Below is a copy of the statute for tax exemption for survivor benefits of a Line of Duty Death. We urge survivors to hire a qualified tax lawyer to prepare their taxes because of the complexity of a line of duty death. This form should be given to every survivor to present to their tax expert. There are many benefits, including the PSOB and funds from the Ohio Death Benefit Fund that are tax-exempt.

¶ 104. Tax exemption for annuities paid to survivors of public safety officers killed in the line of duty

Code Sec. 101 (h), as amended by 97 Act §1528(a)
Generally effective: Amounts received in tax years beginning after Dec. 31, '96, with respect to officers dying after that date
Committee Reports, see ¶5350

Under pre-'97 Act law, survivor annuity benefits paid under a governmental retirement plan to a survivor of a law enforcement officer killed in the line of duty were generally includible in income. However, amounts contributed to the plan by the officer and previously included in the officer's income weren't includible in the survivor's income (Com Rept, see ¶5350) (FTC 2d/Fin ¶J-5000; et seq. USTR ¶724; et seq. TaxDesk ¶14,650 et seq.;)

New Law. The '97 Act excludes from gross income (except as provided below) any amount paid as a survivor annuity on account of the death of a public safety officer (defined below) killed in the line of duty (Code Sec. 101(h)(1) as amended by 97 Act §1528(a)); if the annuity is provided under a governmental plan which meets the requirements of Code Sec. 401(a), to the spouse (or a former spouse) of the public safety officer or to a child of that officer (Code Sec. 101(h)(1)(A)); and to the extent the annuity is attributable to the officer's service as a public safety officer. (Code Sec. 101(h)(1)(B))

The Code Sec. 101(h)(1) exclusion described above doesn't apply with respect to the death of any public safety officer if, as determined under the provisions of the Omnibus Crime Control and Safe Streets Act of '68 (Code Sec. 101(h)(2)); the death was caused by the intentional misconduct of the officer (Code Sec. 101(h)(2)(A)); the death was caused by the officer's intention to bring about the officer's death (Code Sec. 101(h)(2)(A)); the officer was voluntarily intoxicated (as defined in Sec. 1204 of the Omnibus Crime Control and Safe Streets Act of '68) at the time of death (Code Sec. 101(h)(2)(B)); or the officer was performing his or her duties in a grossly negligent manner at the time of death (Code Sec. 101(h)(2)(C)).

In addition, the Code Sec. 101 (h)(1) exclusion described above doesn't apply to any payment to an individual whose actions were a substantial contributing factor to the death of the officer. (Code Sec. 101 (h)(2)(D)).

The determination as to whether any of the circumstances listed by Code Sec. 101 (h)(2) (above) apply with respect to the death of a public safety officer is to be made by the appropriate supervising authority. (Com Rept, see ¶5350)

For purposes of the above rules, "public safety officer" has the definition given by Sec. 1204 of the Omnibus Crime Control and Safe Streets Act of '68. (Code Sec. 101 (h)(1)). Public Safety Officers include law enforcement officers, firefighters, rescue squad workers and ambulance crew members. (Com. Rept, see ¶5350)

RIA observation: Under Sec. 1204 of the Omnibus Crime Control and Safe Streets Act of '68 (42 USC 3796b), a law enforcement officer is an individual involved in crime and juvenile delinquency control or reduction, or enforcement of the law, including, but not limited to, police, corrections, probation, parole, and judicial officers.

Effective: Amounts received in tax years beginning after Dec. 31, '96, with respect to individuals dying after that date. (97 Act §1528(b))

RIA recommendation: Since the exclusion applies retroactively with respect to individuals dying after '96, any beneficiary who is receiving annuity payments that now qualify for exclusion and from which income tax is being withheld, should notify the payor to end the withholding.