Rank and File

May 1956
Labor Law Journal;May56, Vol. 7 Issue 5, p317
Academic Journal
The article reports that the glass industry's version of the guaranteed annual wage plan has been ruled acceptable for tax purposes by the U.S. Internal Revenue Service (IRS) in a set of three special rulings. Inauguration of the glass industry plan is, in part, contingent upon the now received favorable ruling that employer contributions to the plans would be deductible by the employers as business expenses. While so ruling, the IRS also held that the contributions are to be classified as supplemental wage payments to the employee. As such, they are income and are subject to withholding, and they are also taxable under the Federal Insurance Contributions Act and the Federal Unemployment Tax Act. The glass industry's supplemental unemployment pay plan is considerably different from that in the automobile industry. The IRS's special rulings held that the consolidated funds are common trust funds under Section 584 of the Internal Revenue Code of 1954 and, therefore, are not subject to income taxation. The individual employee trusts are taxable on their income, as are any other trusts. However, they get the regular trust exemption of $100.


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