The Sixth Circuit Court of Appeals recently confirmed that life insurance agents were properly classified as independent contractors, rather than employees. The case involved eligibility for benefits under ERISA, and a district court, using the traditional Darden factors for determining classification status, had ruled in 2017 that the agents were employees who were eligible for ERISA benefits. For more information on insurance agents and employment classification issues, visit Tax Facts Online. Read More

The definition of “compensation” is important for many reasons in the retirement planning arena, but has gained new importance in light of suspended deductions and exclusions post-tax reform. Retirement plans generally must use the IRC’s definition of compensation for nondiscrimination testing purposes, which includes, for example, nondeductible moving expenses (but excludes deductible moving expenses). Post-reform, however, all moving expenses are nondeductible. Despite this, the moving expense deduction was only suspended, not eliminated. This is one example of how tax reform has created a level of uncertainty regarding the appropriate definition of compensation while all tax reform provisions remain (at least temporarily) in effect. For more information on the definition of compensation for qualified plan purposes, visit Tax Facts Online. Read More

In the years that have passed since the ACA became effective, many employers may have forgotten the importance of maintaining the grandfathered status of their health insurance plans. Grandfathered health plans remain exempt from many of the ACA market reform provisions and help employers avoid some of the more difficult compliance issues presented by the ACA. To maintain grandfathered status, employers should be sure to maintain proper documentation of the plan coverage extending from March 23, 2010 to the present. If and when the plan enters a new policy or contract, it should provide the health insurance company with documents governing the plan terms to make sure the change will not cause loss of grandfathered status. Adding new employees or new contributing employers will not impact the grandfathered status of the plan, so long as the principal purpose of any restructuring of the business was not to cover additional people under a grandfathered plan. Amendments to the plan that eliminate certain benefits can cause loss of grandfathered status, as can increases in certain cost-sharing requirements and copayments. For more information on grandfathered health plans, visit Tax Facts Online. Read More

· Tax Facts Intelligence Weekly – current as well as archive weekly newsletters you receive by email as another way to access our latest developments.

· Thumbs Up/Thumbs Down – a debate each week between Robert Bloink and myself (William Byrnes) whereby we take opposing viewpoints on tax policy and argue our opinions. Find out if you agree or disagree and, eventually, you will be able to vote on whose side you are on for that week.

· Featured Articles – a weekly article with archives written by Robert Bloink and myself, thought leaders in finding customer needs for new products and how to make new practice tools work with your clients, perhaps in ways you may not have thought about.

· Recent Updates – as you may know, our digital version of Tax Facts is updated weekly and not annually like our print version of Tax Facts. You can now see any significant changes made to a Tax Facts question that week as it will appear in the “Latest Developments” section, so you are aware of changes. These changes can even be delivered to your smartphone should you choose.

We are looking for another big year providing value-added commentary and analysis. I am always interested in your feedback and “practitioner note” submissions so feel free to email me at williambyrnes@gmail.com.

IRS Releases New Safe Harbor for Depreciating Passenger Autos Under Tax Reform 

Post-reform, taxpayers are generally entitled to an additional depreciation deduction for qualified property, including passenger automobiles, if that property was placed in service after September 27, 2017 (and before 2027). If the passenger auto qualifies for 100% depreciation deduction in year one, the tax legislation increased the first-year limitation by $8,000. Assuming the depreciable basis is less than the first year limitation, the additional amount is deductible in the first tax year after the end of the recovery period. Under the safe harbor, however, the taxpayer can take the depreciation deductible for the excess amounts during the recovery period up to the limits applicable to passenger autos during this time frame. The IRS will publish a depreciation table in Appendix A of Publication 946, which taxpayers must use to apply the safe harbor. The safe harbor only applies to passenger autos placed into service before 2023, and does not apply if (1) the taxpayer elected out of 100% first year depreciation or (2) elected to expense the automobile under Section 179. For more information on the rules that apply in determining the depreciation deduction for passenger automobiles, visit Tax Facts Online. Read More

PBGC recently released a set of proposed regulations to amend the rules on calculating withdrawal liability and annual withdrawal liability payments when an employer withdraws from a multi-employer pension plan. Under the regulations, in calculating withdrawal liability, plan sponsors must disregard benefit suspensions for the ten plan years following the plan year in which the suspension of benefits became effective, and include the suspended benefits when determining the plans unvested benefit liability (UVBs) during that period. The proposed regulations would also require plan sponsors to disregard surcharges when determining how to allocate UVBs to a withdrawing employer, as well as certain increases in contribution rates. The regulations provide detailed guidance on how each element necessary to calculate a withdrawing employer’s liability could be calculated. For more information on benefit reductions under the MPRA, visit Tax Facts Online. Read More

A district court recently clarified that an employee’s request for reasonable accommodations for a disability does not necessarily mean that the employee will also qualify for benefits under a short-term disability plan. In this case, the employee provided evidence from his doctor that stated he was unable to drive in traffic, but the employer’s plan required that he be unable to perform essential duties of his job in order to qualify for disability benefits. The employer denied the claim for benefits because the employee’s job did not involve driving, although he was entitled to work from home so that he could avoid driving into an office (the “reasonable accommodation” in this case). The court agreed with the employer that the employee’s ability to perform his job was not impaired, so he was not entitled to disability benefits. The key takeaway from this case is that, even if an employee has a disability that requires reasonable accommodation, that employee is not necessarily entitled to receive employer-sponsored disability benefits. For more information on employer-sponsored disability benefits, visit Tax Facts Online. Read More

· Thumbs Up/Thumbs Down – a debate each week between Robert Bloink and myself (William Byrnes) whereby we take opposing viewpoints on tax policy and argue our opinions. Find out if you agree or disagree and, eventually, you will be able to vote on whose side you are on for that week.

· Featured Articles – a weekly article with archives written by Robert Bloink and myself, thought leaders in finding customer needs for new products and how to make new practice tools work with your clients, perhaps in ways you may not have thought about.

· Recent Updates – as you may know, our digital version of Tax Facts is updated weekly and not annually like our print version of Tax Facts. You can now see any significant changes made to a Tax Facts question that week as it will appear in the “Latest Developments” section, so you are aware of changes. These changes can even be delivered to your smartphone should you choose.

We are looking for another big year providing lots of value-added commentary and analysis. I am always interested in your feedback so feel free to email me at williambyrnes@gmail.com.

IRS Provides Additional Rules for Employers’ Ability to Recover Mistaken HSA Contributions
The IRS clarified when an employer can recover health savings account (HSA) contributions made in error. Generally, erroneous HSA contributions must be corrected by reducing future contributions. The IRS Office of the Chief Counsel released an information letter stating an employer can recover mistaken contributions if the employer has clear documentary evidence that demonstrates an administrative or process error that caused the mistaken contribution. Examples of correctable mistakes provided by the IRS include situations where the participants’ names were confused, mathematical errors and duplicate payroll transmittals. For more information on excess HSA contributions, visit Tax Facts Online and Read More.

Wellness Programs Post-EEOC: What Remains Important 
EEOC regulations that were recently vacated and removed focused incentives an employer could offer without rendering the program impermissibly involuntary. Although the incentive based regulations were removed, the remaining regulations provide some clarity on this “voluntariness” issue. The program may not require employees to participate, and the employer is not permitted to deny health coverage or limit group health plan or other benefits if the employee chooses not to participate in the program. The employer cannot take an action that would be considered retaliation or take any adverse employment actions for non-participation. For more information on the rules that currently govern employer-sponsored wellness programs, visit Tax Facts Online and Read More.