IRS written determination 201521009

Private letter rulings and published taxpayer determination letters. Native document type is retained separately; a determination letter is not labeled a private letter ruling. These taxpayer-specific releases cannot be used or cited as precedent under 26 USC 6110(k)(3); applicability and current legal force are not independently certified. Keep repeated UILC subjects attached to one actual numbered document.

Internal Revenue Service
Department of the Treasury
Washington, DC 20224
Number: 201521009
Release Date: 5/22/2015
Index Number: 104.02-00
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Attention: --------------------
Third Party Communication: None
Date of Communication: Not Applicable
Person To Contact:
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Telephone Number:
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Refer Reply To:
CC:TEGE:EB:HW
PLR-142961-14
Date:
February 09, 2015
Legend
Taxpayer=-----------------------------------------------------------------
State=--------------
State Regulation=-----------------------------------------------------
Statute =---------------------------------------------------------------------------------
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Plans =---------------------------------------------------------------------------------
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Dear ----------------------:
This is in reply to the letter from your authorized representatives, dated November 17,
2014, requesting a ruling on behalf of Taxpayer concerning the federal income tax

PLR-142961-14
2
treatment under section 104(a)(1) of the Internal Revenue Code (the Code) of
accidental disability retirement benefits paid to former spouses of State employees
pursuant to a domestic relations order.
Taxpayer administers death, disability, and retirement benefits that are provided to
eligible State employees by Statute under Plans that are tax-qualified pension plans.
Participation in the Plans is limited to employees of State. The Statute provides
accidental disability retirement benefits to eligible participants.
Taxpayer has previously received a private letter ruling (PLR) on the tax treatment of
accidental disability retirement benefits paid under the Plans to participants who incur a
work-related injury or sickness. The PLR concluded that the accidental disability
retirement benefits are excludable under section 104(a)(1) to the extent the benefits do
not exceed a specified percentage of the participant’s average final compensation. The
PLR also held that accidental disability retirement benefits paid to a participant’s
survivor are taxable to the same extent as the benefits paid to the participant. The PLR
did not address how former spouses should be taxed with respect to accidental
disability retirement benefits received pursuant to a domestic relations order.
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State Regulation was recently amended to provide that, pursuant to an eligible domestic
relations order, all payments to the alternate payee shall be includable in the taxable
income of and taxable to the alternate payee in the same proportion as payments to the
participant are includable in the taxable income of and taxable to the participant.
Taxpayer has not implemented this change pending the issuance of this PLR.
Section 104(a)(1) of the Code and section 1.104-1(b) of the Income Tax Regulations
exclude from gross income amounts that are received by an employee under a
workmen's compensation act or under a statute in the nature of a workmen's
compensation act that provides compensation to employees for personal injuries or
sickness incurred in the course of employment. Section 1.104-1(b) of the regulations
also provides that the exclusion from income of amounts described in section 104(a)(1)
applies to compensation which is paid under a workmen’s compensation act to the
survivor or survivors of a deceased employee. The exclusion from income of amounts
described in section 104(a)(1) does not apply to a retirement pension or annuity to the
extent that it is determined by reference to the employee's age or length of service,or

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3
the employee's prior contributions, even though the employee's retirement is
occasioned by an occupational injury or sickness.
Section 104(a)(1) is strictly construed to conform to the general purview of section 61
that all income is taxable unless explicitly excluded. The accidental disability retirement
benefits are specifically paid to State employees for their work-related injury or
sickness, and not the work-related injury or sickness of the former spouses. Moreover,
section 1.104-1 of the regulations explicitly limits the exclusion from income to
employees and their survivors. Neither the Code nor the regulations provide an
exclusion from income for amounts paid to former spouses pursuant to a domestic
relations order. See, Fernandez v. Commissioner, 138 T.C. 378 (2012).
Accordingly, based on the information submitted and representations made, and
authorities cited above, we conclude that accidental disability retirement benefits paid
under the Plans to former spouses of State employees pursuant to eligible domestic
relations orders are not excludable under section 104(a)(1) of the Code from the taxable
income of the former spouses. The entire amount paid to the former spouses is
includible in taxable income.
This ruling applies to accidental disability retirement benefits paid to former spouses for
tax years beginning after December 31, 20---.
No opinion is expressed or implied concerning the federal tax consequences under any
other provision of the Code or regulations other thanthose specifically stated above.
This ruling is directed only to the Taxpayer who requested it. Section 6110(k) of the
Code provides that it may not be used or cited as precedent.
Sincerely,
/S/
Harry Beker
Chief, Health& Welfare Branch
Office of Associate Chief Counsel
(Tax Exempt and Government Entities)