Notice and Notice : What Your Organization Needs to Know. Kate Murray, Policy Analyst

Similar documents
IMPLEMENTING IRS NOTICE IN MEDICAID-FUNDED SELF DIRECTION PROGRAMS: A QUESTION & ANSWER (Q&A)

Certain Medicaid Waiver Payments May Be Excludable From Income

Fiscal/Employer Agent (F/EA)

COBRA Provisions of the 2009 Stimulus Bill (The American Recovery and Reinvestment Act of 2009) March 11, 2009

Fiscal Intermediary and Financial Cash & Counseling Services. Presented to New Jersey Family Support Planning Council September 16, 2017

MOTOROLA SOLUTIONS HEALTH AND WELFARE BENEFITS BOOK

THE IMPACT OF THE AFFORDABLE CARE ACT ON EMPLOYERS AND EMPLOYEES IN PARTICIPANT DIRECTION

Health Care Reform Information for Employees. Your options under health care reform

PPL s Payroll Service- MA DDS Autism Waiver Program

Application of Retroactive Increase in Transit Benefits

Questions and Answers on Additional Medicare Tax

BENEFIT APPLICATION FORM

ELWOOD STAFFING SERVICES, INC. COLUMBUS IN

COBRA Information and Questions and Answers

COBRA Procedures and Basic Compliance Rules for Employers

Frequently Asked Questions about Form 1095-B

Health Savings Accounts and Medicare

dependent care reimbursement for business travel summary plan description effective january 1, 2017 human energy. yours. TM

LIST OF SUBSTANTIVE CHANGES AND ADDITIONS PPC's Payroll Tax Deskbook. Twenty second Edition (December 2015)

Employer Reporting Guide for Large Employers and 6056 Reporting for Large Employers

125 PLAN SUMMARY PLAN DESCRIPTION BENEFIT OPTION APPENDIX C DEPENDENT CARE ASSISTANCE PROGRAM

Preparing and Maintaining a Vendor F/EA FMS Provider Policies and Procedures Manual

<<Mail ID>> <<Name 1>> <<Name 2>> <<Address 4>> <<Address 2>> <<Address 3>> <<Address 5>> <<City>><<State>><<Zip>> <<Country>>

Health Care Reform Compliance: An Employer Perspective

Development of year-end work plan Create the year-end team (e.g., Payroll, HR, IT, and Accounting) and focus on the following tasks:

FLEXIBLE BENEFIT PLAN SUMMARY PLAN DESCRIPTION

Organization of Staff Analysts. Group Universal Life Dependent Term Life. The Prudential Insurance Company of America

Applying for Supplemental Security Income

Joint Labor-Management Benefits Committee COMMITTEE REPORT 16-03

Planning Tax Payments to Avoid Penalties Properly structuring tax payments requires careful planning, especially in light of tax reform

Benefits Handbook Date November 1, Dependent Children Life Insurance Plan MMC

Evidence of Coverage:

Frequently Asked Questions (FAQs) DEPENDENT CARE REIMBURSEMENT PLAN (D-Care)

SAG-PRODUCERS PENSION PLAN

What s In My Paycheck? compensation package: all of the wages (salary, bonus, commission) and benefits provided by an employer. What s In My Paycheck?

Publicis Benefits Connection Health & Group Benefits Program Dependent Care Flexible Spending Account Summary Plan Description January 1, 2016

Self Direction in Managed Care and the FMS Provider

ARMSTRONG INTERNATIONAL, INC. THREE RIVERS MI

Preparing for your first 401(k) plan audit

SilverScript Employer PDP sponsored by Southern California Edison Frequently Asked Questions

Estate or trust return guide 2014

Paying for Long-Term Care: An Overview of Medical Assistance. Prepared by the Elder Law Team at:

Earned Income Table. Earned Income

ACA REPORTING WEBINAR QUESTIONS AND ANSWERS

January 1, Dependent Children Life Insurance Plan MMC

EOI SERVICE COMPANY, INC. RETIREMENT & SAVINGS PLAN SUMMARY PLAN DESCRIPTION

The American Recovery and Reinvestment Act s Impact on COBRA

Determining Applicable Large Employer Status & Full-Time Equivalent Employees

Chapter 2 Changes to Your Benefits

End-of-Year Payroll Processing

General Information for 401k Plan Participant

HEALTH CARE LAW PRIMER

Group Health Plan For Insured Medical Programs

Your Flexible Benefit Plan -- Premium Conversion and the Flexible Spending Accounts

March 3, 2000 MEMORANDUM FOR THOMAS BURGER, DIRECTOR OFFICE OF EMPLOYMENT TAX ADMINISTRATION AND COMPLIANCE

Domestic Partner Benefits Guide Policy and Procedures

ACA UPDATE. David C. Smith EbenConcepts Company Benefits Experts March 17, 2016

Summary Plan Description

Money Management & Budgeting Skills Workshop

INTUIT INC. 401(k) PLAN SUMMARY PLAN DESCRIPTION

Bryn Mawr College Retirement Plan

Regarding non-student dependents over age 19; can funds from an HSA be used for their qualifying expenses?

