The use of restricted stock awards to compensate employees is growing in popularity in place of the much-maligned stock option. One of the reasons for the shift to restricted stock is the reduced charge against income provided by restricted stock awards as compared to stock option grants. Restricted stock is
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TOPICS / TAX
Employee benefits
IRS issues new guidance on W-2 reporting of health plan costs
The IRS released new guidance on the requirement that employers provide information to employees on the cost of employer-provided group health plan coverage (Notice 2012-9). The guidance comes in the form of 39 questions and answers. It supersedes Notice 2011-28 and makes changes to requirements that were issued in Notice
Transit Pass and Vanpool Benefits to Shrink in 2012
Millions of people across the United States will experience a significant increase in the cost of their daily commute to work, and many employers will suffer a corresponding increase in payroll taxes for 2012 and beyond, unless Congress acts. The monthly tax exclusion for employer provided transit pass and vanpool
Health Care Premium Credit Rules Proposed
The IRS released proposed regulations in August (REG-131491-10) implementing the health insurance premium tax credit, which was enacted last year by the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act and is effective starting in 2014. The proposed regulations were part of a “next
Guidance Issued on Tax Treatment of Business Cell Phones
The IRS issued a notice on Wednesday providing guidance on the tax treatment of employer-provided cell phones now that they have been removed from the definition of listed property (Notice 2011-72). The notice discusses the treatment of employer-provided cell phones as an excludible fringe benefit. The IRS says it has
Prohibited Transactions Wipe Out Bankruptcy Exemption for Self-Directed IRA
The Court of Appeals for the Eleventh Circuit affirmed a district court decision (which had previously affirmed a bankruptcy court) that all funds in two of an individual’s IRAs and part of a third were not exempt from his bankruptcy estate under Bankruptcy Code (USC Title 11) section 522(b)(3)(C). These
W-2 Health Insurance Reporting Detailed
The IRS released guidance (Notice 2011-28) in question-and-answer format on the new requirement that employers include the “aggregate reportable cost” of employer-sponsored group health insurance on Form W-2, Wage and Tax Statement. The requirement was added for tax years beginning after 2010 by the Patient Protection and Affordable Care Act
In-Plan Roth Conversions: Planning and Administrative Considerations
Before enactment of the Small Business Jobs Act of 2010 (SBJA), amounts held in section 401(k), 403(b) and 457(b) plans could be converted to a Roth-type retirement plan only by taking a distribution and rolling it into a Roth IRA. This put plan sponsors in a difficult position, because in-service
Supreme Court: Medical Residents Not Exempt From FICA
Resolving a circuit split and applying the Chevron standard of greater deference to Treasury regulations, the U.S. Supreme Court upheld the validity of Treasury regulations requiring full-time medical residents and their university employers to pay FICA tax. In doing so, the court announced that tax regulations should generally be accorded
IRS Issues First Guidance on Nonprofit CO-OP Health Insurers
The IRS issued its first guidance on the requirements for new qualified nonprofit health insurance issuers under IRC § 501(c)(29) and has requested comments on specific issues (Notice 2011-23). The notice clarifies that the IRS is not yet accepting applications for recognition of tax-exempt status under section 501(c)(29) and will
Tax Court Again Takes Dim View of Benistar Plan
In McGehee Family Clinic the Tax Court ruled that a clinic and shareholder’s investment in an employee benefit plan marketed under the name “Benistar” was a listed transaction substantially similar to the transaction described in Notice 95-34 (1995-1 C.B. 309). This is at least the second case in which the
Health Care Reform Mandates Immediate Changes
The sweeping changes made by the health care reform legislation (the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010) will become effective over the course of several years. However, some employer-related changes are effective as early as the first plan year that
IRS Releases Some Annual Inflation Adjustments, Many Unchanged for 2011
The IRS released on Thursday its annual revenue procedure making inflation adjustments for various credits and other tax items (Revenue Procedure 2010-40). However, unlike in past years, the guidance does not include updated tax rate tables or updated amounts for the child tax credit, Hope scholarship and lifetime learning credits,
Regulations Provide Guidance on Hybrid Pension Plans
On Monday, the IRS released final and proposed regulations providing guidance on so-called hybrid defined benefit pension plans (TD 9505 and REG-132554-08). The regulations deal with changes made by the Pension Protection Act of 2006 and the Worker, Retiree, and Employer Recovery Act of 2008. They generally apply to plan
IRS Delays Mandatory W-2 Reporting of Health Care Coverage Costs
On Tuesday, the IRS issued a notice providing interim relief to employers regarding reporting the costs of group health plan coverage to employees (Notice 2010-69). Under the notice, notification to employees on Form W-2 will not be required for 2011. The IRS also posted a draft 2011 Form W-2 on
Draft Form for Small Business Health Insurance Credit Released
The IRS on Tuesday issued a draft form for businesses to use in figuring and claiming the new small business health insurance credit, starting this year. Draft Form 8941, Credit for Small Employer Health Insurance Premiums, leads taxpayers through the steps of determining the number of full-time equivalent employees, average
Regulations Issued on Preventive Services
As part of ongoing guidance on this spring’s health reform legislation, the IRS, Department of Labor, and Department of Health and Human Services have issued interim final and proposed regulations implementing the preventive health services rules in the acts (TD 9493; REG-120391-10). The Patient Protection and Affordable Care Act (PL
President Signs Bill Providing Temporary Funding Relief for Pension Plans
President Barack Obama signed HR 3962, the Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act of 2010, on Friday. The bill includes the so-called “doc fix,” increasing Medicare reimbursement to physicians by 2.2% through the end of November, in place of a scheduled 21% cut. The
Regulations Issued on Grandfathered Health Plans
The IRS, the Department of Labor, and the Department of Health and Human Services issued interim final regulations on June 14 regarding grandfathered health plans under the health reform legislation enacted in March (TD 9489). The Patient Protection and Affordable Care Act (PL 111-148) incorporated the provisions of part A
IRS Posts Revised Form 941 and Instructions for Claiming New Hire Payroll Tax Exemption
On May 18, the IRS posted a new version of Form 941, Employer’s QUARTERLY Federal Tax Return, and its instructions for claiming the special payroll tax exemption that applies to new workers hired in 2010. The Hiring Incentives to Restore Employment Act (HIRE Act) created a payroll tax exemption for
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FROM THIS MONTH'S ISSUE
Tax season quick guide
Get ready for tax season with the JofA’s annual filing season quick guide, an easy-to-use compilation of dollar thresholds, tax tables, standard amounts, credits, and deductions. Download and print for quick reference this tax season.
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