Sep
21
2016

Register for two upcoming ACA webinars

1.  Register for IRS webinar: Determining full-time employee status under the Affordable Care Act

September 22

2 p.m. ET

Register for this event.

Learn about:

  • Determining full-time employees for purposes of the Employer Shared Responsibility Provisions
  • How to determine full-time status for employees who are seasonal, part-time or work non-traditional schedules
  • Using the look-back method and the monthly measurement method
  • Initial measurement, stability, standard measurement and administrative periods

 2.  Register for IRS webinar: Overview of Requirements for Charitable Hospitals Under ACA Section 501(r)

September 29

2 p.m. ET

Register for this event.

The Affordable Care Act added additional requirements that affect tax exempt hospitals.

Learn about:

  • Community Benefit Standard for 501(c)(3) Hospitals
  • Community Health Needs Assessment and Implementation Strategy
  • Financial Assistance and Emergency Medical Care Policy
  • Limitation on Charge Requirements
  • Billing & Collection Requirements
Written by in: Events
Aug
26
2016

Tax Exempt Government Entities

The IRS is seeking applicants for vacancies on the Advisory Committee on Tax Exempt and Government Entities (ACT). The committee provides advice and public input on the various areas of tax administration served by the Tax Exempt and Government Entities Division (TE/GE). Applications will be accepted through Sept. 26.

Written by in: General
Aug
22
2016

Don’t forget to register for the free webinar about the IRS Tax Calendar for Businesses and Self-Employed

When: August 24, 2016; 2 p.m. (Eastern)

How: Register for this event. You will use the same link to attend the event.

Learn about:

  • The online tax calendar
  • The Desktop Calendar Tool (IRS CalendarConnector)
  • The Mobile Calendar Tool (IRS CalendarConnector)
  • How to Subscribe/Download into Your Calendar
  • How to Obtain Calendar Reminders (RSS Feeds)

Note, we will not be offering Continuing Education Credit for this event.

You may login and download the presentation slides beginning 15 minutes before the program.

Resource:

IRS Tax Calendar for Businesses and Self-Employed

View due dates and actions for each month. You can see all events or filter them by monthly depositor, semiweekly depositor, excise, or general event types. Visit this page on your Smartphone or tablet, so you can view the Online Calendar on your mobile device.

Written by in: Events
Aug
22
2016

Review of Income Tax Deduction Rules for Charitable Gifts

People.com is reporting that Amber Heard, who received a $7 million settlement in her divorce from Johnny Depp this week, is donating the entire $7 million settlement to charities with “a particular focus to stop violence against women” as well as the Children’s Hospital of Los Angeles.

In light of this newsworthy charitable donation, we thought now would be a good time to remind everyone of some of the basic income tax deductions available for gifts to charities.

Section 170 of the Internal Revenue Code (the “Code”) governs income tax deductions for charitable contributions. In the case of an individual making a cash gift to a Section 501(c)(3) organization classified as a “public charity” (such as churches, schools, hospitals, and governmental units), the gift is deductible for federal income tax purposes so long as the aggregate gifts do not exceed fifty percent (50%) of the taxpayer’s adjusted gross income (“AGI”) for the taxable year.

In the case of a contribution of capital gain property to a public charity, a taxpayer can only deduct such contributions up to thirty percent (30%) of the taxpayer’s AGI for the taxable year. The amount of capital gain property contributed is taken into account after all other charitable contributions to public charities. Therefore, if the taxpayer contributes 30% of his or her AGI in non-capital gain assets and 30% of his or her AGI in capital gain assets, the non-capital gain assets will be applied first, then 20% of the capital gain property will be allowed, with the remaining 10% exceeding the taxpayer’s total 50% limit. Any excess contributions will be treated as a contribution in each of the five succeeding taxable years.

If a taxpayer contributes cash to a Section 501(c)(3) organization that is not classified as a public charity, such as to a private non-operating foundation, then the deductions for such contributions may not exceed the lesser of thirty percent (30%) of the taxpayer’s AGI or the excess of fifty percent (50%) of the taxpayer’s AGI for the taxable year over the amount of contributions of cash made to public charities.

If a taxpayer contributes capital gain property to a Section 501(c)(3) organization that is not classified as a public charity, then the amount of the contributions allowable for deduction purposes shall not exceed the lesser of twenty percent (20%) of the taxpayer’s AGI for the taxable year, or “the excess of thirty percent (30%) of the taxpayer’s AGI for the taxable year over the amount of the contributions of capital gain property” to public charities. Contributions of capital gain property to which this twenty percent (20%) limitation apply shall be taken into account after all other charitable contributions. Any excess contributions will be treated as a charitable contribution of capital gain property in each of the five succeeding taxable years.

Aug
09
2016

EO Update: e-News for Charities & Nonprofits

Watch this free webinar about the IRS Tax Calendar for Businesses and Self-Employed

When: August 24, 2016; 2 p.m. (EDT)

How: Register for this event. You will use the same link to attend the event.

