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Find Out How ACA affects Employers with 50 or More Employees
Some of the provisions of the health care law apply only to large employers, which are generally those with 50 or more full-time equivalent employees. These employers are applicable large employers – also known as ALEs – and are subject to the employer shared responsibility provisions.
Information Reporting
Applicable large employers have annual reporting responsibilities concerning whether and what health insurance they offered to their full-time employees during the prior year. In 2016, the deadline to provide Forms 1095-C to full-time employees is March 31. The deadline by which ALEs must file information returns with the IRS is no later than May 31 or June 30 if filed electronically.
All employers, regardless of size, that provide self-insured health coverage must file an annual return reporting certain information for individuals they cover. In 2016, the deadline by which self-insured ALEs must provide Forms 1095-C to responsible individuals is March 31. The returns with 2015 information are due no later than May 31 or June 30 if filed electronically.
Employer Shared Responsibility Payment
ALEs are subject to the employer shared responsibility payment if at least one full-time employee receives the premium tax credit and any one these conditions apply. The ALE:
- failed to offer coverage to full-time employees and their dependents
- offered coverage that was not affordable
- offered coverage that did not provide a minimum level of coverage
SHOP Marketplace
Employers with more than 50 cannot purchase health insurance coverage for its employees through the Small Business Health Options Program – better known as the SHOP Marketplace. However, Employers that have exactly 50 employees can purchase coverage for their employees through the SHOP.
For more information, visit the Determining if an Employer is an Applicable Large Employer page on IRS.gov/aca.
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Everything we were promised with Obamacare has yet to come to fruition: keep your plan! lower prices! tens of millions insured! and a litany of other broken promises and predictions.
Obamacare was signed into law on March 23, 2010. The Weekly Standard took the time to perform a thorough examination on the current state of Obamacare, an audit perhaps, comparing what was promised and what has been delivered. Their findings are sobering. It also offers some remedies of the most egregious maladies plaguing this particular legislation. I have reprinted the article in its entirety below, because it is chock-full of good information:
Three years ago, on the eve of Obamacare’s implementation, the Congressional Budget Office (CBO) projected that President Obama’s centerpiece legislation would result in an average of 201 million people having private health insurance in any given month of 2016. Now that 2016 is here, the CBO says that just 177 million people, on average, will have private health insurance in any given month of this year—a shortfall of 24 million people.
Indeed, based on the CBO’s own numbers, it seems possible that Obamacare has actually reduced the number of people with private health insurance. In 2013, the CBO projected that, without Obamacare, 186 million people would be covered by private health insurance in 2016—160 million on employer-based plans, 26 million on individually purchased plans. The CBO now says that, with Obamacare, 177 million people will be covered by private health insurance in 2016—155 million on employer-based plans, 12 million on plans bought through Obamacare’s government-run exchanges, and 9 million on other individually purchased plans (plus a rounding error of 1 million).
In other words, it would appear that a net 9 million people have lost their private health plans, thanks to Obamacare—with a net 5 million people having lost employer-based plans and a net 4 million people having lost individually purchased plans.
None of this is to say that fewer people have “coverage” under Obamacare—it’s just not private coverage. In 2013, the CBO projected that 34 million people would be on Medicaid or CHIP (the Children’s Health Insurance Program) in 2016. The CBO now says that 68 million people will be on Medicaid or CHIP in 2016—double its earlier estimate. It turns out that Obamacare is pretty much a giant Medicaid expansion.
To be clear, the CBO—which has very generously labeled Obamacare’s direct subsidies to insurance companies as “tax credits,” even though sending money to insurers doesn’t lower anyone’s taxes—isn’t openly declaring that Obamacare has reduced the number of people with private health insurance or that it has doubled the number of people on Medicaid or CHIP. Rather, the CBO maintains that Obamacare has actually increased the number of people with private health insurance by 9 million and has increased the number of people on Medicaid or CHIP by (just) 13 million. But it would seem that the only reason the CBO can make these claims is that it has moved the goalposts.
That is, the CBO has significantly altered its estimates for what 2016 would have looked like if Obamacare had never been passed. In 2013, the CBO projected that, in the absence of Obamacare, 186 million people would have had private health insurance in 2016, and 34 million people would have been on Medicaid or CHIP. The CBO now maintains that, in the absence of Obamacare, only 168 million people would have had private health insurance in 2016 (a reduction of 18 million people from its 2013 projection), while 55 million people would have been on Medicaid or CHIP (an increase of 21 million people from its 2013 projection). Somehow the hypothetical non-Obamacare world has changed a lot in the past three years. (The CBO doesn’t explain how this could have happened.)
