APA Recommends Four Tax
Priorities to Treasury, IRS
By Alice P. Jacobsohn, Esq.
The American Payroll Association (APA) recommended four priorities for the July 2016 to June 2017 Priority Guidance Plan of the Treasury Department's Office of Tax Policy and the IRS. The recommendations, in order of importance to APA members, are:
- Improving management of transcripts
- Providing a social security number matching system for Affordable Care Act (ACA) compliance
- Creating electronic capabilities for levies
- Making permanent multiemployer transition guidance for the ACA
The Treasury Department and IRS each year use the Priority Guidance Plan to identify and prioritize the tax issues that should be addressed through regulation, revenue rulings, revenue procedures, notices, and other published administrative guidance. The agencies asked for recommendations based on resolving significant issues for taxpayers, removing cumbersome or outdated regulations and guidance, and whether recommended guidance can be administered uniformly and to reduce taxpayers' burden. The comment period ended May 16.Management of Transcripts
The APA's most important priority recommendation is re-establishment of the IRS's electronic transcript system with appropriate security measures for employers. Employers' ability to access transcripts electronically was temporarily terminated because of a breach at the IRS. However, the "Get Transcript Online" system has been unavailable for almost a year. This is no longer temporary and causes significant hardship for employers.
At an April IRS National Public Liaison Practitioner Meeting, Rene Schwartzman, IRS Identity Assurance Office Executive, described in detail the IRS's efforts to provide the transcript system to individual taxpayers. The IRS hopes to make that system available this summer but has not yet begun the process to rejuvenate the electronic transcript service for employers. The IRS partnered with the U.S. Digital Service, a branch within the federal Office of Management and Budget, to help design a new multi-factor authentication process to meet federal standards and best practices by financial institutions and industry for individuals. Unclear is whether the new authentication process could be used for employer access, speeding the time necessary to develop a new employer electronic transcript service.SSN Matching for ACA Compliance
Without a means to correct the problem, employers face significant penalties if employee, spouse, and dependent names and social security numbers (SSNs) do not match the IRS's database when filing ACA Form 1095-C.
The APA explained the problem in detail. Different agencies offer several programs to employers to match SSNs with names, but none of these are available for ACA information filing purposes. For example, the Social Security Administration's (SSA) SSN Verification Service (SSNVS) was designed for Forms W-2 only. An employer that uses it for any other purpose faces significant penalties. The U.S. Department of Homeland Security's E-Verify System cannot be used for ACA reporting because it was designed exclusively to determine eligibility to work in the United States. The IRS's taxpayer identification number (TIN) matching system is available for Forms 1099 and only for those where backup withholding is a possibility.
While the APA understands how important it is for the IRS to ensure that SSNs and names match, employers need a means to comply. For ACA information filing, the IRS could open its TIN matching system or work with the SSA to open the SSNVS for ACA purposes.Electronic Capabilities for Levies
Another area where the APA recommended an electronic solution is for levy notices and payments. Currently, the IRS sends employers levy notices by mail. Employers must then enter the information manually into their payroll systems. An IRS pilot program in Texas is sending levy notices by facsimile, but this is not conducive to transmitting large numbers of levy notices and does not ease the burden on employers.
Current electronic capabilities at the IRS do not allow for third-party payments. This means that employers must print and mail checks to the agency. A February 2016 conference call with the IRS revealed that the IRS likely will require authorization from the Treasury Department to change the IRS's business management system to fix this problem.Permanent Multiemployer Plan Transition Guidance for ACA
The APA suggested that the IRS issue permanent guidance for reporting of multiemployer health plans under the ACA. Interim guidance by the agency allows a safe harbor for employers that offer minimum coverage to employees when a collective bargaining agreement requires a contribution to the plan for full-time employees, plan coverage is available to employees and dependents, and the offered coverage is affordable and contains adequate value. In the case of multiemployer plans, employers will have no knowledge about whether an employee becomes eligible for coverage, completed the necessary qualifying period, obtained health care coverage, or continued to be eligible for coverage after satisfying eligibility conditions. Essentially, employers do not have control over plan design and administration in these situations.
Anyone may recommend agency priorities at any time during the year for consideration, but with limited resources at the Treasury Department and IRS, the APA is optimistic that at least some of its recommendations will be included in the original Priority Guidance Plan this summer.