Posts

IRS Issues a Proposed Regulation Regarding Employer-Sponsored Healthcare Plans

/in , /by

The IRS recently issued a proposed rule entitled, “Minimum Value of Eligible Employer-Sponsored Plans and Other Rules Regarding the Health Insurance Premium Tax Credit” (see, 26 CFR Part 1) regarding the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010, and related rules and laws (generally, “PPACA”). In the proposed regulation, the IRS has ruled that employer-sponsored healthcare plans will be unable to include various wellness programs in order to meet minimum value (MV) coverage requirements under the PPACA and related rules. In general, large employers (typically 50 full-time employees or more) who do not meet certain minimum coverage standards under the PPACA must pay an excise tax.

Many employers sought to include wellness programs in their plans in order to reduce health care coverage costs. In general, wellness programs are often designed to reduce potential health problems for employees through various means. Certain wellness programs may even require employees to meet an established health standard.

The article will give a basic summary of a proposed rule and the MV calculation. It is not intended to constitute tax or legal advice. The new rules under the PPACA will involve many complex tax and legal issues, so you are advised to seek an experienced attorney if you have questions in these areas. Sherayzen Law Office, PLLC can assist you in all of your tax, business-planning and legal needs, and help you avoid making costly mistakes.

MV Determinations under the Proposed Regulation

In making its proposed rule, the IRS noted:

“Commentators offered differing opinions about how nondiscriminatory wellness program incentives that may affect an employee’s cost sharing should be taken into account for purposes of the MV calculation. Some commentators noted that the rules governing wellness incentives require that they be available to all similarly situated individuals. These commentators suggested that because eligible individuals have the opportunity to reduce their cost-sharing if they choose, a plan’s share of costs should be based on the costs paid by individuals who satisfy the terms of the wellness program. Other commentators expressed concern that, despite the safeguards of the regulations governing wellness incentives, certain individuals inevitably will face barriers to participation and fail to qualify for rewards. These commentators suggested that a plan’s share of costs should be determined without assuming that individuals would qualify for the reduced cost-sharing available under a wellness program.”

The IRS stated that there are several methods for determining MV (under Notice 2012-31 and 45 CFR 156.145(a)): “the MV Calculator, a safe harbor, actuarial certification, and, for small group market plans, a metal level.” According to the proposed rule, employers may determine whether a certain plan provides MV by utilizing an HHS and IRS MV calculator, unless a safe harbor exists. Certain safe harbor plans will be specified in future guidance.

Under 45 CFR 156.145(a) and the proposed rule, “[P]lans with nonstandard features that cannot determine MV using the MV Calculator or a safe harbor” must use the actuarial certification method. Further, it is required that the actuary performing the MV calculation must be a member of the American Academy of Actuaries and perform the analysis in accordance with generally accepted actuarial principles and methodologies, and its related standards.

Exception to the Wellness Program Rule

The IRS proposed rule does provide one exception to the wellness program MV calculations for certain anti-tobacco related programs. Under the proposed regulation, “…[F]or nondiscriminatory wellness programs designed to prevent or reduce tobacco use, MV may be calculated assuming that every eligible individual satisfies the terms of the program relating to prevention or reduction of tobacco use.”

2012 OVDP and Domestic Voluntary Disclosure

/in , /by

Sometimes a taxpayer who enters 2012 OVDP also has undisclosed domestic tax liability and the question arises with respect to how to handle this additional liability.

As was the case with the 2009 OVDP and the 2011 OVDI, the 2012 OVDP is available to taxpayers who have both offshore and domestic issues to disclose. The Voluntary Disclosure Practice requires an accurate and complete disclosure. Consequently, if there are undisclosed income tax liabilities from domestic sources in addition to those related to offshore accounts and assets, they must also be disclosed in the 2012 OVDP.

Therefore, when applying for the 2012 OVDP, the taxpayer should indicate on the Offshore Voluntary Disclosure Letter that he is also making a domestic voluntary disclosure.

However, these domestic tax liabilities are not going to be covered by the same IRS agent who will be in charge of your 2012 OVDP. Rather, such voluntary disclosures will go through the traditional IRS voluntary disclosure program and another agent will be assigned to the case to deal specifically with domestic issues. This further means that there is a separate application process for acceptance into the traditional IRS voluntary disclosure program in addition to applying to the 2012 OVDP.

Contact Sherayzen Law Office for Legal Help with Domestic and Offshore Voluntary Disclosures

If you have undisclosed offshore accounts and foreign income in addition to undisclosed U.S.-source income, contact Sherayzen Law Office for help. Our experienced international tax firm will thoroughly review your case, determine your options with respect to foreign and domestic voluntary disclosures, prepare all of the necessary legal documents and tax forms, and vigorously represent your interests during your negotiations with the IRS.

September 17, 2012 Deadline for Estimated Tax Payments and Certain Business Entity Filings

/in , /by

This year, the usual September deadline for estimated tax payments for the the third-quarter (June 1-August 31) of 2012 moves to September 17 due to the fact that the usual date for the estimated tax payments (September 15) falls on Saturday. This requirements applies individuals who are either not paying their income tax through withholding or will not pay enough income tax through withholding.

September 17 deadline also applies to the 2012 third-quarter estimated tax payments of a corporation.

Furthermore, if a C-Corporation, S-Corporation or a Partnership obtained an automatic six-month (in case of a corporation) or an automatic five-month (in case of a partnership) extension for filing of their income tax returns (Forms 1120, 1120-S and 1065 (with K-1)), these entities must file these extended income tax returns by September 17, 2012.

It is important no note that the September 17 deadline applies only to taxpayers whose tax year is the calendar year. If a taxpayer uses a fiscal year as its tax year, then different dates for the deadlines may apply.

If you have any questions about how to file these forms, please, contact Sherayzen Law Office for help.

Social Security Wage Base Increase in Tax Year 2012

/in , /by

In November of 2011, the Social Security Administration announced that the wage base (also known as “contribution and benefit base”) used for computing the social security tax is increased to $110,100 in the tax year 2012.  The wage base is used to compute the maximum amount of income subject to the Social Security taxes.

This is the first increase since 2009.  From 2009 through 2011, the wage base was $106,800.

Similarly, the earnings needed to earn one Social Security credit also slightly increased to $1,130 in 2012 (in 2011, it was $1,120).

IRS Extends the 2011 Tax Return Filing Deadline to April 17, 2012

/in , /by

On January 4, 2012, the Internal Revenue Service announced that the taxpayers will have until  April 17, 2012 (Tuesday) to file their 2011 tax returns and pay any tax due.  This is because April 15, 2012, falls on a Sunday, and Emancipation Day, a holiday observed in the District of Columbia, falls this year on Monday, April 16, 2012.  Since, according to federal law, District of Columbia holidays impact tax deadlines in the same way that federal holidays do, all taxpayers will have two extra days this year to file their 2011 tax returns.  Note, however, that taxpayers requesting an extension will have until October 15, 2012, to file their 2011 tax returns; there is no change in the filing date here.

The IRS will begin accepting e-file and Free File returns on January 17, 2012. Additional details about e-file and Free File will be announced later this month.