Coronavirus: Tax and Employee Benefit Considerations – Part 2
|
03/24/2020
|
By: Jason Lacey
|
Employer-sponsored
group
health
plans
have
drawn
attention
regarding
coverage
for
certain
coronavirus-related
costs.
Under
the
FFCRA,
all
group
health
plans
are
now
required
to
provide
coverage
for
COVID-19
testing
without
imposing
deductibles,
copayments,
or
other
cost
sharing
—
and
without
requiring
prior
authorization
or
imposing
other
medical
management
standards.
This
coverage
must
include
both
the
cost
of
the
test
and
related
services,
such
as
charges
for
office,
telehealth,
urgent
care,
or
ER
visits
and
charges
for
the
collection
of
testing
samples.
The
testing
mandate
applies
to
all
types
of
group
health
plans,
including
fully
insured
plans,
self-insured
plans,
high
deductible
health
plans
(HDHPs),
and
plans
that
are
otherwise
“grandfathered”
from
certain
ACA
requirements.
The
mandate
also
applies
to
fully
insured
plans
sold
in
the
individual
insurance
market.
This
mandate
only
applies
to
coverage
of
COVID-19
testing
and
related
services.
Coverage
of
treatment
for
COVID-19
remains
subject
to
the
terms
of
each
plan,
including
applicable
cost
sharing
requirements.
IRS
Notice
2020-15
clarifies
that
an
HDHP
may
provide
benefits
for
COVID-19
testing
or
treatment
prior
to
satisfaction
of
the
minimum
deductible
without
jeopardizing
the
plan’s
status
as
an
HDHP.
Individuals
covered
under
an
HDHP
may
receive
no-deductible
or
low-deductible
coverage
for
these
costs
and
remain
eligible
to
contribute
to
a
health
savings
account
(HSA).
A
new
package
of
proposed
federal
legislation,
currently
called
the
CARES
Act,
would
provide
additional
flexibility
with
respect
to
HDHPs
and
HSAs:
- An
HDHP
could
provide
for
coverage
of
telemedicine
visits
even
if
the
HDHP
deductible
has
not
been
Continue Reading...
|
|
Coronavirus: Tax and Employee Benefit Considerations – Part 1
|
03/23/2020
|
By: Jason Lacey
|
The
Families
First
Coronavirus
Response
Act
(FFCRA),
which
was
enacted
on
March
18,
2020,
established
two
new
categories
of
paid
leave
to
assist
workers
needing
time
off
for
certain
coronavirus-related
purposes:
(1)
up
to
two
weeks
of
paid
sick
leave,
and
(2)
up
to
ten
weeks
of
paid
FMLA
leave.
These
paid
leave
mandates
apply
to
private
sector
employers
with
fewer
than
500
employees
and
public
sector
employers
of
any
size.
Although
the
FFCRA
requires
covered
employers
to
provide
these
new
types
of
paid
leave
to
qualifying
employees,
it
establishes
a
process
for
eligible
employers
to
obtain
reimbursement
from
the
federal
government
for
the
cost
of
the
paid
leave
through
refundable
credits
against
Social
Security
payroll
taxes.
The
tax
credit
is
available
to
all
private
sector
employers
that
are
subject
to
the
FFCRA
paid
leave
mandates,
regardless
of
the
type
of
entity
(C
corporation,
S
corporation,
partnership,
LLC,
or
sole
proprietorship).
Public
sector
employers
are
expressly
excluded
from
eligibility
for
the
tax
credit,
although
they
are
subject
to
the
paid
leave
mandates.
Private
sector
employers
with
500
or
more
employees
also
are
not
eligible
for
the
credit,
even
if
they
voluntarily
provide
paid
leave
that
mirrors
the
FFCRA
requirements.
An
eligible
employer’s
payroll
tax
credit
for
each
calendar
quarter
is
an
amount
equal
to
100%
of
the
qualified
sick
leave
wages
and
100%
of
the
qualified
family
leave
wages
paid
by
such
employer
for
the
quarter.
The
credit
is
limited
to
the
maximum
amount
of
the
paid
leave
required
to
be
paid
Continue Reading...
|
|
Is the ACA Back on the Endangered Species List?
|
05/31/18
|
By: Jason Lacey
|
The
early
years
of
the
ACA
were
fraught
with
existential
threats.
Plans
were
laid
to
repeal
or
defund
it.
Litigation
challenged
the
validity
of
various
aspects
of
the
law,
going
all
the
way
to
the
Supreme
Court
in
a
couple
of
cases.
And
yet
it
has
survived,
more
or
less
intact.
