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PRICE WATERHOUSE: OUTPLACEMENT SERVICES CAN BE TAX EXEMPT

 PRICE WATERHOUSE: OUTPLACEMENT SERVICES CAN BE TAX EXEMPT
 PHILADELPHIA, Sept. 24 /PRNewswire/ -- Despite lower interest rates, our "stutter stepping" economy continues to cause employers to lay off employees to reduce expenses.
 Many employers who have downsized during the past few years have helped employees in their transitions by providing professional outplacement services, including group seminars, resume writing instruction, and interviewing, networking and negotiation strategies. Unfortunately, the federal income tax consequences of providing such services has not been clearly defined in the past.
 To clarify the issue, the IRS recently issued guidance which provides that typical outplacement services will not result in wages for federal income, FICA or FUTA tax withholding purposes. To the extent employees may elect to reduce their salaries, however, to receive outplacement services in lieu of cash compensation, the cost of any services will be wages for all applicable withholdings, and will therefore be taxable.
 "The ruling will be helpful to employers in structuring future reductions in forces, and may present refund opportunities for any employers which have included outplacement services in employee wages," commented Frank Palmieri of Price Waterhouse's Employee Benefit Service Practice.
 /delval/
 -0- 9/24/92
 /CONTACT: Molly Mark of Price Waterhouse, 215-575-5878/ CO: Price Waterhouse ST: Pennsylvania IN: FIN SU:


LJ-CC -- PH042 -- 3252 09/24/92 16:05 EDT
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Publication:PR Newswire
Date:Sep 24, 1992
Words:216
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