Even the CBO’s revised figures for a non-Obamacare world, however, can’t gloss over the fact that Obamacare has failed to hit its target for private health insurance by 24 million people. To see that, one must simply compare Obamacare’s new tally of 177 million to its 2013 target of 201 million.
The CBO doesn’t release retroactive scoring of Obamacare. Try finding, for example, tallies from the federal government (whether from the CBO or otherwise) on what Obamacare has actually cost so far. Rather, the CBO is like a handicapper who predicts the results of horseraces, but then never bothers to publish the races’ actual results.
Now that it’s clear enough, however, that Obamacare is basically an expensive Medicaid expansion coupled with 2,400 pages of liberty-sapping mandates, it’s time for a winning Obamacare alternativeto emerge, one along the lines of what Ed Gillespie almost rode to victory in the Virginia Senate race. Such an alternative should address the longstanding inequity in the tax code—between employer-based and individually purchased insurance—while adhering to four basic notions:
1. It shouldn’t touch the tax treatment of the typical American’s employer-based plan.
2. It should close the tax loophole on the employer side—which says that the more you spend (on insurance), the more you save (in taxes)—by capping the tax exclusion at $20,000 for a family plan (while letting anyone with a more expensive plan still get the full tax break on that first $20,000).
3. It should offer a simple tax break for individually purchased insurance that isn’t income-tested and thus doesn’t pick winners and losers (in marked contrast with Obamacare, which is all about picking winners and losers.)
4. It shouldn’t provide direct subsidies to insurance companies like Obamacare does. (The federal government provides a tax break for mortgage interest paid—it doesn’t directly pay a portion of people’s mortgage bills. Likewise, it shouldn’t directly pay people’s health insurance bills as if it were some kind of “single payer.”)
In addition, anyone crafting an Obamacare alternative should keep this important point in mind and express it publicly: Far from being the gospel truth, the CBO’s scoring is more like a wild guess that will never be checked against future reality.
by | ARTICLES, BLOG, CONSTITUTION, FREEDOM, GOVERNMENT, POLITICS, TAX TIPS, TAXES
We’re coming up on three years since the IRS scandal broke in May 2013. Most Americans have certainly forgotten about it, especially since the former head, Lois Lerner, went wholly unpunished. But some targeted groups have not forgotten about it, and continue to fight for transparency with the entire affair.
Earlier this week, a federal appeals court “ordered the IRS to quickly turn over the full list of groups it targeted so that a class-action lawsuit, filed by the NorCal Tea Party Patriots, can proceed. The judges also accused the Justice Department lawyers, who are representing the IRS in the case, of acting in bad faith — compounding the initial targeting — by fighting the disclosure.”
The IRS, of course, claimed that no targeting happened — that it was merely an issue of poorly trained employees. Of course, we all know better. A vast majority of the targets were conservative or tea-party groups, there were secret buzz words to identify them, and some of the groups still have not attained 501c3 status after 5 years!
According to the Washington Times, Tea Party groups have been trying for years to get a full list of nonprofit groups that were targeted by the IRS, but the IRS had refused, saying that even the names of those who applied or were approved are considered secret taxpayer information. The IRS said section 6103 of the tax code prevented it from releasing that information.
Judge Kethledge, however, said that turned the law on its head. ‘Section 6103 was enacted to protect taxpayers from the IRS, not the IRS from taxpayers,’ he wrote.”
This particular ruling certified the NorCal case as a class-action lawsuit. Others who were targeted may be permitted to join the case, but until that list is revealed, it is unknown who exactly among the 200 or so groups involved were actually targeted.
Now, “the case moves to the discovery stage, where the tea party groups’ lawyers will ask for all of the agency’s documents related to the targeting and will depose IRS employees about their actions.”
As a CPA intimately involved with the IRS for many years, I have been following this case since the beginning and have continued to report on updates. The actions of the IRS were particularly egregious and overreaching, and no one was appropriately punished for it. It’s good that some of the groups remain dedicated to getting more answers that what has been divulged by the Department of Justice to date.
by | ARTICLES, FREEDOM, GOVERNMENT, OBAMA, POLITICS, TAXES
Earlier this month, the Wall Street Journal noted an incredible sequence of events brought to light through judicial process and undercover emails. Obama meddled in the net-neutrality process, violating standards of conduct. I have reproduced the article in its entirety, as the contents contained therein are rather incredulous:
Congressional committees rarely re-report journalistic exposés, but it’s amazing what information subpoenas can pry loose. A Senate committee has exposed new details on how the White House broke the law to get the Internet regulated as an old-fashioned utility, including emails that show how shocked regulators at the Federal Communications Commission were at the violation of their agency’s independence.