But
then
something
curious
happened
late
last
year.
Buried
within
a
massive
package
of
federal
tax
reform
legislation
was
a
short
provision
that
eliminated
the
tax
penalty
associated
with
the
ACA’s
“individual
mandate”
but
left
the
mandate
itself
on
the
books.
It
was
effectively
a
repeal
of
the
mandate
(would
anyone
obey
speed
limits
if
the
police
said
they
would
never
issue
speeding
tickets?),
but
for
reasons
related
to
legislative
procedure,
the
mandate
technically
remained.
Why
does
this
matter?
In
2012,
the
Supreme
Court
was
asked
to
rule
on
the
constitutionality
of
the
ACA’s
individual
mandate.
The
challengers
argued
that
Congress
did
not
have
the
authority
under
the
U.S.
Constitution
to
require
Americans
to
purchase
health
insurance
coverage.
The
Supreme
Court
agreed
with
them
but
went
on
to
say
that
the
mandate
was
still
okay,
because
Congress
does
have
the
authority
to
impose
taxes,
and
the
individual
mandate
was
a
type
of
tax.
But
now
there’s
no
longer
any
tax.
Just
the
mandate.
See
the
problem?
A
number
of
states
saw
the
problem
too
and
have
brought
yet
another
lawsuit
challenging
the
validity
of
the
individual
mandate.
They
might
have
a
good
argument.
|
|
An Employee by Any Other Name: Nail Technicians Misclassified a Independent Contractors
|
03/05/2018
|
By: Travis Hanson
|
Recently,
the
Kansas
Court
of
Appeals
affirmed
the
district
court
and
the
Kansas
Department
of
Labor’s
(KDOL)
finding
that
nail
technicians
at
a
salon
were
employees
rather
than
independent
contractors
for
unemployment-tax
contribution
purposes.
This
case
has
important
tips
for
handling
classification
issues
in
any
industry.
Review
of
the
Record
In
2014,
Leander
and
Hongmin
(Amy)
Fisher
began
doing
business
as
Amy’s
Spa
Services,
LLC
(the
Spa).
The
Spa
classified
all
of
its
nail
technicians
as
independent
contractors.
The
KDOL
audited
the
business
to
determine
whether
the
Spa
properly
classified
the
technicians
for
unemployment-tax
withholdings.
For
unemployment-tax
contributions
in
Kansas,
an
individual
is
an
employee
if
the
employer
has
the
right
to
control
the
manner
and
means
of
the
work
performed;
whether
the
employer
exercises
that
right
is
inconsequential.
The
auditor
reviewed
the
Spa’s
independent
contractor
agreement,
interviewed
three
nail
technicians
and
Leander
Fisher,
and
reviewed
some
of
the
Spa’s
financial
documents.
The
auditor’s
review
of
the
independent
contractor
agreement
stated
that
the
parties
intended
to
form
an
independent
contractor
relationship.
Under
the
agreement,
the
Spa
purported
to
require
the
technicians
to
clean
their
workstations,
supply
the
tools
necessary
to
complete
their
jobs,
and
gave
the
technicians
discretion
to
set
their
own
prices,
as
long
as
they
did
not
undermine
the
Spa’s
prices.
The
agreement
also
provided
that
the
Spa
would
receive
all
payments
that
were
later
distributed
to
the
technicians,
and
that
Continue Reading...
|
|
Supreme Court Confirms Severance Payments are Subject to FICA Tax
|
03/25/2014
|
By: Jason Lacey
|
The
Supreme
Court
released
its
decision
today
in
the
Quality
Stores
case,
confirming
that
severance
payments
are
subject
to
FICA
taxes.
The
payments
at
issue
in
the
case were
fairly
typical.
A
significant
reduction-in-force
occurred.
The
employer
had
two
severance
plans
in
place.
Officers
and
managers
received
between
6
and
18
months
of
severance
payments.
Rank-and-file
employees
received
one
week
of
severance
pay
for
each
year
of
service.
Payments
were
reported
on
W-2s,
and
taxes
were
withheld,
but
the
employer
later
had
a
change
of
heart
and
sued
the
IRS
for
a
refund
of
the
FICA
taxes.
Lower
courts
were
sympathetic
to
the
employer's
arguments,
but
the
Supreme
Court
was
not
persuaded.
The
decision
was
unanimous,
with
one
justice
not
participating.
I
don't
think
the
decision
itself
was
a
big
surprise.
Severance
payments
have
generally
been
viewed
as
an
extension
of
wage
payments
and,
therefore,
subject
to
the
same
tax
treatment
as
wages.
