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LOSAP and Stipends

The following outlines guidance on the ability to provide LOSAP contributions to volunteers who also may be paid stipends by the Fire Department, and as to whether or not the amount of the LOSAP award can be related to the amount of compensation that the firefighter may otherwise be eligible to receive from the F.D.

With regard to whether a volunteer can receive LOSAP contributions while also receiving compensation from the F.D., the LOSAP tax rules are particularly clear that the payment of stipends or other compensation to firefighters does not jeopardize the ability of the volunteer firefighter to receive a LOSAP contribution.

The Code specifically permits LOSAP awards be made to "bona fide volunteers." Bona fide volunteers are permitted to receive reimbursement for reasonable expenses incurred in the performance of such their services, or reasonable benefits and nominal fees for such services, customarily paid by eligibleemployers in connection with the performance of such services by volunteers.

Though the IRS has not specifically ruled on what constitutes "nominal fees" for a volunteer firefighter under the LOSAP rules, the DOL has adopted the standard that an amount not exceeding 20 percent of the total compensation that the Fire Department would pay to employ a full-time firefighter would be deemed a “nominal fee” for FLSA purposes. This means that volunteers receiving less than this level of compensation will still be honored as volunteers, and eligible for participation in the LOSAP program.

With regard to whether the amount of a LOSAP contribution can be related to the compensation paid to the volunteer, nothing on the LOSAP rules prevents this practice. For example, there is no prohibition against requiring the volunteer have a minimal level of compensation in order to be eligible for the LOSAP contribution, or against using compensation in the computation of the amount of award for which the volunteer will be eligible. The only restriction is that the compensation upon which the LOSAP award is computed must be for the volunteer providing "qualified services." The Tax Code defines qualified services as "firefighting and prevention services, emergency medical services, and ambulance services." Further, the compensation for these qualified services by the volunteer must still be less than 20% of the prevailing wage, locally, for such services if not performed on a volunteer basis.

For additional Legal advise please contact:

*Law Office of Robert J. Toth, Jr.
110 West Berry Street
Suite 1809
Fort Wayne, IN 46802

*Not affiliated with Lincoln Financial Advisors.