Benefit that I see as part of salary - taken away

[bag3]

Pennsylvania is where I'm located.
I work for an organization that offers childcare services/teacher training/educational reform/information.
When I started they told me my children would get free childcare.
One of the reasons I've stayed on at a lower salary than I might find elsewhere is knowing that it'd be a huge savings to have it free. Last year, 2 months before my first child was born they told me that the board never knew of the benefit (that many of the other employees in Executive staff had/were receiving) and after reviewing it the board decided that I(and others in executive staff) would not get it free but pay a reduced fee and taxes on the benefit. I think I've figured out that it comes to about 3500 a year in total which is still a great price but not free as others received and I feel should still be extended to me.
So out of curiosity I am wondering what my legal rights are to getting what was offered originally. I never received it in writing unfortunately but they all have admitted/know it was an offering.

My additional question is, I know they must report to the IRS about the others having received the benefit and that the others owe back taxes on it.

I also know they have chosen not to report it, especially because their children (grandchildren) have received the free childcare and don't want their children to have to pay the back taxes.

What does the law say about them having to pay the back taxes, what would the repercussions be if it was found out that they didn't/hadn't reported it to the IRS.
What do the others actually owe on that benefit or how would I calculate their savings, knowing that the benefit was approximately a $10,000(plus taxes on it) savings.
Or would they not owe anything and it'd all be subject to our organization to pay for the mistake of not charging them?

thank you so much for your help.
Sincerely,
B

 

[pattytx]

It's not clear if the benefit actually must be included in your earnings/W-2. "No additional cost services" can be excluded. Don't know if this applies to your situation or not. Discussion starts on page 16 here:
http://www.irs.gov/pub/irs-pdf/p15b.pdf

In any case, though, unless you had an enforceable employment contract requiring the service at a free or reduced-cost basis, the employer is free to change or rescind the program at any time.

 

[bag3]

thanks Patty
I suppose I recognized that since there was no written contract they weren't obligated. I would still LOVE to know what the legal status is about them not reporting the others that received the benefit to the IRS. Since I know they must report mine, and I heard that they are supposed to report it to the IRS about previous recipients but have decided not to.
Mainly I want to know if they are breaking the law by not doing so and who would be liable if it should ever be found out. Would I since I know they are not? etc.

 

[pattytx]

So, how do you figure that the difference between what you were paying and what the service would cost a person "off the street" is reportable income to you?

DOES it cost the facility more to take care of your child than if your child weren't there? Are they adding staff? Another lunch, more milk and cookies?

Seriously, I'm asking. "no additional cost" services are NOT reportable.

 

[bag3]

I have yet to receive it in writing for how its figured but what I've been told is
the way they factor the cost is by number of children could be served in the building. They have ratios for number of children per teacher and my daughter is taking a space that another could be filling (there are wait lists)
They do also provide snacks and breakfast.
So they charge me $50 a week, and cover the taxes on the first $5000.

I think I figured its about $3000 a year for me in taxes and weekly costs...which obviously is cheap childcare but when they offered it as a free benefit and others before me received it, its a bit annoying. I'm also not sure what it raises my "salary" to. Its added as "income" to my paycheck.

I really want to know what they are legally bound to do as far as reporting others who received the benefit for free. I'd heard they are supposed to report it to the IRS and the others who got it would owe back taxes, but they aren't reporting it since it was their children (grandchildren) who got the benefit and they don't want their children to have to pay...meanwhile not raising my salary to cover what they'd offered as a benefit.