Charlotte N. Hodges, CPP October 12, Overpayments

Frequently Asked Questions: HDHP with HSA 2011 Annual Enrollment. What s New for 2011

Elizabeth Sullivan, SHRM CP Accountant/Human Resources Generalist. Regional HR Support

Handbook. TreeHouse Foods, Inc. Health and Welfare Benefits Plan. Non-union Employees. Effective January 1, 2017

Evidence of Coverage:

][Form 11 ][GWRS FDSTHD ][08/24/12 ][Page 1 of 6 ][GP22][/ ][A02:080912

RIGHTS OF MASSACHUSETTS INDIVIDUALS WITH A REPRESENTATIVE PAYEE. Prepared by the Mental Health Legal Advisors Committee August 2017

Marketplace Model Eligibility Notice for 2016 Coverage Special Enrollment Verification Process

NJ CarePoint Green PPO Plan

1. In the login name box enter oh + any number (ex. oh499) 2. In the password box enter tbb Click login

SOCIAL SECURITY REPRESENTATIVE PAYEES

2014 AFFORDABLE CARE ACT (OBAMA CARE)

2019 Health Savings Plan and Health Savings Account Questions

Fringe Benefits That May Affect Your Payroll Reporting and Tax Withholding

All Savers. All Savers Alternate Funding For the health of your business. Employer Guide

Working Together. Pennsylvania Department of Revenue Updates and Information

IRS Reporting Resource Guide

KEY FEATURES OF LEGAL & GENERAL S PENSION ANNUITY.

VITA/TCE Advanced Topic: Premium Tax Credits. Current as of November 21, 2017

Healthcare Participation Section MMC Draft NA

SUMMARY PLAN DESCRIPTION FOR Morehouse School of Medicine 403(b) Plan

SUPPLEMENTAL SECURITY INCOME (SSI)

Summary Plan Description For Flexible Benefit Plan Document. Amended and Restated Effective. January 1, 2006

Introduction FYI - Topics from Content Outline Employers, Wages and Employment Liable for FUTA Employers liable for FUTA...

Answers to Frequently Asked Questions for Registered Domestic Partners and Individuals in Civil Unions

GUIDE TO RETIREMENT FROM THE MOTION PICTURE INDUSTRY PENSION AND HEALTH PLANS

SUMMARY PLAN DESCRIPTION. Waukesha State Bank Employees' 401(k) Profit Sharing Plan

CORNELL-HART PENSION PLAN EE ELECTIVE 401(K)

Kaiser Plus Medical Plan Kaiser Permanente Colorado

Fiesta Mart, Inc. 401(k) Retirement and Savings Plan

Evidence of Coverage:

STEVENS INSTITUTE OF TECHNOLOGY NO. 660 PENSION PLAN SUMMARY PLAN DESCRIPTION

Model COBRA Continuation Coverage Election Notice Instructions

YES PREP 401(K) PLAN SUMMARY PLAN DESCRIPTION

Willcox Unified School District #13 Cafeteria Plan SUMMARY PLAN DESCRIPTION. Effective July 1, 2017

Caution: DRAFT NOT FOR FILING

QMCSO Procedures for Trace Systems Group Health Plans

Evidence of Coverage

Transcription:

Notice 2014-7 and Notice 2015-15: What Your Organization Needs to Know Kate Murray, Policy Analyst

Today s Agenda Analyze new IRS Q&A on Notice 2014-7 and how this guidance applies to F/EA operations Gain familiarity with IRS Notice 2015-15, a new proposed revenue procedure Would require agents to obtain written authorization from employees as a condition of refunding overcollected FICA IRS is seeking feedback from stakeholders NRCPDS will submit comments in collaboration with members Time for questions 2

Notice 2014-7 Basics Announced that payments received by individual care providers who live in the same home as care recipients are now considered difficulty of care payments under Section 131 of the Internal Revenue Code Notice s language is specific to Medicaid waiver programs, but could apply to similar Medicaid programs operating under authorities other than 1915(c) Notice doesn t apply to private pay or Veterans programs We ll discuss this more later 3

Notice 2014-7 Basics Difficulty of care (DOC) payments defined in the Internal Revenue Code as compensation to a foster care provider for the additional care required because the qualified foster individual has a physical, mental, or emotional handicap In the past, only foster care providers could receive DOC payments Notice s purpose is to standardize federal tax treatment of Medicaid HCBS providers who perform similar duties with the same goal to prevent institutionalization 4

