HCTT-2014-21: Information for Employers about Their Responsibilities Under the Affordable Care Act

f you are an employer, the number of employees in your business will affect what you need to know about the Affordable Care Act (ACA).

Employers with 50 or more full-time and full-time-equivalent employees are generally considered to be “applicable large employers” (ALEs) under the employer shared responsibility provisions of the ACA.  Applicable large employers are subject to the employer shared responsibility provisions.  However, more than 95 percent of employers are not ALEs and are not subject to these provisions because they have fewer than 50 full-time and full-time-equivalent employees.

Whether an employer is an ALE is determined each calendar year based on employment and hours of service data from the prior calendar year. An employer can find information about determining the size of its workforce in the employer shared responsibility provision questions and answers section of the IRS.gov/aca website and in the related final regulations.

In general, beginning January 1, 2015, ALEs with at least 100 full-time and full-time equivalent employees must offer affordable health coverage that provides minimum value to their full-time employees and their dependents or they may be subject to an employer shared responsibility payment.  This payment would apply only if at least one of its full-time employees receives a premium tax credit through enrollment in a state based Marketplace or a federally facilitated or Marketplace.  Also, starting in 2016 ALEs must report to the IRS information about the health care coverage, if any, they offered to their full-time employees for calendar year 2015, and must also furnish related statements to their full-time employees.

For 2014, the IRS will not assess employer shared responsibility payments and the information reporting related to the employer shared responsibility provisions is voluntary.  In addition, the employer shared responsibility provisions will be phased in for smaller ALEs from 2015 to 2016.  Specifically, ALEs that meet certain conditions regarding maintenance of workforce size and coverage in 2014 are not subject to the employer shared responsibility provision for 2015.  For these employers, no employer shared responsibility payment will apply for any calendar month during 2015 (including, for an employer with a non-calendar year plan, the months in 2016 that are part of the 2015 plan year). However these employers are required to meet the information reporting requirements for 2015.  The employer shared responsibility provision questions and answers section of the IRS.gov/aca website and the preamble to the employer shared responsibility final regulations describe the requirements for this relief in more detail.  Both resources also describe additional forms of transition relief that apply for 2015.

Small employers, specifically those with fewer than 25 full-time equivalent employees, may be eligible for the small business health care tax credit.

Regardless of the number of employees, if an employer sponsors a self-insured health plan, it must report to the IRS certain information about its health insurance coverage plan for each covered employee.

More information

Find out more about the small business health care tax credit, applicable large employers, the employer shared responsibility provision, information reporting requirements and the premium tax credit at IRS.gov/aca.

Find out more about the health care law at HealthCare.gov.

IRS Special Edition Tax Tip 2014-20: Extended Tax Deadline Expires Oct. 15; Don’t Overlook Tax Benefits

If you are one of the nearly 13 million taxpayers who asked for more time to file your federal tax return this year, the extra time is about to expire. If you haven’t yet filed, here are some things that you should know:
Know the deadline. Oct. 15 is the last day to file for most people who requested an automatic six-month extension.

Don’t overlook tax benefits. Make sure to check if you qualify for tax breaks that you might miss if you rush to file. This includes the Earned Income Tax Credit and the Saver’s Credit. The American Opportunity Tax Credit and other education tax benefits can help you pay for college.

Use IRS Free File. Many people do not know that they can still e-file their tax return for free through IRS Free File. The program is only available on IRS.gov through Oct. 15. IRS e-file is easy, safe and the most accurate way to file your taxes. E-file also helps you get all the tax benefits that you’re entitled to claim.

Use IRS Direct Pay. If you owe taxes the best way to pay them is with IRS Direct Pay. It’s the simple, quick and free way to pay from your checking or savings account. Just click on the ‘Pay Your Tax Bill’ icon on the IRS home page.

File on time. If you owe taxes, file on time to avoid a late filing penalty. If you owe and can’t pay all of your taxes, pay as much as you can to reduce interest and penalties for late payment. Use the Online Payment Agreement tool to ask for more time to pay. You can also file Form 9465, Installment Agreement Request, with your tax return.

More time for the military. Some people have more time to file. This includes members of the military and others serving in a combat zone. If this applies to you, you typically have until at least 180 days after you leave the combat zone to both file returns and pay any taxes due.

New filing status rules may apply. New rules apply to you if you were legally married in a state or foreign country that recognizes same-sex marriage. You and your spouse generally must use a married filing status on your 2013 federal tax return. This is true even if you and your spouse now live in a place that does not recognize same-sex marriage. See IRS.gov for more information.