But
if
the
court
had
reached
a
different
conclusion,
that
certainly
would
have
been
big
news.
The
court's
opinion
is
here.
|
|
Supreme Court Invalidates DOMA
|
06/26/2013
|
By: Jason Lacey
|
In
a
closely
watched
and
sharply
divided
opinion
today,
the
Supreme
Court
invalidated
the
federal
Defense
of
Marriage
Act
(DOMA)
and
its
directive
that
only
opposite-sex
spouses
may
be
recognized
as
spouses
for
purposes
of
federal
law.
Although
the
details
and
impact
of
the
decision
are
still
being
parsed
and
evaluated,
the
bottom
line
is
that
same-sex
couples
who
are
recognized
as
validly
married
under
state
law
are
entitled
to
be
recognized
as
spouses
for
purposes
of
federal
law.
Brief
Background.
The
case
involved
a
same-sex
couple,
Edith
Windsor
and
Thea
Spyer,
who
had
been
married
in
Canada
and
whose
marriage
was
recognized
as
valid
under
New
York
law,
where
they
lived.
Ms.
Spyer
died
and
left
her
estate
to
Ms.
Windsor,
who was
required
to
pay
federal
estate
tax
because,
under
DOMA,
she
could
not
rely
on
an
estate
tax
exception
that
allows
for
tax-free
transfers
of
property
between
spouses
at
death.
She
sued
for
a
refund
of
the
taxes,
claiming
DOMA
was
unconstitutional.
The
Court’s
Analysis.
Five
of
the
nine
Supreme
Court
justices
agreed
that
DOMA
was
unconstitutional
because
it
violated
the
equal
protection
rights
of
same-sex
individuals
who
were
recognized
under
state
law
as
validly
married.
The
Court
essentially
said
that
if
a
same-sex
couple
and
an
opposite-sex
couple
are
treated
the
same
under
state
law,
they
are
constitutionally
entitled
to
equal
treatment
under
federal
law.
Implication
for
Employee
Benefit
Plans.
The
case
has
many
implications
for
employee
benefit
plans.
For
health
plans,
qualifying
same-sex
spouses
that
are
covered
under
Continue Reading...
|
|
Should You Let Employees Buy and Sell PTO?
|
06/12/2013
|
By: Boyd Byers
|
School
is
out,
summer
is
upon
us,
and
many
workers
soon
will
be
taking
vacations.
With
visions
of
sandy
beaches,
national
parks,
and
Wally
World
(Chevy
Chase's
destination
in
the
movie
Vacation)
dancing
in
our
heads,
now
is
a
good
time
to
take
stock
of
your
vacation
or
paid
time
off
(PTO)
policy.
More
employers
are
allowing
workers
to
buy
and
sell
vacation
time,
according
to
a
Society
for
Human
Resource
Management
study.
The
study
shows
that
52
percent
of
employers
(up
from
42
percent
in
2009)
now
offer
PTO
plans
that
combine
vacation
time,
sick
leave,
and
personal
days
into
one
comprehensive
plan,
to
give
employees
more
flexibility
in
managing
their
time
off.
Of
these,
almost
20
percent
offered
a
cash-out
option.
And
five
percent
of
all
employers
are
taking
the
more-novel
approach
of
letting
workers
buy
more
vacation
time
through
a
payroll
deduction.
Could
such
a
policy
provide
a
low-cost
perk
to
help
with
employee
recruitment
and
retention,
and
improve
more
morale
and
productivity,
at
your
organization?
Give
it
some
thought.
But
be
sure
to
work
with
an
experienced
employment
lawyer
to
help
develop
such
a
program
before
you
roll
it
out,
to
ensure
you
don’t
run
afoul
of
some
tricky
wage
payment
law
and
tax
law
issues
these
policies
present
(“constructive
receipt”
and
“condition
subsequent”
anyone?).
|
|
Fiscal Cliff: Taxing Employer-Sponsored Health Coverage
|
12/27/2012
|
By: Jason Lacey
|
Almost
as
soon
as
the
Affordable
Care
Act
passed
in
March
2010,
the
emails
began
coming,
and
they
all
said
something
like
this:
Obamacare
increases
your
taxes
by
making
your
employer-provided
health
coverage
taxable
to
you.
Some
even
referenced
a
specific
provision
of
the
Affordable
Care
Act
as
authority.
True
or
false?
False.
Or
at
least
mostly
so.
The
kernel
of
truth
was
a
reference
to
the
provision
of
the
Affordable
Care
Act
that
requires
employers
to
report
the
value
of
employer-provided
health
coverage
on
the
employees'
W-2s.
