This is the sentence from Article 17 of the National Master:
"All green checks will be taxed at the employee’s regular withholding tax rate."
I did not take it out of context. That one sentence stands alone as a paragraph unto itself.
That sentence was added to the Contract several years ago specifically to stop Payroll from over-taxing green checks, which was a constant problem.
I thought you would mention the IRS regulations. I'll read them later. But I don't see why a negotiated paycheck is considered a buyback or a sellback or a supplemental. It's a normal part of our wages. No different than, say, overtime pay, holiday pay, sick pay, option day pay, etc.
Now you tell me UPS Payroll also under-taxes some green checks (even if only by a little)! The plot thickens!
Ok, let me clarify. If your regular paycheck was short and a green check was issued for the shortage, it would be taxed based on your regular withholding settings. My point when I said slightly undertaxed was this: the tax on a $1249 check is different than the sum of the taxes on a $1050 check and a $199 check. If your entire check was paid as a green check, it will be the exact same taxes as if it had paid normally. When you start breaking a check up into pieces, the taxes change a little bit. Using the 2010 tax tables on
www.irs.gov for a single person paid weekly, claiming one allowance you get the following for federal tax withholding:
$1249 gross wages, $203 federal tax
$1050 gross wages, $155 federal tax
$199 gross wages, $1 federal tax
So $203 withheld if it paid as one check, $156 withheld if paid as two checks with those gross amounts. The system is reading your normal tax rates and taxing correctly based on the gross of each check. However, it comes out a little lower than it would have if it had been paid all as one check through the normal payroll.
Here's a direct quote from the IRS (the link I posted in the prior post) about vacation pay. "Vacation pay is subject to withholding as if
it were a regular wage payment. When vacation pay is in addition to regular wages for the vacation period, treat it as a supplemental wage payment." So if you take the week off, it's regular pay. If you work that week and take cash in lieu of vacation time, it's supplemental. IRS rule---I don't think a contract can override that. However, if it is in the calendar and you get your vacation check paid two weeks prior and then happen to work that week, no one is going to go back and try to get extra taxes from you.