to an additional six months' salary. It so happened that the employer did terminate the employment and he began paying the stipulated monthly amounts. Advice was requested from the IRS as to whether these payments for six months were wages for employment tax purposes.
The IRS pointed out that the payments were made by the company to the employee upon his involuntary separation from the service of the company and were in the nature of dismissal payments. They were made pursuant to the provisions of the contract rather than as consideration for the relinquishment of interests the employee had in his employment contract in the nature of property rights. Hence, these payments were held to be "wages" for the purpose of employment taxes and withholding. (Rev. Rul. 74-252.)
"I'm very sorry," said the maid. "But Mrs. Black said to tell you she is not at home." The caller at the door replied, "That's all right. Just tell her I'm glad I didn't come."
At a vacation camp for children, a little girl fished for awhile, then threw down her pole in frustration and cried, "I quit." Asked for an explanation, she said, "I just can't seem to get waited on."
GETMAN BROTHERS MANUFACTURING COMPANY
A Subsidiary of Oury Engineering Co
PO Box 1145 Marion, Ohio 43302 Phone 614-389-4661
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