But
it
is
only
an
information-reporting
requirement.
There
is
no
increase
in
taxable
income
as
a
result.
Fast-forward
2-1/2
years,
however,
and
we
find
ourselves
in
the
midst
of
frantic
politicking
to
attempt
to
avert
the
so-called
fiscal
cliff.
Desperate
times
lead
to
desperate
measures,
and
it
seems
that
even
the
most
sacred
of
sacred
cows
are
now
being
considered
for
slaughter.
Today's
news
brings
a
report
that
this
includes
the
long-standing
tax
exclusion
for
employer-provided
health
coverage.
It
is
an
enormous
tax
expenditure
for
the
federal
government.
Eliminating
it
would
reportedly
raise
as
much
as
$150
billion
in
additional
revenue
in
one
year.
But
it
has
also
been
a
linchpin
of
the
employment-based
health-care-financing
scheme
in
this
country.
To
encourage
employers
to
provide
health
coverage
to
their
employees,
we
allow
the
employers
to
claim
a
tax
deduction
for
the
cost
of
that
coverage,
but
we
do
not
tax
the
employees
on
it.
We
also
allow
employees
to
pay
their
share
of
the
cost
of
coverage
with
pre-tax
Continue Reading...
|
|
IRS Authorizes Leave-Based Donation Programs to Benefit Hurricane Sandy Victims
|
11/08/2012
|
By: Jason Lacey
|
In
new
guidance,
the
IRS
has
provided
tax
relief
for
leave-based
donation
programs
established
to
aid
victims
of
Hurricane
Sandy.
Similar
guidance
was
provided
after
the
September
11,
2001
terrorist
attacks
and
after
Hurricane
Katrina
in
2005.
Under
a
leave-based
donation
program,
an
employer
allows
employees
to
elect
to
forego
paid
leave
time
(e.g.,
vacation,
sick,
or
personal
leave),
and
the
employer
then
donates
the
value
of
the
foregone
leave
to
a
charitable
organization.
The
guidance
clarifies
that
employees
will
not
have
taxable
wage
income
solely
because
they
make,
or
have
the
right
to
make,
an
election
to
donate
leave
under
a
qualifying
leave-based
donation
program.
Employers
are
allowed
a
full
deduction
for
the
donations,
without
regard
to
the
percentage
limitations
on
charitable
contributions.
To
qualify
for
this
treatment,
payments
of
foregone
leave
time
must
be
made:
- To
a
qualifying
charitable
organization.
- For
the
relief
of
victims
of
Hurricane
Sandy.
- Before
January
1,
2014.
Employees
who
elect
to
participate
in
a
leave-based
donation
program
may
not
claim
a
charitable
contribution
deduction
for
the
value
of
the
foregone
leave.
|
|
IRS Posts FAQs on New Medicare-Tax Withholding
|
07/22/2012
|
By: Jason Lacey
|
The
IRS
has
posted
a
set
of
FAQs
to
its
website
that
provide
guidance
on
withholding
the
new
0.9%
Medicare
tax
that
will
apply
beginning
in
2013.
The
new
tax
was
enacted
as
part
of
health
care
reform
and
goes
into
effect
with
respect
to
wages
paid
on
or
after
January
1,
2013.
The
tax
is
an
additional
0.9%
on
all
wages
received
in
excess
of
a
threshold
amount.
The
threshold
amount
is
$200,000
in
the
case
of
a
single
individual
and
$250,000
in
the
case
of
a
married
individual
who
files
a
joint
tax
return.
But
regardless
of
an
employee's
marital
status
or
household
income,
employers
are
required
to
begin
withholding
the
tax
once
they
have
paid
an
employee
$200,000
in
wages
during
a
year.
Example.
An
employee
has
received
$180,000
in
wages
during
2013
and
then
receives
a
bonus
of
$50,000
in
December
2013.
In
addition
to
all
other
required
tax
withholding,
the
employer
must
withhold
the
new
0.9%
Medicare
tax
on
$30,000
of
the
bonus.
Some
of
the
clarifications
provided
in
the
FAQs:
- The
obligation
to
withhold
the
new
tax
only
applies
once
an
employee
has
received
$200,000
in
wages
and
only
to
the
extent
wages
for
the
year
exceed
$200,000.
- Non-cash
taxable
fringe
benefits
provided
to
an
employee
who
has
received
at
least
$200,000
in
other
taxable
wages
are
subject
to
the
new
tax,
even
though
not
paid
in
cash.
