Agenda - Council - 01/25/1983 - Laserfiche WebLink

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I I I I I I I I I I I I ! I December 20, 1982 PERA withholding changes Page 2 e The League has requested Minnesota's Senators and Congressmen to encourage the IRS to act promptly on the request for a ruling. It might be useful for city officials also to contact these Congressman-affd Senators Durenberger and Boschwttz similarly to request their assistance. How are the increased employee PERA contributions treated for state income tax purposes? The employee's PERA contribution is taxable under the state income tax, and should therefor be included in gross income for calculating state income tax w~thholding. In other words, withhold state taxes as you have been doing up to now. ~at is the effect of AFSCME's lawsuit challenging the new law? AFSCME has asked the Supreme Court for an injunction to prevent the change in PERA contributions from taking effect. The Court has appointed a special, three-Judge panel to hear the arguments, but it is unlikely that any decision will be made until Dec. 28 or 29 at the earliest. If an injunction'is issued, we will inform cities immediately. Otherwise, cities should assume the law will take effect as described above. When does the increased state income tax withholding take effect? The state Revenue Department is preparing revised withholding tables to reflect the 10% surcharge. They expect to have these tables to employers by Jan. 1. The revised withholding schedule is to be applied to any paycheck issued after Jan. 1. (Note that this effective date is different from the.effective date of the PERA withholding change.) If you have not yet received the new tables by the time of your first payroll after Jan. 1, use the old tables for that payroll, and rise the new tables for the next payroll. How are these pension funding changes related to proposals for a "~uarantee" of emplpyer pension contributions? PERA members recently received a letter from John Allers of the Public Pension Protection Association urging support for legislation to guarantee employer pension contributions. ~ This question is really not related to the recent pension funding. changes; had the proposed legislation been in effect it would not have prevented the sort of shift of responsibility for pension contributions from the employer to the employee which the recent bill mandated. What the proposed legislation would do is prevent the legislature from diverting money already contributed to PERA by employers to purposes other than pensions. There are valid arguments for enacting this sort of guarantee, and the LMC Board will be considering supporting such legislation. It is, however, a separate issue from the funding changes now being implemented. PT:glb