News Reedy Creek Improvement District and the Central Florida Tourism Oversight District

[LAKid53]

RCID did not pay taxes on the park admission, nor did the employees, which is why they are being called out in the report. Someone has to pay the bill.

Former district administrator John Classe was aware these benefits should be taxed, but decided to consider it "employee training" to dodge the taxes. It's ironic, because if we were to accept his argument that it is "employee training" then there's an FLSA violation there for unpaid wages, as training would be compensable time (unless for some reason the various CBAs exempt it, which is highly unlikely).

You know any of this for a fact? You worked in the HR office?

The income value of the passes, IF taxable, would be added to the gross income on the employee's W-2 under wages, tips and other compensation.

 

[lazyboy97o]

I find it curious that this didn’t come to light months ago when the District was first making a fuss about the benefits. Wouldn’t this have been a great talking point in the face of all of the employee backlash?

 

[Disstevefan1]

I thought I saw an invoice posted showing what Disney billed RCID someplace. It did not include tax?

There is no tax mentioned in the Invoice -

 

[Brian]

You know any of this for a fact? You worked in the HR office?

It's in the report. I'm fairly certain there would be stiff penalties for lying to the legislature and the governor.

The income value of the passes, IF taxable, would be added to the gross income on the employee's W-2 under wages, tips and other compensation.

That is correct. However, that doesn't happen when the district tax dodger administrator classifies it as "employee training."

Were RCID employees paid every time they visited the parks for pleasure? No? That's likely an FLSA violation, and the employees are owed lost wages. After all, it's employee "training."

 

[LAKid53]

I find it curious that this didn’t come to light months ago when the District was first making a fuss about the benefits. Wouldn’t this have been a great talking point in the face of all of the employee backlash?

I'm taking this with a grain of salt.

 

[LAKid53]

There is no tax mentioned in the Invoice -
View attachment 757470
View attachment 757471

Those items are for the purchase of tickets by RCID.

 

[Brian]

I find it curious that this didn’t come to light months ago when the District was first making a fuss about the benefits. Wouldn’t this have been a great talking point in the face of all of the employee backlash?

I'm inclined to agree, but perhaps it came to light after that?

 

[lazyboy97o]

There is no tax mentioned in the Invoice -
View attachment 757470
View attachment 757471

This isn’t someone’s W-2. It does not show an employee’s taxable income.

 

[mmascari]

How would the employees know the taxable amount in order to claim it as their income? And based on how often they use the passes, or if they took advantage of discounts with food or hotels, how could they possibly know what to claim?

If they're taxable income, it would be based on the cost of the passes, and not depend on how they're used or not.

It's still a question on if they're really taxable or not. If you assume they are, RCID would need to report that value to employees. So, it's not just an accusation that RCID employees were incorrectly reporting their taxes, it's an accusation that RCID accounting, the prior board, and anyone else who signed off on the RCID finances all did it wrong too.

I don't know the rules for when something becomes material and needs to be reported as part of your income. Nobody thinks if your employer gives you two movie tickets you need to include that in your taxable income. However, if they give you a car, that's probably taxable. There is definitely an IRS publication that would give you the details, or at least guidance on how to make the decision.

If we have a tax accountant reading, they'll probably know which publication to reference.

 

[lazyboy97o]

I'm inclined to agree, but perhaps it came to light after that?

Sure that’s possible, but it’s yet another example of the new leadership not prioritizing their actual job of operating the district. It took them months to learn what benefits they offer, even as they were in the middle of a major contract negotiation, and then even longer to learn how they were actually handling them while again, working on the issue of benefits.

 

[Brian]

If they're taxable income, it would be based on the cost of the passes, and not depend on how they're used or not.

It's still a question on if they're really taxable or not. If you assume they are, RCID would need to report that value to employees. So, it's not just an accusation that RCID employees were incorrectly reporting their taxes, it's an accusation that RCID accounting, the prior board, and anyone else who signed off on the RCID finances all did it wrong too.

I don't know the rules for when something becomes material and needs to be reported as part of your income. Nobody thinks if your employer gives you two movie tickets you need to include that in your taxable income. However, if they give you a car, that's probably taxable. There is definitely an IRS publication that would give you the details, or at least guidance on how to make the decision.

If we have a tax accountant reading, they'll probably know which publication to reference.

I don't think that anyone blames the employees for misrepresentation of their income as it relates to their admission benefits from RCID. It's incumbent on the employer to provide an accurate W-2, and withhold taxes in accordance with your W-4 instructions and IRS regulations.

