Police Special Duty not Subject to SE Tax

Technical topics regarding tax preparation.
#1
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How do you handle cops who have 1099nec income for hired duty?

I saw an IRS ruling letter of some sort that says that they are exempt form SE tax.

This might be true in my client's cases only because the police in Hawaii don't pay SS and MC on their W2s, their retirement is handled through the union instead.

Does anyone file these as exempt from SE Tax?

What prevents the IRS from automatically sending a letter correcting the return to include it?

Can these even be e-filed?
 

#2
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I think if someone is performing private duty police services, and it is not related to their regular police employment, then it would indeed be subject to SE tax.

See this: https://www.irs.gov/pub/irs-wd/02-0187.pdf. It has some good info in it.
 

#3
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Why are they not casual employees of the entity hiring them?
 

#4
DavidG  
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Please provide a reference to the IRS ruling you mentioned.

ItDepends wrote:I saw an IRS ruling letter of some sort that says that they are exempt form SE tax.
 

#5
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I see now that it was an old letter for which I don't have a reference (I have it in my hand right here) and that it is about FICA.

It was passed around by a competing firm owner at a meeting that includes local CPAs and EAs. The firm owner was saying "I hope you don't impose SE Tax on your police officer clients with special duty - because all you have to do is attach this letter and you can exempt it".

This was a couple of years ago, and I couldn't get my head around it, so I still "imposed" SE tax on my clients that are cops with special duty.

My partner was asking me if we are making a mistake by not exempting it, so that's why I posted to see what others are doing.

Glad I did, thanks for your help.

Why are they not casual employees of the entity hiring them?



Should be, right?

Maybe.

Arguable IMO.

One one hand, a concert producer that needs security is not in the security business, nor are they providing guidance on how to do the job, but on the other hand they are setting the hours.
 

#6
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I think the special duty is referring to special duty pay from the police department that would be exempt from FICA. Army Drill Sergeant receive special duty pay that is exempt. Hazard duty pay is as well. That could be what he was referring to.
 

#7
RowTax  
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I have seen that very letter. Seems like all the cops have it. Must come from the union. I think we have discussed it here on the board previously. I don't think it holds water.
 

#8
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