PA Act 172: A (Tax) Break for Volunteer Firefighters
With Act 172, municipalities have another tool to recognize the critical service of volunteer firefighters and emergency responders. In a nutshell, Act 172 allows municipalities to give certain tax breaks to volunteers in acknowledgment of their service – specifically, from municipal earned income and real estate taxes. The relief might be nominal in the grand scheme of things, but the hope is that it can encourage residents to volunteer. Putting these incentives in place, however, is more than just passing an ordinance. It takes concerted effort by the municipality and active coordination with the emergency services providers.
“Active volunteers” are eligible under the Act. In order to protect against abuse from ghost volunteers, the key aspect of the eligibility is “active.” Act 172 leaves the particular criteria open, but provides guidance that the following should be considered: the number of emergency calls; the level of training and participation in drills; the total amount of volunteer time expended on administrative and other support services, and involvement in other events “that aid in the financial viability, emergency response and operational readiness” of the company.
Examples of criteria that have been considered include:
Treating all events equally, allocating a point for each activity over the course of a year, and a point for a certain number of other volunteer hours. After aggregating the points, “active” members are determined by whether they reach a certain percentage of involvement across-the-board.
Another model breaks down the volunteer’s level of participation by activity. For example, a volunteer could qualify as “active” if they respond to 30% of service calls, 50% of volunteer trainings/meetings, 60% of community activities, a minimum number of service hours (e.g., 125 service hours per year), OR a combination of the above.
“Injured volunteers” (injured during a response to an emergency call) also qualify to the extent that they would have otherwise qualified in the previous 5 years.
Ultimately, volunteers must sign a certification to confirm that they meet the criteria, with the Fire Chief to maintain adequate records to confirm. These logs are then subject to inspection by the PA Fire Commissioner, the Auditor General, and the governing body. And false reporting carries stiff criminal penalties!
Where do we start?
The process to put the tax credits in place is, well, a process.
1. First, the municipality should coordinate with the heads of the fire company to discuss the parameters for who should be considered active. Their service territories will also need to be considered, given the likelihood that they span multiple municipalities (each of whom might be considering different criteria).
2. Next, the municipality will need to enact an Ordinance to formally establish the program and set out the extent of the tax credits, and should separately (but at the same time) adopt a Resolution to memorialize the guidelines for active volunteers to qualify.
3. Lastly, once enacted, the fun of administering the program kicks off. The chief must maintain service logs for all of the activities, and make it available for periodic inspection by the municipality (and others). The company must also provide the municipality with a notarized list of eligible active volunteers no later than 45 days before the tax notices are to be distributed.
This post was written by Michael G. Crotty, Esquire. Mr. Crotty will speak about PA Act 172 at The Chester County Association of Township Official’s (CCATO) upcoming event on September 28, 2017 at the Westtown Township building from 8:00 – 9:30 AM. To learn more or register for this event, visit www.CCATO.org.
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