When a firefighter receives compensation, that compensation is wages and is subject
to FICA taxes, unless an exclusion applies. It does not matter whether the workers
are called “volunteers.” Any worker who receives compensation for services performed
subject to the will and control of an employer is a common-law employee. If the worker
is a common law employee, the amounts paid, whether in cash or some other form, are
subject to withholding. Volunteer firefighters are generally considered employees
of the fire departments or fire districts for which they perform their services.
Firefighters who are on call and work regularly but intermittently do not qualify
for the emergency exclusion under Section 218(c) (6) of the Act, even if their work
involves situations that may be considered emergencies. This exclusion applies only
to services of an employee who was hired because of an unforeseen emergency to do
work in connection with that emergency on a temporary basis (e.g., an individual hired
to battle a major forest fire or to provide emergency assistance in other similar
disasters such as volcano eruption, severe ice storm, earthquake and flood).
While volunteer firefighters may not receive wages, they may receive remuneration
intended to reimburse them for expenses. Expense reimbursements (whether cash, in-kind
benefits, or tax exemptions) paid to firefighters must be made under an accountable
plan. According to Internal Revenue Code section 62(c), an accountable plan must:
require firefighters to substantiate actual business expenses,
allow no reimbursements for unsubstantiated expenses, and
require that any amounts received that exceed substantiated expenses be returned with
a reasonable period.
Any amounts paid for reimbursement that do not meet these conditions are considered
made under a nonaccountable plan and are treated as wages. Therefore, a per diem amount
that does not reimburse actual, documented expenses is subject to Social Security
and Medicare. It does not matter whether the amount is paid as reimbursements, a per
diem, or under a point system.