A page-one article in The Wall Street Journal last year detailed an “unusual, secretive effort inside the White House” led by a small group “acting like a parallel version of the FCC itself.” President Obama’s aides thought net neutrality “would help define the president’s legacy” and that along with immigration could be handled by unilateral presidential action. The courts have blocked Mr. Obama’s executive order on immigration, and the Internet regulations should be next to go.
The report, from Republicans on the Senate Committee on Homeland Security and Governmental Affairs, finds that FCC staff worked through a weekend in November 2014 to finalize a plan backed by Chairman Tom Wheeler for light regulation of the Internet. They were shocked on Monday, Nov. 10, when an agency official forwarded a news alert, which she summarized as follows: “Obama says to make it Title II”—the heavy-handed law regulating railroads and the old monopoly phone system.
Staffers then shared a flurry of emails: “Not sure how this will affect the current draft and schedule—but I suspect substantially.” “This might explain our delay.” “It might indeed.” “Will try to get to the bottom of this this morning.” “At least the delays in edits from above now makes [sic] sense.”
Panic struck when it became clear the chairman would cave in to Mr. Obama’s demand and surrender the FCC’s independence. This is a verbatim quote from a draft media Q&A prepared for Mr. Wheeler:
“Q. Has there been discussions between the WH and the FCC leading up to this rollout?
“A. The FCC kept the WH apprised of the process thus far, but there have not been substantive discussions [IS THIS RIGHT?].”
FCC staffers cited nine areas in which the last-minute change violated the Administrative Procedure Act, which requires advance public notice of significant regulatory changes. Agency staffers noted “substantial litigation risk.” A media aide warned: “Need more on why we no longer think record is thin in some places.”
These emails are a step-by-step display of the destruction of the independence of a regulatory agency. The Senate report should make fascinating reading for the federal appellate judges considering whether to invalidate the regulations.
Mr. Obama’s edict resulted in 400 pages of slapdash regulations that the agency’s own chief economist has dismissed as an “economics-free zone.” In the year since Obamanet has been in effect, regulatory uncertainty has led to a collapse in investment in broadband.
Independent regulatory agencies operate in a constitutional gray area, separate from the executive and legislative branches. They have the power to issue broad rules but are unaccountable to voters. The rationale is that agency staffers are experts in the fields they regulate. That justification collapses if they’re subject to political pressure.
In 1983, Ronald Reagan held a single meeting with his FCC chairman on the issue of regulating television rerun revenues. Unlike Mr. Obama, Reagan didn’t have his own staff working on the regulations. And Reagan didn’t express any opinion on the rules—also unlike Mr. Obama, who issued a video promoting utility regulation for the Internet.
Yet Reagan’s modest involvement was headline news. A congressional committee declared he “acted improperly and undermined the fairness and integrity” of the FCC. Sen. Daniel Patrick Moynihan said: “It is imperative for the integrity of all regulatory processes that the president unequivocally declare that he will express no view on the matter.” The Washington Post editorialized: “The danger lies in the kind of chilling signal a certain kind of presidential participation might send to all regulatory agencies about the possible fragility of their independence.”
A 1991 opinion from the Justice Department’s Office of Legal Counsel warns: “White House staff members should avoid even the mere appearance of interest or influence—and the easiest way to do so is to avoid discussing matters pending before the independent regulatory agencies with interested parties and avoid making ex parte contacts with agency personnel.”
The appeals court has plenty of evidence proving White House meddling with a supposedly independent agency. Voters have more reason for outrage at an administration that ignores limits on its power. The Internet is too important to be left to politicians, especially ones who violate the law.
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Dustin Howard over at Americans for Limited Government tackles one of the key factors contributing to the rise of corporate inversions: high corporate taxes. I would also argue that another mitigating factor is foreign-earned income, which the United States government lays claim to — and is the only major country to do so. Under U.S. tax law, U.S. companies are forced to pay both foreign- and domestic-earned income, putting them at a global disadvantage.
At any rate, Howard’s piece is a worthwhile read on the equally detrimental effect of high corporate tax rates. I have shared it in its entirety below.
“How should policymakers stop the bleeding of American jobs overseas? There’s one easy answer among many harder ones, and that is to stop making it so expensive to do business in the United States.
