TO: Executive Board and Council Leaders

FROM: Cliff Merchant

DATE: November 2, 2001

RE: PSTP Voucher and Voucher Alternative Programs – Taxable Benefit

Under the Internal Revenue Service Code tuition benefits received from your employer for graduate level course work is a taxable benefit unless it meets one of a limited number of exemptions. As in the past, the employer can not determine whether or not an individual qualifies for any of these exemptions, and therefore withholding taxes are calculated and withheld from payroll check. (Undergraduate benefits are taxable only if the benefit amount exceeds $5,250.00.)

The Governor’s Office of Employee Relations has notified me that the Office of State Comptroller has requested the data from them and their administrators to begin the withholding tax process. If the amount of tuition benefit received through the Voucher Program and/or the VALT Program exceeds $300 withholding taxes will be computed and withheld in installments over 3 payroll checks. If the amount is $300 or less the withholding taxes will be deducted from one check on the earliest date on the following list:

Administrative Payrolls Institutional Payrolls

November 21, 2001 November 29, 2001
December 5, 2001 December 13, 2001
December 19, 2001 December 27, 2001

Please contact a tax preparation specialist when completing you 2001 federal and state income tax returns to see if you qualify for an exemption.



Cliff Merchant
Director, Mobilization and Education