Try easy-to-use tools on IRS.gov. Use the EITC Assistant to see if you’re eligible for the credit. Use the Interactive Tax Assistant tool to get answers to common tax questions. The IRS Tax Map gives you a single point to get tax law information by subject. It integrates your topic with related tax forms, instructions and publications into one research tool.
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IR-2014-98: Business E-File Jumps 10 Percent This Year; Doubles in 4 Years; 7 in 10 Corporate and Partnership Tax Returns Now Filed Electronically

WASHINGTON — Business e-file rose nearly 10 percent this year, continuing the growth that has seen the number of corporate and partnership returns filed electronically double in just four years, the Internal Revenue Service said today. An additional 600,000 corporations and partnerships e-filed their tax returns this year.

As of Sept. 21, more than 7 million corporations and partnerships e-filed, an increase of almost 10 percent over the prior year’s total, and twice the nearly 3.5 million returns e-filed during the 2010 fiscal year. About 70 percent of all corporate and partnership returns have been e-filed during 2014. Many corporations and partnerships operating on a calendar year receive filing extensions. The extended due date is usually Sept. 15.

Most large corporations and partnerships are required to e-file.

Large and mid-size corporations, generally those with $10 million or more in total assets, are required to electronically file their Forms 1120 or 1120S. Partnerships with more than 100 partners (Schedules K-1) are also required to e-file their tax returns. The IRS is seeing growth in e-filing by these businesses and by businesses not required to e-file.

This year, 92,494 large corporations e-filed their returns, an increase of 8.6 percent compared to the same time last year. The greatest rate of growth in e-filing among these businesses is by large partnerships. This year, 122,879 large partnerships e-filed, up more than 14 percent from the same time the year before.

Tax Returns e-filed by Corporations and Partnerships

Category of e-filers

Sept. 22, 2013

Sept. 21,2014

%Change

Large Corporation Tax Returns

85,180

92,494

8.59%

Other Corporate Returns

4,007,895

4,373,597

9.12%

Total Corporate Returns

4,093,075

4,466,091

9.11%

Large Partnership Tax Returns

107,730

122,879

14.06%

Other Partnership Returns

2,388,175

2,640,319

10.56%

Total Partnerships

2,495,905

2,763,198

10.71%

Total Returns

6,588,980

7,229,289

9.72%

Corporations and partnerships can get more information about IRS e-file at IRS.gov.

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Page Last Reviewed or Updated: 09-Oct-2014

HCTT-2014-20: Small Employers Should Check Out the Health Care Tax Credit

New and existing small employers who do not yet benefit from the Small Business Health Care Tax Credit should look into whether the credit can help them provide insurance to their employees.

For tax years beginning in 2014 and after, the maximum credit is 50 percent of premiums paid for small business employers, and 35 percent of premiums paid for tax-exempt small employers, such as charities.

Beginning in 2014, a small employer may qualify for the credit if:

  • It has fewer than 25 employees who work full-time, or a combination of full-time and part-time. For example, two half-time employees equal one full-time employee for purposes of the credit.
  • It pays premiums on behalf of employees enrolled in a qualified health plan offered through a Small Business Health Options Program Marketplace or qualifies for an exception to this requirement.
  • The average annual wages of full-time equivalent employees are less than $51,000. The annual average wages will be adjusted annually for inflation.
  • It pays a uniform percentage for all employees that is equal to at least 50 percent of the premium cost of the insurance coverage.

The credit is available to eligible employers for two consecutive taxable years.

A small business employer who did not owe tax during the year can carry the credit back or forward to other tax years. Also, since the amount of the health insurance premium payments is greater than the total credit claimed, eligible small employers can still claim a business expense deduction for premiums in excess of the credit.

For tax-exempt small employers, the credit is refundable. Even if the tax-exempt small employer has no taxable income, it may be eligible to receive the credit as a refund so long as it does not exceed its income tax withholding and Medicare tax liability.

More information

More information about the Small Business Health Options Program Marketplace – better known as the SHOP Marketplace – including the Federally Facilitated Marketplace, is available at HealthCare.gov.

Find out more about the small business health care tax credit at IRS.gov/aca.

Find out more about the health care law at HealthCare.gov.

IR-2014-97: IRS Simplifies Procedures for Favorable Tax Treatment on Canadian Retirement Plans and Annual Reporting Requirements

WASHINGTON ― The Internal Revenue Service today made it easier for taxpayers who hold interests in either of two popular Canadian retirement plans to get favorable U.S. tax treatment and took additional steps to simplify procedures for U.S. taxpayers with these plans.

As part of this, the IRS provided retroactive relief to eligible taxpayers who failed to properly choose this benefit in the past. In addition, the IRS is eliminating a special annual reporting requirement that has long applied to taxpayers with these retirement plans.

Under this change, many Americans and Canadians with registered retirement savings plans (RRSPs) and registered retirement income funds (RRIFs) now automatically qualify for tax deferral similar to that available to participants in U.S. individual retirement accounts (IRAs) and 401(k) plans. In general, U.S. citizens and resident aliens qualify for this special treatment as long as they filed and continue to file U.S. returns for any year they held an interest in an RRSP or RRIF and include any distributions as income on their U.S. returns.

