Federal Officials to Detail Legislative Horizon
Capital Summit Offers Firsthand Insight on Regulatory Outlook
By William Dunn, CPP
APA's Government Relations Department keeps up a steady conversation with federal agencies and reports regularly on all issues pertaining to payroll professionals. Capital Summit, scheduled for March 26-27 in Washington, D.C., highlights those relationships by inviting speakers from a wide variety of federal agencies to speak directly to our members on the very latest developments and most pressing issues.
Capital Summit will offer firsthand federal insight into the changes in store for your tax, human resources, wage payment, work authorization, child support, unemployment functions, and more.
Legislative and Regulatory Outlook
In 2012, the nation looks forward to months of election-year politics in which payroll tax holidays share equal billing with foreign trade agreements. During Capital Summit, Mark Iwry, Senior Adviser to the Secretary of the Treasury, and Preston Rutledge, Tax and Benefits Counsel for the Senate Finance Committee, will tell attendees what employers and payroll professionals can look forward to leading into November.
New Guys in Town
The Consumer Financial Protection Bureau is in the news, with Congress and the President wrangling over who will get to head the agency. While that argument may be headed to the Supreme Court, the agency still has work to do that will affect consumers and employers alike. Corey Stone, Assistant Director of the CFPB's Office of Collections, Deposits, and Information Markets, will explain during the Capital Summit the CFPB's role in areas that impact the employer-employee relationship, such as Regulation E, the Electronic Fund Transfer Act, and the Fair Credit Reporting Act.
What's New at the Internal Revenue Service?
Joseph Tiberio, Program Manager with the Internal Revenue Service, and Scott Mezistrano, Policy Analyst in the IRS' Employment Tax Division. will discuss during the Capital Summit the voluntary worker classification settlement program, which allows employers to reclassify their employees with greatly reduced penalties.
The two will also explore updates on IRS's continuing National Research Program employment tax audits, the Commissioner's "real-time" tax system vision, and recent legislative and regulatory developments.
Rebecca Harshberger, Director of Payroll Tax Administration with Entertainment Partners and APA Representative on the IRS Information Reporting Program Advisory Committee (IRPAC), will also review IRPAC's recent recommendations to the IRS.
Unemployment Funding Gap
The "Great Recession" created an Unemployment Insurance funding gap greater than the aggregate annual employer tax burden. States must pay back some $40 billion in debt, while continuing to meet high demand for unemployment assistance. Employers face dramatic state and federal tax increases and more than 20 states expect FUTA Credit Reductions to increase annually for the foreseeable future.
Tom Crowley, Tax Chief with the Department of Labor; Doug Holmes, President of UWC-Strategic Services on Unemployment and Workers' Compensation; and Pete Isberg, Vice President of Government Affairs with ADP, will discuss the outlook and how employers might forecast state and federal tax increases as well as policy goals set out by the Obama administration, which could help states and employers.
Promoting Electronic Payments
The federal government has an interest in increasing Americans' participation in our financial system, and it has performed considerable research showing the benefits of electronic payments to individuals. Luke Reynolds, Chief of the FDIC's Outreach & Program Development Section, will share the results of one such study, and Joshua Wright, Director of Financial Access Innovations with the U.S. Treasury, will share the Treasury's important perspective.
In addition, Pamela Chan, Senior Policy Analyst with the New America Foundation, will discuss a workplace savings pilot, AutoSave, which utilizes direct deposit to help employees build savings with post-tax wages. The first phase of the pilot used direct deposit to banks and split-pay functions of employer payroll systems. The second phase will incorporate payroll cards into the mix.
The February Issue of PAYTECH offers an expanded description of all of the Capital Summit sessions.
IRS Addresses APA, Stakeholder Concerns on New Health Care Coverage Reporting
By Brian O'Laughlin, Esq.
The IRS has addressed a number of concerns of APA members and other stakeholders in its most recent guidance concerning the new requirement to report health care coverage on employees' Forms W-2. Notice 2012-9, Interim Guidance on Informational Reporting to Employees of the Cost of Their Group Health Insurance Coverage, provides item-by-item commentary on those concerns.
On April 18, 2011, the IRS issued its initial interim guidance on informational reporting to employees of the cost of their group health insurance coverage, in Notice 2011-28. In July, after conferring with members, APA provided comments to the IRS regarding the interim guidance, along with other stakeholders. Many of the APA's suggestions were taken into consideration when the new interim guidance was put together.
Employers Subject to the Reporting Requirement
The APA noted that many employers use third-party sick pay providers to handle Forms W-2 for short-term and/or long-term disability payments; however, the IRS failed to provide guidance as to whether the health insurance reporting obligation extended beyond the "employer." In response, the IRS created Q&A-39, which states that the reportable amount is not required to be included on a Form W-2 provided by a third-party sick pay provider.
Cost of Coverage Must Be Included in Aggregate Reportable Cost
Q&A-18 provided that employers were not required to report the cost of coverage under a Health Reimbursement Arrangement (HRA). The APA encouraged the IRS to state that employers may make a reasonable good faith effort to calculate a value and include the HRA value in the total reportable cost, if they so choose. The IRS created Q&A-33, which clarifies that employers may include the cost of coverage under programs not required to be included under the applicable interim relief, such as the cost under a Health Reimbursement Arrangement.
Q&A-19, which dealt with calculating the reportable cost if a health FSA was involved, was difficult and confusing for readers. In response to APA's suggestion that the examples be streamlined, the IRS added a new example to Q&A-19 demonstrating that the reporting requirement does not apply to coverage under a health FSA if contributions are made only through employee salary reduction elections.
Q&A-20 provided transitional relief from the reporting requirement for dental and vision plans that are not integrated into a group health plan. The APA recommended that the IRS use the terminology from the Health Insurance Portability and Accountability Act (HIPAA) for the definition of "excepted benefits." In response, the IRS modified Q&A-20 to clarify that the standard for determining whether dental or vision coverage is included will be based on the same standard set forth under HIPAA.
What Is Applicable Employer-Sponsored Coverage?
Members requested that the IRS clarify whether employee assistance programs (EAPs), wellness programs, and on-site medical clinics were included in the cost of coverage. The IRS responded with Q&A-32, which provides that employers are not required to include the cost of coverage of an EAP, wellness program, or on-site medical clinic in the reportable amount if the employer does not charge a premium with respect to that type of coverage provided under COBRA to a qualifying beneficiary.
Submit Your 'Payroll and AP Puzzlers' for the Annual Congress' Federal Forum
Got a tough question for the federal government? Submit it now for the "Forum on Federal Payroll Issues" workshop at our 30th Annual Congress. Experts from six federal agencies (IRS, SSA, OCSE, DOL, USCIS, and ICE) will answer your most perplexing questions about how federal law should be applied to your trickiest situations. Send your question by March 16 to federalforum@americanpayroll.org so it can be forwarded to the panel for research and a complete answer.
To be there in person when your question is answered, register for the APA's 30th Annual Congress, being held May 6-10 in Orlando. Visit the Congress homepage for more information. (The questions and answers will also be reviewed in a future edition of PAYTECH.)