Many things price American workers out of competition, whether it be the current mix of trade rules, currency manipulation and other unfair labor practices but the easiest to address domestically is the corporate tax rate. Government’s unwillingness to do with less is making it considerably harder for Americans to even work.
Seriously, why should American corporations pay a 39 percent rate, among the world’s highest, to headquarter here when they can “invert” to Ireland and pay 12.5 percent, less than one third the domestic rate?
If the corporation can keep most of their American workforce and keep 26.5 percent more of their money as an alternative by cutting the corporate tax rate, wouldn’t that a good thing?
Why would the U.S. maintain a policy that discourages business from even being on American soil?
Democrats propose a solution to this phenomenon: punish the innovating refugees that refuse to pay into their racket. They believe in taxing the profits of inverted firms. One problem: extrapolating from a recent study by economist Wayne Winegarden for the Pacific Research Institute, this actually further discourages firms from even retaining their American workforce, and encourages them to simply export their products outright from their new foreign addresses.
Call it a lose-lose proposition, where American workers lose jobs, American businesses leave and revenues drop while the deficit increases; Ireland should chip in and send Democrats a fruit basket.
If taxing inverted companies suddenly sounds unappealing, here’s an alternative: make inversions less attractive as a means of generating profit. The U.S. is a free country, so it looks bad when it punishes corporations for acting in their best interest. Instead, why not lower the tax rate to a more competitive, attractive rate, and then focus rolling back the regulatory state that is literally paid by taxpayers to make businesses less productive?
The first step on this path would be to begin reducing the cost of business with a comprehensive set of tax reforms that clean up our messy corporate tax code, and give businesses a sense of calm when planning for the future.
Besides it’s not like the corporate tax generates that much revenue anyway, at just 10.6 percent of $3.2 trillion of total receipts in 2015, according to the Office of Management and Budget. By far the most revenue comes from individual and payroll taxes.
As things stand, corporations are seeking foreign shores to chart out profitable futures, mainly because the business climate in the U.S. has made itself so volatile that it cannot accomplish that at home. The data supports the notion that punishing corporations that choose foreign domiciles will hurt working Americans more than it will avenge or protect them. The limited government solution is to let individuals choose what works for them, and to tax them at a reasonable rate so they do not move out of necessity.
As stated above, lowering the corporate tax rate is just one part of the solution. America has fundamental problems across the board that put us at a global disadvantage that should also be addressed.
The corporate tax rate is a necessary first step to signal to the world that we are restructuring the policies to make the U.S. more attractive among competitors. Creating jobs in America begins with keeping the economy free and competitive, and that cannot happen without fiscal restraint and limiting government, but also cannot happen if we’re taxing ourselves to the stone age.
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Tax Refund Offsets Pay Unpaid Debts
If you can’t pay your taxes in full, the IRS will work with you. Past due debts like taxes owed, however, can reduce your federal tax refund. The Treasury Offset Program can use all or part of your federal refund to settle certain unpaid federal or state debts, to include unpaid individual shared responsibility payments. Here are five facts to know about tax refund offsets.
1. Bureau of the Fiscal Service. The Department of Treasury’s Bureau of the Fiscal Service, or BFS, runs the Treasury Offset Program.
2. Offsets to Pay Certain Debts. The BFS may also use part or all of your tax refund to pay certain other debts such as:
Federal tax debts.
Federal agency debts like a delinquent student loan.
State income tax obligations.
Past-due child and spousal support.
Certain unemployment compensation debts owed to a state.
3. Notify by Mail. The BFS will mail you a notice if it offsets any part of your refund to pay your debt. The notice will list the original refund and offset amount. It will also include the agency that received the offset payment. It will also give the agency’s contact information.
4. How to Dispute Offset. If you wish to dispute the offset, you should contact the agency that received the offset payment. Only contact the IRS is your offset payment was applied to a federal tax debt.
5. Injured Spouse Allocation. You may be entitled to part or the entire offset if you filed a joint tax return with your spouse. This rule applies if your spouse is solely responsible for the debt. To get your part of the refund, file Form 8379, Injured Spouse Allocation. If you need to prepare a Form 8379, you can prepare and e-file your tax return for free using IRS Free File.
Health Care Law: Refund Offsets and the Individual Shared Responsibility Payment
While the law prohibits the IRS from using liens or levies to collect any individual shared responsibility payment, if you owe a shared responsibility payment, the IRS may offset your refund against that liability.
Each and every taxpayer has a set of fundamental rights they should be aware of when dealing with the IRS. These are your Taxpayer Bill of Rights. Explore your rights and our obligations to protect them on IRS.gov.