Learn about tracking federal tax due dates on your computer or mobile device 

  • The online Tax Calendar
  • The Desktop Calendar Tool (IRS CalendarConnector)
  • The Mobile Calendar Tool (IRS CalendarConnector)
  • How to Subscribe/Download into Your Calendar
  • How to Obtain Calendar Reminders (RSS Feeds)

Please note that we won’t be offering Continuing Education Credit for this event.

Resource:

IRS Tax Calendar for Businesses and Self-Employed

View due dates and actions for each month. You can see all events or filter them by monthly depositor, semiweekly depositor, excise, or general event types. Visit this page on your Smartphone or tablet, so you can view the Online Calendar on your mobile device.

Written by in: General
Jul
14
2016

Cautionary Observations from the Proposed 457 Regulations

After more than nine years of deliberations, the IRS has finally released proposed regulations governing all types of deferred compensation plans maintained by non-profit organizations and governmental entities.

In issuing these regulations, the IRS reiterates its long-standing theme that these regulations are intended to work in harmony with, and be supplemental to, the 409A regulations. However, the IRS provides little guidance on how these regulations interact with each other.  The following discussion focuses on 3 key aspects of the new guidance: the severance exemption, the substantial risk of forfeiture requirement, and leave programs.

As with the 409A regulations, the 457 regulations exempt severance pay plans from the rules and taxes applicable to deferred compensation. The 457 regulations apply similar criteria with one notable exception: they do not apply the 401(a)(17) compensation limit in determining the “two times” dollar cap on amounts that can be paid pursuant to an exempt severance pay plan.  Practitioners in the for-profit arena currently believe they enjoy wide latitude in restructuring severance arrangements that are exempt from 409A.  It would not appear that practitioners will have that same latitude for severance arrangements that are exempt from 457, unless the arrangements also satisfy the severance pay exemption under 409A, particularly with regard to the dollar cap limit.

Historically, the proposed 457 rules afforded greater flexibility with respect to what is considered a substantial risk of forfeiture, particularly in the context of non-competes and rolling risks of forfeiture. The regulations restrict, but do not eliminate this flexibility by establishing requirements that must be satisfied for non-competes and rolling risks of forfeitures to create a substantial risk of forfeiture.  Despite the fact that there is wide latitude in restructuring short-term deferral arrangements in the for-profit arena, these restrictions will limit the ability to  restructure short-term deferral arrangements when using non-competes or rolling risks of forfeiture without taking into consideration whether any restructuring would constitute a separate transgression of the 409A rules.

Finally, the proposed 457 regulations raise the possibility that many leave programs, especially those maintained by governmental entities, could be suspect as deferred compensation arrangements. A paid leave program may be considered suspect if it allows large amounts of leave to be accumulated over the course of many years.  In our experience, this is not an uncommon design for many governmental and educational leave programs.  If the IRS does not retreat from this position, many such employers may need to reassess the structure of their leave programs.  The position taken in the proposed 457 rules might also give for-profit employers some pause as to whether the IRS might take a view that overly liberal leave programs may be subject to 409A requirements as deferred compensation.

Notwithstanding the long-awaited guidance afforded by these regulations, practitioners and plan sponsors would have welcomed greater guidance with respect to the interaction of the 409A and 457 rules. For instance, the rules could have better addressed where and how the 409A rules claw back some of the greater flexibility historically provided by the proposed 457 rules.  In the absence of guidance, some of that greater flexibility may turn out to be illusory – and the IRS will have failed to adequately highlight the pitfalls that await those that rely upon the greater flexibility afforded 457 arrangements.  Such failure to adequately address the interaction of the regulations raises some troubling questions and possible traps for the unwary.

Jul
11
2016

EO Update: e-News for Charities & Nonprofits

  1. New requirement for organizations intending to operate under Section 501(c)(4): Submit Form 8976
    New legislation enacted at the end of 2015 added section 506 to the Internal Revenue Code. Section 506 requires an organization to notify the IRS of its intent to operate as a section 501(c)(4) organization. The IRS has developed a new form – Form 8976 – that organizations should use to provide this notification. The Form 8976 may only be submitted electronically. The Form 8976 – Electronic Registration System allows organizations to complete the notification process, keeps account information current and enables organizations to receive secure, digital communications from the IRS. A user fee of $50 must be submitted to Pay.gov to complete your organization’s notification. You do not need special software to submit a notification. Learn more.
  2. User fee decreased for Form 1023-EZ
    On July 1 the user fee to process the Form 1023-EZ, Streamlined Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code, was decreased from $400 to $275 (see Rev. Proc. 2016-32). You must submit the fee through www.pay.gov when you file a 1023-EZ application. You can pay the fee directly from your bank account or by credit/debit card.
  3. EP and EO participating in 2016 IRS Nationwide Tax Forums
    Employee Plans and Exempt Organizations will participate in the 2016 IRS Nationwide Tax Forums in five cities starting in July. The forums offer three days of seminars and workshops featuring speakers from both the IRS and tax practitioner organizations. In addition to getting the latest tax information, tax professionals can earn continuing education credits for their attendance.

