COMPTROLLER'S MEMORANDUM NO. 06 (2002-2003)
SUBJECT: TUITION & FEE WAIVERS FOR STATE EMPLOYEES
The purpose of this memorandum is to disseminate to state agencies a written plan document that allows the State of Florida to offer tuition and fee waivers on a tax-exempt basis, pursuant to Internal Revenue Code (IRC) Section 127. This plan document does not cover state universities, as explained below.
The 2002 Legislature created Section 1009.265, F.S., which provides that, subject to approval by the employer, state universities and community colleges shall grant state employees tuition and fee waivers of up to six credit hours per term, for courses taken on a space-available basis. This Section does not stipulate that courses, whether graduate or undergraduate, must be job related. In addition this Section excludes employees of state universities. On October 9, 2001, the Bureau of State Payrolls issued Memorandum DBFBP 01-31, which addresses federal taxation of employer-provided educational assistance and the responsibilities of the agencies with respect to reporting taxable educational assistance. Because tuition and fee waivers are a form of employer-provided educational assistance, the IRS considers it a taxable fringe benefit, unless the courses are work-related, as defined by the IRS. However, when provided as part of a qualified educational assistance program under IRC Section 127, waivers for courses that are not job related are excludable from taxable income up to $5,250 per calendar year.
STATE OF FLORIDA EMPLOYEE EDUCATIONAL ASSISTANCE PROGRAM
In order to provide a tax-exempt benefit, state agencies must abide by the written plan document attached to this memorandum. The document includes eligibility requirements, benefit provisions, and limitations that conform with current statutes, appropriations proviso language, and general state employment policies relevant to this program. Please note that if an agency elects not to administer the program pursuant to this plan document, or fails to communicate the provisions of the qualified program to all eligible employees, waivers of tuition and fees could be subject to federal income, Social Security and Medicare taxes. Furthermore, the employing agency will be responsible for the matching tax on Social Security and Medicare. Reporting instructions for taxable educational assistance are contained in the Payroll Preparation Manual for state agencies. The payroll manual may be accessed on-line at the following web address: http://www.dbf.state.fl.us/bosp/BOSP_MANUAL.pdf.
If you have any questions about the plan document, please contact Anna Gray by email at firstname.lastname@example.org or by phone at (850) 410-9305, Suncom 210-9305. If you have any questions regarding the reporting of taxable educational assistance, please contact Ernest Thompson by email at mailto:email@example.com by phone at (850) 410-9432, Suncom 210-9432.