June 3, 1980

You request a ruling regarding the Massachusetts income tax treatment of payments made to police and fire personnel who are absent from duty due to an injury sustained in the line of duty. These payments, which are authorized by Massachusetts General Laws Chapter 41, Section 111F, are distributed at the same time and rate as the employee's regular compensation and for all purposes are deemed to be the employee's regular compensation.

Police and fire personnel of a city, town, or fire or water district are not employees within the meaning of the Commonwealth's workmen's compensation laws and therefore do not qualify for payments under the workmen's compensation laws. (See Massachusetts General Laws Chapter 152, Section 69).

Massachusetts gross income is federal gross income with certain modifications. (General Laws Chapter 62, Section 2). Unless specifically stated in Chapter 62, an item of income which is not included in federal gross income for a taxable year is not included in Massachusetts gross income.

Section 104(a)(1) of the Internal Revenue Code states that in general, gross income does not include amounts received under workmen's compensation acts as compensation for personal injuries or sickness. Federal income tax regulations interpreting this section exclude from gross income amounts which are received by an employee under a workmen's compensation act or under a statute in the nature of a workmen's compensation act which provides for compensation to employees for personal injuries or sickness incurred in the course of employment. (Treasury Regulation 1.104-1(b)).

Moreover, federal revenue rulings concerning this issue have held that the continuation of salary to policemen and firemen, as compensation for personal injuries or sickness incurred in the course of employment, is excluded from federal gross income.

Income is subject to withholding taxes under Chapter 62B if it is taxable under Massachusetts personal income tax law and if it constitutes wages for federal withholding purposes.

Based on the foregoing it is ruled that compensation paid pursuant to Massachusetts General Laws Chapter 41, Section 111F to police, fire, and public safety personnel who are granted leave of absence because of injuries sustained in the performance of their duties, is not subject to income taxation under Chapter 62 and does not constitute wages subject to withholding under Chapter 62B.

Very truly yours,

/s/L. Joyce Hampers

L. Joyce Hampers
Commissioner of Revenue

LJH/RSF/jmcd

LR 80-32