Teachers escape new IRS tax rule implementation

However, after calls from teachers and others from numerous states who would have been affected by the ruling, the IRS issued a clarification of the rule. The agency noted that the new rules will not be applied to annualization elections for school years beginning before Jan. 1, 2008. Because Texas schools generally start in August, teachers will be under contract before that January deadline. As a result, "No teachers will be affected" this school year, said Tirloni.

The TCTA spokesperson said the January deadline "gives school boards and school districts the opportunity and the time to go back and make a blanket ruling that non-hourly employees be paid out over 12 months," removing the teacher election for annualized payment.

Because the vast majority of public school teachers throughout the state are paid under a 12-month contract, said Tirloni, if the ruling were implemented by the start of the upcoming school year this month, "it would have affected most everyone across the state who is under contract." The IRS has since decided not to require school districts and their employees to make any changes now to the way teachers or other employees elect to annualize their pay. Only school districts that offer their employees the option of how they will be paid will be affected during the 2008-09 school year. They are likely to have to make annualization part of their school's policy and not a choice for teachers.