The change relates to a longstanding provision in the U.S.-Canada tax treaty that enables U.S. citizens and resident aliens to defer tax on income accruing in their RRSP or RRIF until it is distributed. Otherwise, U.S. tax is due each year on this income, even if it is not distributed.

In the past, however, taxpayers generally would get tax deferral by attaching Form 8891 to their return and choosing this tax treaty benefit, something many eligible taxpayers failed to do. Before today’s change, a primary way to correct this omission and retroactively obtain the treaty benefit was to request a private letter ruling from the IRS, a costly and often time-consuming process.

Many taxpayers also failed to comply with another requirement; namely that they file Form 8891 each year reporting details about each RRSP and RRIF, including contributions made, income earned and distributions made. This requirement applied regardless of whether they chose the special tax treatment. The IRS is eliminating Form 8891, and taxpayers are no longer required to file this form for any year, past or present.

The revenue procedure does not modify any other U.S. reporting requirements that may apply under the Bank Secrecy Act (BSA) and section 6038D. See FinCEN Form 114 due by June 30 of each year, and Form 8938 attached to a U.S. income tax return for more information about the reporting requirements under the BSA and section 6038D. Different reporting thresholds and special rules apply to each of these forms.

Further details on today’s change can be found in Revenue Procedure 2014-55, posted on IRS.gov.

IRS Special Edition Tax Tip 2014-19: IRS Grants Tax Relief to Drought-Stricken Farmers and Ranchers in 30 States

IRS Special Edition Tax Tip 2014-19, October 7, 2014
If you’re a farmer or rancher and drought forced you to sell your livestock, special IRS tax relief may help you.
The IRS has extended the time to replace livestock that farmers were forced to sell due to drought. If you’re eligible, this may help you defer tax on any gains you received from the forced sales. The relief applies to all or part of 30 states affected by drought. Here are several points you should know about this relief:
If the drought caused you to sell more livestock than usual, you may be able to defer tax on the extra gains from those sales.

You generally must replace the livestock within a four-year period. The IRS has the authority to extend the period if the drought continues. For this reason, the IRS has added one more year to the replacement period in 30 states.

The one-year extension of time generally applies to certain sales due to drought.

If you are eligible, your gains on sales of livestock that you held for draft, dairy or breeding purposes apply.

Sales of other livestock, such as those you raised for slaughter or held for sporting purposes and poultry, are not eligible.

The IRS relief applies to farms in areas suffering exceptional, extreme or severe drought conditions. The National Drought Mitigation Center has listed all or parts of 30 states that qualify for relief. Any county that is contiguous to a county that is on the NDMC’s list also qualifies.

This extension immediately impacts drought sales that occurred during 2010.

However, the IRS has granted previous extensions that affect some of these localities. This means that some drought sales before 2010 are also affected. The IRS will grant additional extensions if severe drought conditions persist.
Get more on this relief in Notice 2014-60 on IRS.gov. This includes a list of states and counties where the IRS relief applies. For more on these tax rules see Publication 225, Farmer’s Tax Guide on IRS.gov. You can get a copy of it by calling 800-TAX-FORM (800-829-3676).
If you found this Tax Tip helpful, please share it through your social media platforms. A great way to get tax information is to use IRS Social Media and subscribe to IRS Tax Tips or any of our e-news subscriptions.

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IR-2014-96: IRS Seeks Applications for Advisory Committee for the Tax Exempt and Government Entities Division

WASHINGTON ― The Internal Revenue Service is seeking applications for vacancies on the Advisory Committee on Tax Exempt and Government Entities (ACT). The committee provides a venue for public input on relevant areas of tax administration.

Vacancies exist in the following customer segments:

  • Employee Plans – two vacancies
  • Exempt Organizations – two vacancies
  • Indian Tribal Governments – one vacancy
  • Tax Exempt Bonds – two vacancies

Members are appointed by the Department of the Treasury and serve two-year terms, beginning in June 2015. Applications will be accepted through Nov. 3, 2014.

The ACT is an organized public forum for the IRS and representatives who deal with employee plans, exempt organizations, tax-exempt bonds, and federal, state, local and Indian tribal governments. The ACT allows the IRS to receive regular input on administrative policy and procedures of the Tax Exempt and Government Entities Division (TE/GE).

Applications can be made by completing an ACT member application form.  Applications should reflect the proposed member’s qualifications.  Members of the ACT may not be federally registered lobbyists.  A notice published in the Federal Register, dated Oct. 2, contains more details about the ACT and the application process.

Applications should be sent by:

  • Email to Mark.F.O’Donnell@irs.gov,
  • Fax: 877-801-7395, or
  • U.S. mail to Mark O’Donnell, TE/GE Communications and Liaison Director, Internal Revenue Service, 1111 Constitution Ave., NW, SE:T:CL, NCA 676, Washington, DC 20224.
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