Full Steam Ahead: IRS Moves Forward to Collect Affordable Care Act Penalties

As efforts to reform the Affordable Care Act (the “ACA”) stall in Congress, a recent government report suggests that the Internal Revenue Service is preparing to identify and collect employer shared responsibility penalties.

The Treasury Inspector General for Tax Administration issued the report, Affordable Care Act: Assessment of Efforts to Implement the Employer Shared Responsibility Provision, two weeks after House leadership retracted a bid to repeal and replace the ACA.

The report indicates that the IRS processed over 400,000 Forms 1094-C (Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns) and nearly 110 million Forms 1095-C (Employer-Provided Health Insurance Offer and Coverage) as of last October.  Read More ›

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IRS Warns Employers of Dangerous Email Scam

The IRS has recently warned employers of another scam targeting employee information. The IRS has learned that scammers are posing as internal executives and are requesting Forms W-2 and Social Security Numbers from payroll or human resources departments.  The scammers may even initiate contact with a “Hi, are you in today” message before requesting the Forms W-2 and Social Security numbers.  It appears that scammers are using this information to file fraudulent tax returns and claim tax refunds in the names of the victims.

The target for the most recent scam is employers, including tax exempt entities, universities and schools, government and private sector businesses. Read More ›

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Did Hardship Distributions Just Get Easier?

In a previous blog, we addressed an issue of Employee Plans News in which the IRS took the position that 401(k) plan administrators must maintain hardship distribution records and should not rely on electronic participant self-certification for hardship distributions.

On February 23, 2017, the IRS issued a memorandum to its Employee Plans Examiners that sets forth substantiation guidelines for the examination of 401(k) hardship distributions.  The memorandum provides that a plan administrator may maintain either of the following to establish a participant’s need for a hardship distribution: (1) source documents that support the need for the hardship distribution or (2) a summary of the information contained in the source documents. Read More ›

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Trumping the Affordable Care Act? Not So Fast – Impact of Executive Order on Employers Unclear

On January 20, 2017, President Trump signed an Executive Order (“Minimizing the Economic Burden of the Patient Protection and Affordable Care Act Pending Repeal,” hereinafter referred to as the “Order”) relating to the future of the Affordable Care Act (“ACA”).  The stated goal is to direct the agencies (IRS, HHS, and DOL) to waive or defer provisions of the ACA that would “impose a fiscal burden on any State or a cost, fee, tax, penalty, or regulatory burden on individuals, families, healthcare providers, health insurers, patients, recipients of healthcare services, purchasers of health insurance, or makers of medical devices, products or medications.”  Notoriously absent from this list is any mention of employers or plans.  Read More ›

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IRS Issues First Required Amendments List for Qualified Plans

In a previous blog, we discussed the IRS’ elimination of its five year staggered determination letter cycle for individually designed plans.  The IRS recently provided guidance to help sponsors of individually designed plans keep their plans in compliance with applicable law.  Notice 2016-80 contains the first Required Amendments List (the “RA List”) for individually designed qualified retirement plans.  In general, the RA List is a list of changes in the plan qualification requirements for changes that became effective in 2016.  The list is divided into two parts—(A) changes in qualification requirements that would generally require an amendment to most plans  or to most plans of the type affected by the change and (B) changes that the IRS and Treasury anticipate will not require an amendment in most plans, but might require an amendment due to an unusual provision in a particular plan.  Read More ›

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Certain Information Statements for ISOs and ESPPs Due by January 31, 2017

As reported in Part 1 of our 2016 End of Year Plan Sponsor “To Do” List, Section 6039 of the Code requires employers to provide a written information statement to each employee or former employee and file information returns with the IRS regarding: (1) the transfer of stock pursuant to the exercise of an Incentive Stock Option (“ISO”); and (2) the first transfer by the employee or former employee of stock purchased at a discount under an Employee Stock Purchase Plan (“ESPP”).  For ISO exercises and ESPP transfers occurring in 2016, the Section 6039 employee information statement requirement is satisfied by providing Form 3921 (for ISOs) and Form 3922 (for ESPPs) to employees no later than January 31, 2017Read More ›

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A Little Breathing Room: IRS Extends ACA Reporting Deadline and Good Faith Penalty Relief

The IRS delivered welcome news to employers gearing up to meet the Affordable Care Act’s (“ACA”) information reporting deadlines for the 2016 calendar year. In Notice 2016-70, the IRS extended the deadline to furnish Forms 1095-B and 1095-C to employees.  The new deadlines are provided below.

  Old Distribution Deadline New Distribution Deadline
Form 1095-B (to employees) January 31, 2017 March 2, 2017
Form 1095-C (to employees) January 31, 2017 March 2, 2017

Importantly, the Notice does not extend the deadline for filing Forms with the IRS.  The deadline to file with the IRS remains February 28, 2016 (for paper filings) and March 31, 2017 (for electronic filings). Read More ›

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IRS Makes Late Rollovers Easier

Generally, distributions from a qualified retirement plan that are eligible for rollover must be rolled over within 60 days of the date on which the distribution occurs.  If a taxpayer did not complete the rollover within 60 days, the taxpayer previously had to request a private letter ruling from the IRS to receive additional time to complete the rollover.  In Revenue Procedure 2016-47, the IRS makes it easier for a taxpayer to rollover a qualified retirement plan distribution if the taxpayer misses the 60-day rollover window.

Under the new guidance, instead of applying for a private letter ruling, a taxpayer may complete a self-certification and provide it to the plan administrator or IRA trustee if the rollover was not completed due to one of reasons listed in the guidance.  Read More ›

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IRS Finalizes Regulations Simplifying 83(b) Filing Requirements

On July 23rd of last year, I blogged on a set of proposed regulations eliminating the requirement that a taxpayer attach a copy of his or her Section 83(b) election to their individual tax return.  This July, the IRS made the proposed rule final and the final regulations eliminate the requirement that a taxpayer attach a copy of their Section 83(b) election to their tax return for the year in which the restricted property was transferred. This change should be welcomed by taxpayers who file electronic federal tax returns because commercial software does not consistently allow taxpayers to attach a copy of the Section 83(b) election to an electronically filed return. Read More ›

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You Received a Health Insurance Marketplace Notice from HHS – Now What?

Take a deep breath.  The HHS Health Insurance Marketplace Notice (the “Notice”) may seem to be a nuisance, but it does not necessarily mean that you will be subject to employer shared responsibility penalties.

First, the IRS, not HHS, assesses employer shared responsibility penalties, and the IRS does so only after it provides employers with:  (1) a “certification” that one or more employees received a premium tax credit; and (2) an opportunity to respond to the certification.

Second, an individual may have incorrectly reported on his application that he was eligible for a premium tax credit (or cost-sharing reductions) because:  (1) he did not receive an offer of health coverage from you; (2) he did receive an offer of health coverage from you, but it was unaffordable or it failed to provide minimum value, or (3) he was in a waiting period and was unable to enroll in health care coverage.  Read More ›

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