Notice 2014-7 Impact DOC payments are excludable from federal income Workers can t choose to classify DOC payments as regular income payments cannot be included in federal income for any reason Therefore should not have federal income tax withheld They do NOT affect FICA/FUTA exemption status FICA and FUTA must still be paid unless an employee is exempt due to an eligible family relationship with the consumer/representative employer or other reason Cannot be considered income for purposes of determining worker s Medicaid/ACA tax credit eligibility Some states have chosen to follow Notice 2014-7 for state income tax purposes 5

Difficulty of Care Payment Eligibility Eligible workers must live with the participant and cannot have a separate home where they reside, even if only part-time IRS expects eligible workers will perform routines of private life (e.g., share meals & celebrate holidays) in the participant s residence, not elsewhere Do NOT use DOL definition of live-in worker to determine who is eligible for difficulty of care payments Standards are very different IRS s standards are narrower 6

Difficulty of Care Payment Eligibility Worker s family relationship to participant is not a determining factor as to whether worker is receiving DOC payments or not Multiple caregivers living in the same house with a participant can each receive DOC payments (e.g., parents providing care for a child) Eligibility hinges on whether the participant and worker live together it doesn t matter who owns or rents the property Not all of worker s care must occur in the home for payments to be considered DOC Transportation, shopping, attending doctor appointments, and attending community events are allowable 7

Claiming Eligibility Employees who receive DOC payments can submit a statement to the F/EA certifying their status in order to stop federal income tax withholding Can also handle it on their individual tax return In that case, employee would receive refund for withheld FIT IRS will ask the worker for proof of address after his/her individual tax return is filed Driver s license or other government-issued ID Medical bill Utility bill Bank statement Document from F/EA or case management agency 8

Sample Certification Statement Under penalties of perjury, I declare that I am an individual care provider receiving payments under a state Medicaid Home and Community-Based Services waiver program for care I provide to (Participant s Name) under the care recipient s plan of care. Signed: Date: 9

Claiming Eligibility Agent is not responsible for verifying accuracy of worker s statement Must accept statement unless you already have knowledge the statement is untrue Handle these certifications as you would handle an employee s Form W-4 in general, take their word for it F/EA shouldn t act as the payroll police Do not preemptively stop withholding; stop withholding only when you receive employee statement 10

Payroll Processing for Exempt Employees If you receive a statement from an employee stating that he/she receives difficulty of care payments, you should stop withholding federal income tax immediately Notify employees that if their living situation changes for any reason, they must report the change to the F/EA or face a tax bill 11

Payroll Processing for Exempt Employees If employee has certified that he/she receives DOC payments, disregard employee s Form W-4 for that employment relationship because Form W-4 only handles withholding from federal income. DOC payments are excludable from federal income. No need to obtain a new Form W-4 marked exempt If employee s living arrangement changes, withhold at single, zero until Form W-4 can be obtained If Agency with Choice provider bound by the Affordable Care Act, use Federal Poverty Level safe harbor to determine affordability for full-time employees receiving DOC payments 12

Example Scenario Losing Eligibility Emily lives full-time with parent, to whom she provides care She submits a certified statement to the F/EA, who ceases withholding federal income tax Emily gets married and begins living in spouse s residence on weekends Payments Emily receives are no longer DOC payments Failure to notify F/EA of this change will result in a tax bill for the employee 13

Best Practices for Notice 2014-7 Compliance IRS recently confirmed no complete formal process yet However, they advised the following: Stop federal income tax withholding when you receive a statement from the employee If the employee wishes to refund past federal income tax withholding, they can handle it on their individual return OR request Form W-2c If an employee requests Form W-2c from the agent, the agent should comply* Issuing Forms W-2c will require filing Form 941-X with Schedule R for each affected quarter 14

Best Practices for Notice 2014-7 Compliance If you receive a statement from an employee but the employee was living in an eligible arrangement prior to your receiving the statement, you can refund FIT for the YTD amount if the employee asks you to do so This is a courtesy gesture by the agent Even if this amount is not refunded, the employee will be able to exclude the amount from gross income and obtain a refund on their individual tax return 15

What Should I Do? Agents should stop federal income tax withholding when they receive statements from employees For past payments, agents are advised to consider the tradeoffs between issuing new Forms W-2c to employees and not doing so IRS confirmed that as of right now, no penalties for failure to issue Forms W-2c to employees affected by Notice 2014-7 Expected procedures will likely grow more formalized over time 16