 

[Disstevefan1]

This isn’t someone’s W-2. It does not show an employee’s taxable income.

My concern was tax collected on the same item twice.

 

[Disstevefan1]

Those items are for the purchase of tickets by RCID.

Agreed. I had thought RCID paid taxes when they purchased this stuff from Disney.

 

[LAKid53]

It's in the report. I'm fairly certain there would be stiff penalties for lying to the legislature and the governor.


That is correct. However, that doesn't happen when the district tax dodger administrator classifies it as "employee training."

Were RCID employees paid every time they visited the parks for pleasure? No? That's likely an FLSA violation, and the employees are owed lost wages. After all, it's employee "training."

How many courses in tax or employment law have you taken? Visiting a park is not a violation of FLSA.

An employer failing to properly report and include taxable benefits that are part of an employee compensation package on the employees' would be an issue for the employer with the IRS.

Again, I seriously doubt RCID wasn't including the value of the benefits on the employee's W-2. Any decent payroll software would capture said item.

 

[lazyboy97o]

It's still a question on if they're really taxable or not. If you assume they are, RCID would need to report that value to employees. So, it's not just an accusation that RCID employees were incorrectly reporting their taxes, it's an accusation that RCID accounting, the prior board, and anyone else who signed off on the RCID finances all did it wrong too.

This could potentially apply to a lot more than just the Reedy Creek Improvement District. It seems possible that it might also apply to other operating participants and maybe even Disney themselves.

Thinking about it, it might even be an issue for other park operators. It seems like lower wage theme park employees would notice being taxed for a few extra grand in income.

 

[Brian]

As I said, I'm sure RCID'S accounting and payroll staff are familiar with the IRC regulations on employee benefits. I'm skeptical of the claim. No employer is going to provide benefits that may be subject to federal income taxes and NOT include the value of the benefit on the employees' W-2.

A company will only include the value of a benefit on the W-2 if they know it's taxable in the first place, and withheld/paid themselves accordingly. Many companies without the armies of tax attorneys like Disney don't know about the taxability of fringe benefits, and will do things like give gift cards without withholding taxes/paying them for the employee and subsequently reporting it on the W-2.

 

[lazyboy97o]

My concern was tax collected on the same item twice.

Sales tax is different than income tax.

 

[Brian]

How many courses in tax or employment law have you taken? Visiting a park is not a violation of FLSA.

I have a Master's degree in Human Resources Management and a Bachelor's in Business Administration. What about you?

I say that visiting a park would be a violation of the FLSA if Classe's bogus argument that the complimentary admission was "employee training" was to be accepted as fact. In that case, training is considered compensable except in limited circumstances which likely would not apply to RCID employees.

In reality, he was merely attempting to dodge taxes.

An employer failing to properly report and include taxable benefits that are part of an employee compensation package on the employees' would be an issue for the employer with the IRS.

Again, I seriously doubt RCID wasn't including the value of the benefits on the employee's W-2. Any decent payroll software would capture said item.

It likely did capture the value, which is why district employees brought it to Classe's attention. He told them to consider it "employee training."

From page 9 of the report:

 

[LAKid53]

If they're taxable income, it would be based on the cost of the passes, and not depend on how they're used or not.

It's still a question on if they're really taxable or not. If you assume they are, RCID would need to report that value to employees. So, it's not just an accusation that RCID employees were incorrectly reporting their taxes, it's an accusation that RCID accounting, the prior board, and anyone else who signed off on the RCID finances all did it wrong too.

I don't know the rules for when something becomes material and needs to be reported as part of your income. Nobody thinks if your employer gives you two movie tickets you need to include that in your taxable income. However, if they give you a car, that's probably taxable. There is definitely an IRS publication that would give you the details, or at least guidance on how to make the decision.

If we have a tax accountant reading, they'll probably know which publication to reference.

There is. Both an IRS publication and de minimis rules.

And as I said previously, an decent payroll software would have a field to input the value of any employee benefits and include said dollar value(s) in determining gross income to be reported on the employees' W-2. Failure to report said income is not just a problem for the employee, but also for the employer.

 

[LAKid53]

A company will only include the value of a benefit on the W-2 if they know it's taxable in the first place, and withheld/paid themselves accordingly. Many companies without the armies of tax attorneys like Disney don't know about the taxability of fringe benefits, and will do things like give gift cards without withholding taxes/paying them for the employee and subsequently reporting it on the W-2.

Payroll software includes fields for capturing this information. There are benefits specialists in both HR and payroll offices. Again, I doubt RCID wasn't reporting taxable benefits in employees' gross wages.