Friday, July 11, 2008

The IRS and faculty pay...

I got a letter from HR today...

The essence of the letter is that the IRS has a new regulation about faculty pay. It goes into effect at the beginning of the next school year...

The basic idea is that we must choose, now and forevermore, whether we want to be paid over 9 or 12 months. Once we make this change and the school year starts, we are not allowed to change it.... EVER.

I know some faculty members have changed their payment schedules due to sabbaticals etc -- Since I've never done it, I assume that they had to do so for a year and at the change in the school year.

Did your HR interpret the regulation this way, or is BNCC's crew screwy?

7 comments:

Bitty said...

Jeez. I knew there was some recent talk about the IRS complication of being paid over 12 months but working 9 months to earn it. I didn't know it was a choose-now-or-forever-hold-your-peace deal. I doubt that my school is seeing it that way -- yet. Or at least hasn't told us this -- yet. In any event, the unions will throw a hissy, because that's how I got the info I got.

We only just got the option to get paid over 12 months two years ago. I almost did it for the coming year, but -- well, never mind. I guess if I'm going to be locked into one cell, I'll stay with the 9 month option. So far I've managed all right regarding improvising to cover the summer months.

julie said...

I got my letter yesterday: and "screwy" is a very generous adjective to use with our HR incompetents. They're shockingly unable to do their jobs. :-(

Rhonda said...

My college insists we all be paid over 12 months because they don't believe our insurance will cover us in the summer otherwise.

They just decided this last year. I don't know what happened to everyone who went to the doctor in June for all the years previous.

Bardiac said...

My school's never given us a choice: we're all paid over 9 months. It takes some budgeting, and lots of folks are feeling a little short in late September (since we start in August, but don't get paid til October).

Debbie said...

I got a notice from the school I'm now leaving that said the IRS directive doesn't apply to us because the 12-month "option" is required. I think what is more important is the fact that the pay is equally distributed between the two tax years, since we're paid on a July 1 - June 30 cycle, so there's no deferment of pay involved.

I think, however, that there is an issue at my new school, since if you choose the 9-month option what they do is begin paying you on September 1, and spread your salary over 12 months. There really is deferment happening because you're not being paid until after you've earned the income.

So, basically, the question seems to be whether there's deferment happening. And it's pretty clear that once the selection of 9 months or 12 is made, it is irrevocable for that year. However, there's no reason (from the point of the IRS) you couldn't change from one year to the next.

Inside the Philosophy Factory said...

For us, we have to choose once and then we can NEVER change it. They were very clear about that -- and even underlined the sentence in the letter.

Also, they said that the default will be 9 months pay -- so, if we don't return the letter (or, if they lose it... they've lost stuff of mine before) they'll put us on the 9 month plan forever.

What is icky about this is that people on sabbatical often change to the 9 month option while on sabbatical, teach summers and end up with about the same pay -- otherwise they take a pay cut, which can be hard to absorb.

Personally, I've been on 12 months ever since I had the option, because I hated budgeting for the summers -- and hoping the money would last until September.

Pilgrim/Heretic said...

Coming to this late, but it's interesting to see the variety of interpretations... our school wasn't concerned about our insurance carrying over (up to this year we've had a choice, and I've chosen the 9 month option & sock away the extra so it earns interest; they adjust the insurance deductions to cover me over the summer). However, with the new IRS rules, if you take the deferment option that debbie mentions, it gets taxed differently - and more. So my school is simply no longer allowing us to do the 9-month option.