- The
withholding
requirement
does
apply
to
tipped
employees
who
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IRS Updates Guidance on FICA Taxes and Employee Tips
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06/20/2012
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By: Jason Lacey
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The
IRS
recently
released
Revenue
Ruling
2012-18,
which
provides
updated
guidance
for
employers
on
the
treatment
of
employee
tips
for
FICA-tax
purposes.
Tips
are
subject
to
both
the
employer's
and
the
employee's
share
of
the
FICA
tax,
even
though
they
are
not
paid
directly
from
the
employer
to
the
employee.
Special
procedures
govern
how
employees
report
tips
to
employers
and
when
employers
must
withhold
and
pay
the
required
FICA
taxes
on
those
tips.
Among
other
things,
the
new
guidance
clarifies
the
distinction
between
tips
and
service
charges.
Service
charges,
such
as
automatic
gratuities
added
to
a
bill
for
large
parties,
are
not
tips
for
FICA
purposes
and
may
not
be
reported
using
the
special
procedures
that
apply
to
tips.
They
must
be
treated
like
other
wages
paid
by
the
employer.
This
means,
for
example,
that
they
are
subject
to
FICA-tax
withholding
at
the
time
they
are
paid
to
the
employee.
In
a
related
announcement,
the
IRS
has
released
a
memorandum
to
field
agents
providing
instruction
on
audits
of
businesses
where
tipping
of
employees
is
customary.
The
memorandum
says
that,
in
general,
the
principles
in
Revenue
Ruling
2012-18
are
retroactively
effective.
But
in
certain
cases
it
may
be
appropriate
for
auditors
to
apply
the
new
guidance
on
service
charges
prospectively
from
January
1,
2013,
"in
order
to
allow
businesses
not
currently
in
compliance
additional
time
to
amend
their
business
practices
and
make
needed
system
changes."
Although
this
announcement
indicates
the
possibility
of
some
relief
for
employers
that
have
not
handled
service
charges
in
the
Continue Reading...
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Colorado Latest to Join DOL in Worker Misclassification Efforts
|
12/13/2011
|
By: Donald Berner
|
The
U.S.
Department
of
Labor
(DOL) continues its
efforts
to
combat
the
misclassification
of
employees
as
independent
contractors.
Last
week,
the
DOL entered
into
a
partnership
agreement
with
the
state
of
Colorado.
This agreement expands
the
number
of
states cooperating
with the
DOL to
eleven,
including
our
neighbors
to
the
east
and
west
(Missouri
and
Colorado).
Stay
tuned
as
the DOL continues
to
turn
up
the
heat
on
independent
contractor
classification
issues.
To
keep
tabs
on
the
DOL's
efforts
click
here.
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IRS Calls 'Olly Olly Oxen Free' to Employers Who Voluntarily Reclassify Contractors as Employees
|
09/23/2011
|
By: Boyd Byers
|
Olly
olly
oxen
free!
Do
you
remember
this
chant
as
the
“all
clear”
signal
when
playing
tag,
hide-and-seek,
and
similar
childhood
games?
(In
case
you’re
wondering, linguists
think the
phrase
probably
evolved
from
“all
ye,
all
ye,
‘outs’
in
free”
as
it
was
passed
down
over
generations
of
schoolchildren.)
On
September
21,
the
Internal
Revenue
Service
announced
the
Voluntary
Classification
Settlement
Program
(VCSP).
It’s
sort
of
like
an
“olly
olly
oxen
free”
for
employers
who
have
misclassified
employees
as
independent
contractors.
Sort
of.
It’s
not
entirely
free,
of
course.
But
the
program
does
offer
employers
substantial
relief
from
past
federal
employment
tax
liability
if
they
agree
to get
into
compliance
going
forward.
The
VCSP
is
available
to
employers
who
are
currently
treating
a
class
or
group
of
workers
as
independent
contractors,
but
want
to
treat
the
workers
as
employees
prospectively.
In
exchange
for
agreeing
to
treat
the
workers
as
employees
for
future
tax
periods,
employers
participating
in
the
VCSP
get
the
following
relief:
- pay
only
10
percent
of
the
employment
tax
liability
that
may
have
been
due
on
compensation
paid
to
the
workers
for
the
most
recent
tax
year;
- no
liability for
any
interest
and
penalties
on
the
amount;
and
- not subject
to
an
employment
tax
audit
with
respect
Continue Reading...
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Editors
Don Berner, the Labor Law, OSHA, & Immigration Law Guy
Boyd Byers, the General Employment Law Guy
Jason Lacey, the Employee Benefits Guy
Additional Sources

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