PVW Tax & Business Law Blog

Proposed Regs Clarify 90-day Waiting Period Rule Under the ACA

pvwlaw — Thu, 09 May 2013 15:00:43 +0000

Under the ACA, group health plans may not impose waiting periods longer than 90 days. However, this provision raised several questions. Do employers have to offer coverage to part-time employees? Can employers require any conditions at all? In response to these issues, the IRS has issued new proposed regulations. Employers may rely on the new regulations until the end of 2014.

The new regulations have three key parts. First, the employer is in compliance as long as the employee can elect coverage within the 90 day waiting period. The employee does not actually have to elect coverage before that period expires. The second part addresses late and special enrollees. For these enrollees, the period before their enrollment does not count as a waiting period. Finally, employers can impose substantive eligibility conditions. These conditions do not violate the 90-day rule, unless they are designed to avoid compliance with the 90-day rule. So, for example, an employer can require that an employee be in an eligible job classification. Or, the employer could require that an employee achieve a certain licensure requirement.

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New Guidance on “Minimum Value” for Employer Health Plans

pvwlaw — Wed, 08 May 2013 15:00:04 +0000

The ACA may assess penalties on certain employers if their health plans do not provide “minimum value.” Generally, minimum value means that the plan’s share of the total allowed costs of benefits must be at least 60% of the plan’s cost. The IRS has released new regulations that further explain this rule.

Under the rule, employer HSA contributions are counted as part of the plan’s share of costs. HRA contributions may also be counted under certain circumstances. But, wellness programs will not be counted, unless they are related to tobacco cessation. The rules also lay out safe harbors for plans and methods for calculating whether a plan offers minimum value.

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New Guidance Released on Required Summary of Benefits and Coverage

pvwlaw — Tue, 07 May 2013 15:39:06 +0000

Employers will need to change the summary of benefits and coverage (SBC) they provide to their employees to reflect changes in healthcare law. The Department of Labor has recently released a template SBC for employers’ use. Key changes to the SBC include new required language about whether the plan provides minimum essential coverage. Employers must also indicate whether the plan meets actuarial value requirements.

The Department of Labor has also taken measures to make transition easier for employers. First, the Department has provided sample language for required statements. It has also indicated that employers may be able to use old SBCs with a cover letter including new required language. It has also stated that it will not enforce the new requirements in other situations. Employers should use this new guidance to review their SBCs and determine whether updates are needed.

This particular release can be found at http://www.dol.gov/ebsa/faqs/faq-aca14.html. The entire set of EBSA’s releases on ACA implementation can be found at http://www.dol.gov/ebsa/faqs/main.html.

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IRS Tax Tip 2013-62: Tips to Start Planning Next Year’s Tax Return

pvwlaw — Wed, 24 Apr 2013 15:43:04 +0000

Here’s some great information from the IRS of things to do now to start planning for next year:

IRS Tax Tip 2013-62: Tips to Start Planning Next Year’s Tax Return.

Bartering: You Scratch My Back, I’ll Report It on My Taxes

pvwlaw — Wed, 17 Apr 2013 15:34:39 +0000

If you are a professional or business owner, you have probably bartered with someone this year. Is that barter taxable? Suppose you are a consultant, and your neighbor is an accountant. She agrees to prepare your tax return, and you agree to give her recommendations on her marketing strategy. Even if no money changes hands, you still need to report this exchange on your tax return. The amount you need to report is the fair market value of the services you received.

Usually, the fair market value of services you have received in a barter like this is the amount the other person would ordinarily charge. You can also agree to the value of the services in advance. In some situations, the tax rules on bartering are more complex. For example, barter clubs are required to withhold tax on any credit units you receive when they are credited to you. You should also keep in mind that, if the barter was part of a trade or business, you may be able to deduct costs you incurred to perform the bartering.

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Self-employment Taxes and Deductions

pvwlaw — Tue, 16 Apr 2013 14:09:37 +0000

If you are self-employed, you should keep in mind several major potential tax issues this year. First, be aware of whether you are self-employed. If you work out of your home part-time in addition to your regular job, you are likely subject to self-employment taxes. If you are self-employed, you will need to file some additional forms with your 1040. These include Schedule C or Schedule C-EZ, and Schedule SE. You will use Schedule SE to figure out what self-employment tax you owe in addition to your regular income tax.

