In their haste to boost their retirement benefits, members of the Virginia General Assembly may have left themselves with a lot of explaining to do. What's worse for them is that they may have to do it to the Internal Revenue Service.
At least this is the fear some legislators now have as the result of enactment earlier this year of a long, complex bill affecting the state employees' retirement fund. Because their salaries are low - $5,475 year - the legislators decided the state should count all the finds they receive - expense allowances and office funds included - as salaries for the purpose of computing retirement benefits.
The bill's impact on the state's 140 legislators, who contribute 5 per cent of the salaries to the retirement fund as do most state workers, is potentially significant, Senate Majority Leader Adelard L. Brault (D-Fairfax) said yesterday. The law should "Double" the typical lawmaker's "salary," Brault said.
That's where the IRS comes in. It seems some IRS agent has cautioned the legislators they cannot have it both ways.
If they want to count the $2,600 in expense money most of them received this year as "expenses," and not as "salary," each legislator will have to account for how he spent the money. That's a step Brault said that will leave th legislators with a difficult - task since most believed they would not have to account for the money, and thus did not keep records of expenses. The money met the IRS's $44-a-day allowance for unvouchered expenses. Under IRS rules, if the extra money is counted as salary, and not justified as expenses, then it becomes taxable income.
Clearly worried about what the IRS will do with their tax returns, the legislators have taken a predictable action. They have convened a committee to study the matter.