Bah Humbug! Mich. Factory Taxes $15 Holiday Bonus

[jazz lady]

TRAVERSE CITY, Mich. - Some bonus.

Hourly workers at Tower Automotive received $15 gift cards redeemable at Meijer grocery-retail stores before Thanksgiving. Then the automotive supplier decided the cards were "same as cash" gifts subject to federal and state income taxes totaling 36.75 percent.

That means the "gift" will take $5.51 out of the workers' next paychecks, the Traverse City Record-Eagle reported Friday.

"It's got a lot of people ticked off," said Donald McKee of Kingsley, a welding technician who's worked almost 13 years at the plant in Grand Traverse County's Garfield Township. "This is the lowest they've gone yet to give us something and then take it back."

A Tower manager who didn't want to be named told the newspaper the situation was "very unfortunate." Tighter accounting standards in the wake of Enron and other corporate scandals have prompted more scrutiny of employee benefits, including minor payouts like the gift card, he said.

United Auto Workers Local 5110, which represents about 300 hourly workers, has filed a contract grievance over the matter. Some workers also have returned the gift cards rather than pay the tax, Tower said.

Workers will still get Christmas bonuses. Tower said it will return to issuing gift certificates that can be redeemed for holiday turkeys or hams without being considered cash income.

 

[jazz lady]

Factory Drops Plan to Tax Holiday Bonus

TRAVERSE CITY, Mich. - Good riddance, "turkey tax."

Tower Automotive has dropped a plan to dock employee pay to cover supposed taxes on $15 gift cards it gave hourly workers before Thanksgiving. The cards were redeemable at Meijer grocery-retail stores.

A memo issued Wednesday said the company had determined the cards were "same as cash" gifts subject to federal and state income taxes totaling 36.75 percent. It said the workers' next checks would be reduced by $5.51.

United Auto Workers Local 5110, which represents about 300 hourly workers at the plant in Grand Traverse County's Garfield Township, filed a contract grievance over the matter. Some workers returned the gift cards rather than pay the tax, the company said.

"It's got a lot of people ticked off," Donald McKee of Kingsley, a welding technician, told the Traverse City Record-Eagle for a story Friday.

And it may have been unnecessary, because the IRS says Tower misread the tax law.

Recipients are never required to pay federal tax on gifts, said Sarah Wreford, spokeswoman for the Internal Revenue Service in Detroit. The only gift tax is levied against people who give an individual more than $11,000 in one year, she said.

Tower came to a different conclusion after researching the law, spokeswoman Bev Pierce said. "We're double-checking that," she said.

But even if the company decides there is a tax liability, "we have decided we will cover that for our colleagues in Traverse City," Pierce told The Associated Press on Friday.

Earlier, a Tower manager who didn't want to be named labeled the deduction a "turkey tax" and called the situation "very unfortunate."

Tighter accounting standards in the wake of Enron and other corporate scandals have prompted more scrutiny of employee benefits, including minor payouts like the gift card, he told the newspaper.

Workers will still get Christmas bonuses. Tower said it would return to issuing gift certificates that can be redeemed for holiday turkeys or hams without being considered cash income.

 

[tlatchaw]

Bonuses at Giant consist of a 10% off coupon redeemable at any Giant store. Yay! Here's a present for you but you have to spend money to get it. Thanks, guys!