Self-employed taxpayers can take some additional deductions. Most of the costs you paid to run your trade or business are deductible. The deductibility standard is one of whether the expenses are “ordinary and necessary” to operate your business. If an expense is common or accepted in the trade, it is ordinary. If it is helpful and appropriate for your trade or business, it is necessary. You may have to capitalize some costs, rather than deducting them in full. That means you will deduct part of the expense each year for multiple years. Self-employed taxpayers should generally make estimated tax payments. If you are required to do so and do not make the payments, you may be subject to penalties.

There are a variety of tax deferred retirement plan options available to the self-employed taxpayer. Contributions to such plans can substantially reduce current income taxes.

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Commuting and Overtime Pay

pvwlaw — Mon, 15 Apr 2013 14:44:44 +0000

If you have employees with remote workplace access and long commutes, you may be at risk for a wage headache. Generally, you do not have to pay your employees for normal travel from home to work. But, if your employees work during their commute, you may have to pay them for that time. If a telecommuting employee comes into the office for a meeting, you may owe them pay for their commute. If you knowingly let employees work off-the-clock from home, you might also be liable.

Limit your risk by including a policy in your handbook prohibiting unauthorized work; however, a handbook policy by itself will not protect your business. To reduce your risk further, regularly remind employees of the policy. You should also discipline employees who violate an unauthorized work policy. Increased monitoring is a common form of discipline for unauthorized work issues. In more extreme cases, you might have to cut off e-mail or remote access privileges. It may even be necessary to confiscate employer-owned electronics. If you have telecommuting employees who come to the office for required meetings, you can take extra steps. The easiest way to handle this is scheduling the meeting for the beginning or end of the day.

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New Required FMLA Poster

pvwlaw — Mon, 25 Mar 2013 18:22:34 +0000

Certain employers need to immediately replace their Family and Medical Leave Act poster with a recently released revised new one. The FMLA poster is generally required to be posted by employers with 50 or more employees and should be displayed in a conspicuous place where employees and applicants can see it. The revised poster implements changes made by recently released FMLA regulations.

The new poster may be found here: FMLA Poster

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Common FMLA Violations Highlighted in Recent Survey

pvwlaw — Mon, 18 Feb 2013 15:40:44 +0000

As part of the Family and Medical Leave Act’s 20^th anniversary, the U.S. Department of Labor recently released the results of a survey on its use and impact. The results show the generally positive impact the FMLA has had on workers. The survey also highlights several aspects where the FMLA is being misapplied by employers. Among them include:

No Fault Attendance Policies. Many employers reported still using no-fault attendance policies – policies that treat all employee absences the same regardless of the reason – without providing exceptions for FMLA leave. FMLA-related absences should be excused and may not be used against employees in performance evaluations.

Asking Employees on Leave to Perform Work. The survey revealed that when an employee is on leave, the most common method for covering the work is to assign it to other employees. However, while employees are on longer leaves, 70.5% of employees were asked to perform some work while on leave. This practice is likely in violation of FMLA’s prohibition from interfering with employees while on leave.

Pressuring Employees to Return. Under the FMLA, employers are not allowed to pressure employees to return to work. However, the survey shows that 12.4% of eligible employees reported such pressure as a reason why they returned.

The full report may be viewed at Family and Medical Leave in 2012.

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Cybersecurity Policies Should Include Associate Agreements

pvwlaw — Tue, 12 Feb 2013 16:55:12 +0000

The dizzying pace of recent hacking attempts has prompted national attention. President Obama plans to enact rules allowing the military to respond to national cybersecurity threats. These rules come in the wake of a string of attacks on governments and private firms. Private firms are at high risk, especially when they rely on cloud computing and mobile devices. Their limited ability to address breaches makes this risk worse. Companies should set up procedures to prevent and deal with breaches. They should also consider cybersecurity insurance.

In prior years, many companies ignored the threat of a breach because of low risk in their field. However, hackers are now targeting new types of businesses. Thus, businesses of all types need to address these issues. Even companies with strong cybersecurity policies in place may be overlooking new trends. For example, experts have noted an increase in the number of attacks on consultants, accountants, and law firms. Companies should protect themselves against the risk of indirect attack by requiring that these firms follow certain cybersecurity policies.

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