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MEMORANDUM TO: Sylvia Frolik, Planning and Zoning Commission Liaison Jim Gromberg, Economic Development Commission Liaison Mark Boos, Parks and Recreation Commission Liaison DATE.: Mary Gomez, Senior Accountant Kay McAIoney, Personnel Coordinator Ryan Schroeder, City Administrator Ramsey City Council Sandra Ashley Helling, Finance Officer September 2, 1992 SUBJECT: Commissioner Expenditures The City Code provides for expenditure payment to Planning and Zoning, Board of Adjustment, Parks and Recreation and Economic Development Commission members in an amount appropriated for that purpose by the City Council For the last many years this amount has been established at $25.00 per meeting attended for the Commission Chair and $20.00 for Commissioners. The internal Revenue Service has ruled that payments for expenses not substantiated with expense accounts and the required receipts shall be considered earnings. As such, these payments are subject to F.I.C.A. and Medicare employer costs, possibly federal and state income tax withholding, and W-2 annual earning reporting. Currently some Commission members report the expense payment received from the City as income for tax purposes, and deduct the associated expenses. The decision to report or not report has previously been up to the individuals, but the City can no longer extend this option. Effective January 1, 1993 the City wilt: Pay expenses based upon supporting documentation (expense account forms and receipts when applicable). Such payments are not subject to IRS reporting. or Pay expenses at a fiat rate subject to payroll taxes and withholdings. These payments will annually be reported on the IRS form W-2. The Council would appreciate knowing the preference of the Commissioners. Please forward ~my feedback to me and I will prepare a case for a Council agenda in October. Thanks for your assistance.