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January 14, 2014

Re:  US Treasury Clarifies Treatment of Volunteer First Responders Under ACA

Dear Mayor:

On December 13 of last year, we wrote on continuing efforts to clarify the treatment of volunteer first responders, under the Affordable Care Act (ACA). You can access that letter at .

By way of background, an existing Internal Revenue Service (IRS) rule requires that stipends and other reimbursements to volunteer firefighters and emergency responders be considered taxable income, subject to the same rules and guidelines that apply to the income of any other hourly or salaried employees.   

Over the last several months, questions arose over whether the IRS rule would mean that volunteer emergency responders were to be counted as employees under the ACA.  If that were the case, some volunteer departments would end up having over 50 employees and be subject to the ACA's large employer health insurance coverage mandates. The large employer mandate requires employers to provide volunteers working 30 or more hours per week with health insurance consistent with the ACA mandates.  This would have placed an unanticipated financial burden on many volunteer squads. 

The National League of Cities (NLC) argued, on our behalf, that volunteer first responders should not be counted as employees under the ACA by virtue of the U.S. Department of Labor’s (DOL’s) definition of an employee, regardless of the IRS’s determination that some or all of the benefits or stipends a volunteer firefighter or emergency responder receives might be subject to federal income tax. 

On January 10 of this year, U.S. Department of Treasury (Treasury) Assistant Secretary for Tax Policy, Mark J. Mazur, published a statement on the Departments webpage at That statement details Treasury’s review of the matter, which involved the analysis of other Federal laws dealing with volunteer first responders, including the IRS Tax Code and Federal Wage and Hour Laws, administered by the DOL. Assistant Secretary Mazur’s statement concludes:
“As a result of that review and analysis, the forthcoming final regulations relating to employer shared responsibility generally will not require volunteer hours of bona fide volunteer firefighters and volunteer emergency medical personnel at governmental or tax-exempt organizations to be counted when determining full-time employees (or full-time equivalents).”

The review included an analysis of Section 457(e)(11) of the Tax Code, which defines a bona fide volunteer as follows.

An individual shall be treated as a bona fide volunteer for purposes of subparagraph (A)(ii) if the only compensation received by such individual for performing qualified services is in the form of—

(I) reimbursement for (or a reasonable allowance for) reasonable expenses incurred in the performance of such services, or
(II) reasonable benefits (including length of service awards), and nominal fees for such services, customarily paid by eligible employers in connection with the performance of such services by volunteers.

We want to acknowledge the expertise of Neil Bomberg, NLC’s Program Director for Federal Advocacy, and his efforts on this important matter. We will provide further guidance, once Treasury publishes the final regulations. If you have any questions, contact Jon Moran at 609-695-3481, ext. 121 or

Very truly yours,

Hon. Chuck Chiarello, Chair                                     
NJLM EMS Task Force,                                            
NJLM Past President and
Mayor, Buena Vista Twp.

William G. Dressel, Jr.
Executive Director






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