    Read article.

Written by in: General
Jun
24
2016

Deadline Reminder for Employers and Providers: Electronically File Information Returns with IRS by June 30

Self-insured employers, applicable large employers and health coverage providers are reminded that the June 30 deadline to electronically file information returns with the IRS is approaching.

The deadline to provide information returns to employees or responsible individuals was March 31. While the deadline to file paper information returns with the IRS was May 31, electronic filers have more time. This chart provides a reminder about the upcoming filing requirement and the June 30, 2016, deadline.

Action

Electronic Filing Due Dates in 2016 for…

Applicable Large Employers – Including Those That Are Self-Insured

Self-insured Employers That Are Not Applicable Large Employers

Coverage Providers –       Other Than Self-Insured Applicable Large Employers*

Electronically File 1094-B and 1095-B with the IRS

Not Applicable **

June 30*

June 30*

Electronically File 1094-C and 1095-C with the IRS

June 30* Not Applicable

Not Applicable

*If you file 250 or more Forms 1095-B or Forms 1095-C, you must electronically file them with the IRS. Electronically filing ACA information returns requires an application process separate from other electronic filing systems. Additional information about electronic filing of ACA Information Returns is on the Affordable Care Act Information Reporting (AIR) Program page on IRS.gov and in Publications 5164 and 5165.

**Applicable large employers that provide employer-sponsored self-insured health coverage to non-employees may use either Forms 1095-B or Form 1095-C to report coverage for those individuals and other family members.

This chart applies only for reporting in 2016 for coverage in 2015. In future years, the due dates will be different; see IRS Notice 2016-04 for information about these dates.

Written by in: Employee Benefits
Jun
16
2016

Advisory Committee on Tax Exempt and Government Entities (ACT) Presents its Report of Recommendations on June 8, 2016

On June 8, 2016, the 21 members of the ACT presented its 15th report of recommendations to the IRS in a public meeting in Washington, DC.

The ACT report addressed five issues:

  • Employee Plans: Analysis and Recommendations Regarding Changes to the Determination Letter Program
  • Exempt Organizations: Stewards of the Public Trust: Long-Range Planning for the Future of the IRS and the Exempt Community
  • Federal, State and Local Governments: Revised FSLG Trainings and Communicating with Small Local Governments
  • Indian Tribal Governments: Survey of Tribes Regarding IRS Effectiveness with Current Topics of Concerns and Recommendations
  • Tax Exempt Bonds: Recommendations for Continuous Improvement and Enhancing Resources in the Tax Exempt Bond Market

ACT members provide observations about current or proposed IRS policies, programs and procedures, and suggest improvements. The members are selected by the Commissioner of the IRS and then appointed by the Department of the Treasury. The IRS seeks a diverse group of members representing a broad spectrum of people experienced in employee plans; exempt organizations; tax-exempt bonds; federal, state, local and Indian tribal governments.

Written by in: Governance
Jun
15
2016

Changes to the Fair Labor Standards Act May Affect Employee Benefits

The United States Department of Labor recently issued a Final Rule updating the Fair Labor Standards Act (the “FLSA”) that includes an increase in the standard salary level and that will take effect December 1, 2016. Under the FLSA, certain employees may be exempted from overtime pay for working more than 40 hours per week if their job duties primarily involve executive, administrative, or professional duties and their salary is equal to or greater than the required salary levels.

Among other changes made by the Final Rule, the threshold salary levels have been dramatically increased and will continue to be automatically updated every three years in the future. Prior to the Final Rule, the standard salary level was $455/week or $23,660/year.  As of December 1, 2016, the standard salary level will be $913/week or $47,476/year.  Highly compensated employees are subject to a less stringent job duties test than lower compensated employees; the salary threshold for highly compensated employees was $100,000 and will increase to $134,004.

The Final Rule also revises prior FLSA regulations by permitting up to ten percent (10%) of the salary thresholds to be met with nondiscretionary bonuses and incentive compensation (including commissions).

Employers may face many other decisions in addition to whether to increase pay or limit overtime hours as a result of the Final Rule. Many employers offer certain benefits, like long-term disability or paid time off, to employees on the basis of whether the employee is exempt or non-exempt under the FLSA.  As employees’ classifications change, their benefits will change accordingly unless employers decide to make corresponding changes to benefits eligibility.

Employers will also need to revisit their retirement plans to confirm whether overtime pay is eligible for employer contributions, including matching contributions; if so, employers should plan ahead for increased contributions. Further, if overtime pay is excluded, employers should be aware of potential nondiscrimination testing issues (as a result of non-highly compensated employees becoming newly eligible for and receiving overtime pay).

Finally, increased overtime costs may require employers to reduce other employee benefits or require greater employee contributions for such benefits to stay on budget for the year. Regardless of its exact impact on your business, the Final Rule is sure to require some changes.  Start planning now; December 1st will be here before you know it!

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