Additional IRS Resources:
Tax Topic 203 – Refund Offsets
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The following is a short version of a recent talk by Ben Eisen regarding the minimum wage issue as a poverty-fighting tool. It is undeniable that the percentage of full-time workers in poverty is much less than part-time workers. “He explained – using sound economic theory and admirable coverage of empirical findings – that the minimum wage is as effective a tool for fighting poverty as is gasoline as a tool for fighting fires.
One of the stats that Ben cited is that only three percent of workers who work full-time year ’round live below the poverty line, while sixteen percent of workers who work only part-time live below the poverty line. (I can’t recall if Ben’s stats are for Canada or the U.S., but because the general trend no doubt holds in nearly all countries, whether Ben’s specific stats are for Canada or the U.S. doesn’t matter for purposes of my post here.)
Here’s a mental experiment (one that I might have offered, in some form, in the past): suppose that Pres. Hillary Clinton or Pres. Bernie Sanders – displaying to the public her or his courageous opposition to poverty – cites the stat that Ben mentioned and then proposes that government outlaw part-time work. “Because every worker should be able to live decently upon his or her earnings,” proclaims the president, “and because working full-time enables a worker to earn more income than that worker earns when working only part-time, it shall hereby be the law of the land that every worker must be employed full-time.”
I’m pretty sure even the most ardent supporter of the minimum wage would balk at such a proposal. But why? What’s the difference between minimum-hour legislation and minimum-wage legislation? If government dictates that each worker shall be paid no less than $X per hour, and if this diktat has no effect on workers other than ensuring that no worker is paid less than $X per hour, what reason is there to suppose that if government dictates that all jobs shall be full-time jobs that this diktat have any effect on workers other than ensuring that all workers will now be employed full-time – and, hence, that the number of people living in poverty will fall?
Put differently, if government can work miracles when it dictates hourly wages, why can’t it work miracles when it dictates hours of work?”
by | ARTICLES, GOVERNMENT, TAX TIPS, TAXES
Military Members: Get Free Tax Help
The IRS offers free tax help to members of the military and their families through the Volunteer Income Tax Assistance program. VITA is available both on and off base including sites for military members overseas. Here are five tips to know about free tax help for the military:
1. Armed Forces Tax Council. The Armed Forces Tax Council oversees the military tax programs offered worldwide.
2. Certified Staff. Military VITA certified employees staff their sites. They receive training on military tax issues, like tax benefits for service in a combat zone. They can help you with special extensions of time to file your tax return and to pay your taxes or with special rules that apply to the Earned Income Tax Credit.
3. What to Bring. Take the following records with you to your military VITA site:
- Valid photo identification.
- Social Security numbers for you, your spouse and dependents; or individual taxpayer identification numbers (ITINs) or adoption taxpayer identification numbers (ATINs) for those who don’t have Social Security numbers.
- Birth dates for you, your spouse and dependents.
- Your wage and earning forms, such as Forms W-2, W-2G, and 1099-R.
- Interest and dividend statements (Forms 1099).
- Health coverage information forms such as Form 1095-A, 1095-B or 1095-C.
- Exemption Certificate Number for exemptions that you obtained through the Marketplace.
- A copy of your last year’s federal and state tax returns, if available.
- Routing and account numbers for direct deposit of your tax refund.
- Total amount you paid for day care and the day care provider’s identifying number. This is usually an Employer Identification Number or Social Security number.
- Other relevant information about your income and expenses.
4. Joint Returns. If you are married filing a joint return, generally both you and your spouse need to sign. If you both can’t be present to sign the return, you should bring a valid power of attorney form unless you are eligible for an exception. Publication 501, Exemptions, Standard Deduction, and Filing Information, has more details.
5. Health Care Tax Law Help. IRS Free File can help with tax provisions of the health care law. The software will walk you through the lines on the tax forms that relate to the Health Care Law. If your income was $62,000 or less, you qualify for Free File software. If you made more than $62,000, you can use Free File Fillable Forms.
Each and every taxpayer has a set of fundamental rights they should be aware of when dealing with the IRS. These are your Taxpayer Bill of Rights. Explore your rights and our obligations to protect them on IRS.gov.
Additional IRS Resources:
Military Pay Exclusion – Combat Zone Service
Publication 4940, Tax Information for Active Duty Military and Reserve Personnel
Publication 3, Armed Forces’ Tax Guide
Gathering Your Health Coverage Documentation
IRS YouTube Videos:
Military Tax Tips – English | Spanish
