Agenda - Council - 08/08/1989 - Closed Executive Session and Regular Meeting

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City Council and Residents May 23, 1989 the City's meters. The deposits and inventory should then be written off the books. In the future, all deposits received will be recognized as revenue and all meters issued will be expensed. Employee Benefit Compliance Requirements (IRC Section 89) The 1986 Tax Reform Act established Section 89 which is effective for employee benefit plan years beginning after December 31, 1988. Strict requirements are imposed on a variety of employee benefit plans including: ° Accident and health plans ° Group term life insurance plans ° Cafeteria plans, and if the employer elects to treat these type plans as a statutory benefit - - Qualified group legal services - Educational assistance programs - Dependent care assistance programs ° Fringe benefit programs providing no additional cost services, qualified employee discounts, or meals from employer-operated eating facilities ° Voluntary employees' beneficiary associations and supplemental unemployment compensation benefit trusts ° Qualified tuition reduction programs In general, the requirements are intended to ensure that lower paid employees are receiving a share of the "tax-advantaged" benefits being provided to highly compensated employees. Ail employers have at least one highly compensated employee by general definition. The compliance requirements are covered in two broad categories: Qualification Rules and Nondiscrimination Tests. The Qualification Rules are required by all employers. Failure to comply with these rules may cause many nontaxable fringe benefits (e.g., health insurance) to become taxable to all employees. Plans will meet the qualification rules if: ° The plans are in writing, ° The employees' rights under the plans are legally enforceable, ° The plans are maintained for the exclusive benefit of employees, ° Ail employees are notified of their available benefits, and ° The plans are intended to be permanent.