Program Eligibility If your Medicaid program operates under an authority other than 1915(c), difficulty of care payments may come into play Notice aimed at Medicaid-funded caregivers living with care recipients and providing nonmedical services, such as personal care Generally, Medicaid self direction programs should meet IRS requirements If you have remaining questions about your program s eligibility, contact Victoria Driscoll at IRS Office of Chief Counsel Contact her at (202) 317-4718 17

State Issues Some states have chosen to follow Notice 2014-7 for state income tax withholding purposes California (historically followed Section 131 of the Internal Revenue Code for state income tax purposes, but not yet made announcement on Notice 2014-7 and its expanded scope) Kentucky (no formal announcement, but DOR officials in phone conversation have stated they will follow it) Minnesota (officially announced) Contact your state for guidance if none is available No formal announcement does not necessarily mean your state isn t following the Notice 18

Questions? 19

Notice 2015-15 Proposed Revenue Procedure on FICA refunding Would require that employers or agents obtain written authorization from employees OR repay/reimburse each employee s share before refunding overcollected FICA Could impact year-end processes for Fiscal/Employer Agents seeking refunds on behalf of employees who did not reach the annual FICA wage threshold (currently $1,900) IRS is seeking comments through May 31, 2015 NRCPDS will submit comments in collaboration with membership 20

Notice 2015-15: Purpose Seeks to streamline FICA refunding process and protect employee interests Agents will not receive refunds of employer shares of overpaid FICA without either: Repaying/reimbursing employee shares, or Securing employee s consent to claim refund of employee share Employees and employers are frequently seeking refunds for the same overcollected FICA Causes problems at IRS IRS wants to make sure employers & agents aren t seeking refunds for employee FICA without employees knowledge 21

Notice 2015-15: Key Quotes No refund for the employer share of the overpaid FICA taxes will be allowed unless the employer has first repaid or reimbursed its employee or has secured the employee s consent to the allowance of the claim for refund and includes a claim for the refund of such employee tax. Agents must certify that the agent has repaid or reimbursed the employee share of the overpayment of FICA tax to the employee OR has secured the written consent of the employee to allowance of the refund or credit. 22

Notice 2015-15: Prior Years For prior tax years, employer or agent must also certify that it has obtained the employee s written statement confirming that the employee has not made any previous claims (or the claims were rejected) and will not make any future claims for refund or credit of the amount of the overcollection. Could come into play for F/EAs in the event an employee was FICA exempt in past years (e.g., family relationship) but was treated as non-exempt 23

Notice 2015-15: Obtaining Consent No need to obtain written authorization if agent makes reasonable efforts to obtain the employee s consent but cannot: Locate the employee Receive written consent from employee due to employee s choice Can be either not to furnish a statement Or can be choice to furnish a statement that does not authorize agent to refund overcollected FICA In these cases, employer may claim a refund of the overpaid employer share of the tax but not obtain a refund of the employee share 24

Refunding under Notice 2015-15 An agent need not repay or reimburse employees or obtain the consents for the filing of a refund claim prior to filing the claim in order for the claim to be valid BUT, agent must repay or reimburse employees or obtain employees consents before the IRS can grant the claim If an agent files a claim for refund based on certification that consents were secured from employees and IRS grants the refund, FICA will be refunded to the agent 25

Employee Statements May be received on paper or in electronic format Fax is acceptable Electronic system must be reasonably accessible to employee and should be designed such that only employee can give consent for his/her share of FICA refunding Must furnish hard copy of electronic statement per IRS request Electronic option can be provided as a choice but must not be required of employees 26

Employee Statements Must clearly inform employee of the purpose of employee consent Must provide name/contact information for any employee questions Must give reasonable period of time to respond (minimum 45 days from the date of the request) Must include statement that electronic employee consent was furnished by the named employee to the best of agent s knowledge and belief 27

Reasonable Efforts An agent s attempt to locate an employee will be a reasonable effort if the following are met: Agent properly requests employee consent as provided in Notice 2015-15; Request for consent sent electronically provides for an acknowledgment of receipt of email message (read-receipt message not sufficient); Agent retains a record of mailing/emailing/personally delivering the request for consent; If mailing is undeliverable, agent makes an effort to determine the employee s current address; If email results in delivery failure or employee does not acknowledge receipt of email, agent mails a request for consent in paper format to the employee s last known address. 28

Other Requirements Agents must retain employee consent statement as part of its records (4 years required, 7 years recommended) Employee consent statement must be made under penalties of perjury IRS requires agents to use this language or something close to it: I declare, under penalties of perjury, that I have examined the above statements and information and to the best of my knowledge and belief they are true, correct, and complete. 29

Comments on Notice 2015-15 NRCPDS will solicit comments from members on the Notice Stay tuned for more updates 30

Questions? 31