Certain Religious Employers Exempt from Contraception Coverage

There has been a lot of discussion in the media and on the Hill about federal regulations that could require religious organizations to cover the cost of contraceptives under their health care plans.  The IRS has published the final regulations authorizing the exemption of group health plans and group health insurance coverage sponsored by certain religious employers from having to cover contraceptive services under provisions of the Patient Protection and Affordable Care Act. These final regulations are effective on April 16, 2012.

The final regulations specified that, for purposes of this exemption, a religious employer is one that: (1) has the inculcation of religious values as its purpose; (2) primarily employs persons who share its religious tenets; (3) primarily serves persons who share its religious tenets; and (4) is a non-profit organization described in section 6033(a)(1) and section 6033(a)(3)(A)(i) or (iii) of the Code.

The final regulations also created a temporary enforcement safe harbor to accommodate organizations that don’t meet the above definition and have religious objections to covering contraceptive services.  During the temporary enforcement safe harbor, the Federal departments plan to develop and propose changes to these final regulations that would meet two goals – providing contraceptive coverage without cost-sharing to individuals who want it and accommodating non-exempted, non-profit organizations’ religious objections to covering contraceptive services. Continue reading »

Obama Signs Repeal of 1099 Reporting Provision

We have been following the progress of the bill to repeal the burdensome 1099 Reporting Provision that would have required companies to file a 1099-Misc for every vendor for any cumulative annual amount of $600 or more. The provision was expected to contribute $19 billion toward paying for healthcare reform but was widely critisized for the intense reporting effort it would require. With the President signing this bill, the funds will be collected from people who will have to repay excess amounts claimed above and beyond what they were entitled under the healthcare reform.

House Passes Repeal of 1099 Requirement

One of the components of the 2010 Health Care legislation included significantly expanded 1099 reporting requirements. The new rule would be that all corporations and organizations would have to report purchases over $600 and on rental real estate. The Senate and the House had dueling versions of bills to repeal the  additional reporting requirements and spent a year duking it out. The Senate approved a modified version in February and the House has now approved it as well. The next stop is the President’s desk.

Is Your Organization Eligible for a Health Care Tax Credit?

The Patient Protection and Affordable Care Act signed into law by President Obama created a tax credit for small businesses and tax exempt organizations.  The credit is designed to encourage small employers to offer health insurance coverage for the first time or maintain coverage they already have.  In general, the credit is available to small employers that pay at least half the cost of single coverage for their employees in 2010.  The credit is specifically targeted to help small businesses and tax exempt organizations that primarily employ low and moderate income workers.  The credit is worth up to 25% of a tax exempt’s premium costs in 2010.  More details are available on the IRS web site.

Senate Passes Bill with 1099 Repeal

The Senate passed a bill on February 18th that included provisions to repeal the new expanded 1099 reporting requirements. The House Ways and Means Committee has also approved its own bill including a similar repeal with additional passages covering rental property businesses. The House bill includes some controversial off-sets involving getting some repayments from low-income and middle-income taxpayers who received credits and subsidies under the original health care act. The Senate’s version of the bill has non-specific offsets comprised of spending cuts as opposed to repayments. The House is expected to vote on the Senate’s bill when they return from recess.

See more about it here.

Possible Repeal of Expanded 1099 Requirement?

Yesterday the Senate approved an amendment to repeal the expanded 1099 requirements that were put in place with the Patient Protection and Affordable Care Act. The expanded requirements would require businesses to report any purchases of goods and services over $600 a year from another business or individual.

Senate Finance Committee Chairman Max Baucus, D-Mont said “We heard small businesses loud and clear, and today both parties came together in a bipartisan manner to respond to their concerns. Eliminating these paperwork requirements lets small businesses focus on the critical work of growing their businesses and creating jobs. ” He continued noting that the repeal is a “common-sense solution”.

Read more about the repeal here.

The Senate’s Efforts to Reduce The New 1099 Reporting Burden

Senator Bill Nelson, Democrat of Florida, has proposed that businesses with 25 or fewer employees would be exempt from the new 1099 filing requirement.  In addition, for businesses with more than 25 employees, the reporting threshold would be set at $5,000, rather than $600.  For more details, read Robert Pear’s article titled “Many Push for Repeal of Tax Provision in Health Law”.

New 1099 Reporting Requirements

The 2010 Patient Protection and Affordable Health Care Act dramatically changes the Form 1099 reporting requirements for businesses.

 Current Law:  Businesses are required to file Form 1099-MISC to report payments to service providers to whom they paid more than $600 during the year.  Payments to corporations are exempt from that requirement.  Penalties for failure to file required Forms 1099 are $50 per occurrence with a maximum penalty of $250,000 per calendar year. Continue reading »

IRS Notifies Employers of Health Care Tax Credit

April 19, 2010 (PLANSPONSOR.com) – The Internal Revenue Service has begun mailing postcards to more than four million small businesses and tax-exempt organizations to make them aware of the benefits of the recently enacted small business health care tax credit.

An IRS news release explained that a provision included in the Patient Protection and Affordable Care Act provides a tax credit to small employers that pay at least half the cost of single coverage for their employees in 2010. For tax years 2010 to 2013, the maximum credit is 35% of premiums paid by eligible small business employers and 25% of premiums paid by eligible employers that are tax-exempt organizations.   

The maximum credit goes to smaller employers –– those with 10 or fewer full-time equivalent (FTE) employees –– paying annual average wages of $25,000 or less. Because the eligibility rules are based in part on the number of FTEs, not the number of employees, businesses that use part-time help may qualify even if they employ more than 25 individuals.   

The credit is completely phased out for employers that have 25 FTEs or more or that pay average wages of $50,000 per year or more.   

Eligible small businesses can claim the credit as part of the general business credit starting with the 2010 income tax return they file in 2011. For tax-exempt organizations, the IRS will provide further information on how to claim the credit, the news release said.  

More information about the credit is here.

Nonprofits benefit from the Small Business Health Care Tax Credit

The health care bill signed by President Obama last week, the Patient Protection and Affordable Care Act, provides a credit that can be used by small tax exempt organizations to help provide or keep health insurance for their employees.  To qualify an employer must cover at least half of the cost of health care coverage, the company must have less than the equivalent of 25 full-time workers, and pay average annual wages of less than $50,000.  The IRS will be providing information in the future on how to claim the credit – so stay tuned!

Link to IR-2010-38 http://www.irs.gov/newsroom/article/0,,id=220848,00.html