Anybody know what this is about?

[JAinNC]

Public schools in this area (and probably the state) have had this form. I get calls from 1st year and new year teachers begining the school year. They may elect (only at the beginning) to spread their salary over 12 months instead of 10.5 months. This is a beneficial way if the teacher does not want to have no pay checks in the summer.

I have heard nothing of an excise tax. Perhaps the article used incorrect terminology.

[Jiggers]

20% Excise Tax

No way. I just read the same site.

No way is there a 20% "EXCISE" tax on these wages. 20% Witholding maybe.

Remember this was written by a school organization!

I would ask TSTA for an IRS reference.

[WhiteOleander]

I copied this from another site. (not tax related)

It is from TSTA, Texas State Teachers Assoc.

~*~*~*Recent changes have been made to income tax regulations which affect school employees who are paid out over 12 months. Many public school employees who work less than a full year chose to have their salary evenly distributed over 12 months. This is commonly referred to as “annualized compensation.”

New IRS regulations state that annualized compensation may be subject to an additional 20% excise tax. An employee can avoid this tax if the employee elects, in writing, to have his compensation annualized before an employee begins work for 2007-2008 school year. This regulation applies to both contracted and non-contracted school employees.

To avoid the penalty, if an employee who works less than 12 months wishes to have his salary spread over 12 months, the employee must make a written election to annualize his compensation. Most school districts have been advised of these new regulations and should provide employees with an election form. If your district does not have such a form, contact TSTA.

If an employee fails to make a written election by the first day of work of the new school year, the safest course of action would be to request non-annualized payments (receive pay on a 10- or 11-month basis, as applicable).

Once the election to annualize compensation has been made by the employee, it may not be revoked. Employees must elect to have their compensation annualized at the beginning of each new school year.

If you do not wish to annualize your compensation (because you either prefer to be paid on a 10- or 11-month basis, or because you did not sign the annualization form by the first day that you begin working), you may choose not to have your compensation annualized. If your district does not allow this procedure, contact TSTA.~*~*~*