Lee B

I've used Star Software for a number of years. It does a good job, might be missing a few things, but I use it for several large clients, who have hundreds of assets. It does everything I need. I think it's in the $500 to $600 range. (http://www.starccs.com/)

1. I filed an extension, so I don't need to pay anything now. 2. I had a big loss in the stock market, so I won't owe any taxes. 3. I got paid in cash, so I don't need to report it. 4. I'm too young to pay taxes. 5. Income earned outside the U S isn't taxable. 6. Tax Preparers just fill out forms that you can do yourself. Since a number of my clients are S Corporations and their owners, my favorite is, " I didn't take any distributions so I don't owe any taxes." Please feel free to add to the list.

ATX has since updated the Blog See thread started by Janitor Bob on Jan 3rd, "Efiling 2012 Fed . . . . "

Isn't there a page under Program Preferences that deals with this?

I realize that many times other expenditures, which are not actual quarterly distributions of profit, end up being categorized as distributions. However when those other expenditures are regular monthly "personal" expenses we have to advise our clients that if they are audited the IRS may take the position that these regular monthly "personal" expenses are wages subject to employment taxes, especially if the S corp owners are not taking reasonable compensation.

For Sub S Corps that have at least one more employee in addition to the shareholder or more than one shareholder/employee that PAYS the premiums directly for All employees, I will treat the insurance premiums to employees as tax free fringe benefits and treat the Shareholder premiums following the IRS guidelines to obtain the shareholders tax-free treatment of the premiums. As Jack says, this will only work, if the owner(s) and the eligible employees are covered by a group policy which meets the specified requirements.

From the ATX Blog (updated from an earlier thread): Posted by Stephanie Bradford at 9:00 AM **In order to efile 2012 and 2013 prior year returns, you will need an update to your 2012 or 2013 software. We will post an update for each year’s product by January 30th, but more likely by Jan 15th

Unfortunately HP's customer service has definitely slipped the last 3 or 4 years.

Per The ATX Blog Important Note for Business Filers: The IRS will begin accepting Business tax returns on January 9, 2015.

Issue Number: 2014-1 Tax Season Opens As Planned Following Extenders Legislation Following the passage of the extenders legislation, the Internal Revenue Service announced today it anticipates opening the 2015 filing season as scheduled in January. The IRS will begin accepting tax returns electronically on Jan. 20. Paper tax returns will begin processing at the same time. The decision follows Congress renewing a number of "extender" provisions of the tax law that expired at the end of 2013. These provisions were renewed by Congress through the end of 2014. The final legislation was signed into law Dec 19, 2014. "We have reviewed the late tax law changes and determined there was nothing preventing us from continuing our updating and testing of our systems," IRS Commissioner John Koskinen. "Our employees will continue an aggressive schedule of testing and preparation of our systems during the next month to complete the final stages needed for the 2015 tax season." The IRS reminds taxpayers that filing electronically is the most accurate way to file a tax return and the fastest way to get a refund. There is no advantage to people filing tax returns on paper in early January instead of waiting for e-file to begin. More information about IRS Free File and other information about the 2015 filing season will be available in January Well I guess all the doomsayers were wrong

From the ATX Blog Jan 31st- we will deliver an update to the 2012 and 2013 program to allow efile for those prior years. An IRS schema change requires that we update those prior software years

I have a client who has legitimately claimed his parents and his disabled sister, who live in Mexico for many years.

IRS Warns Tax Return Preparers About Schedule C Errors By Ken Berry, CPA Practice Advisor Tax Correspondent On Dec 22, 2014 According to a new report in the Kiplinger Tax Letter, the IRS has mailed out more than 2,500 letters this month to tax return preparers who have been guilty of foiling a faulty Schedule C, Profit or Loss from Business (Sole Proprietorship). The gist of the message: Do better next time. However, while the IRS appears to treating wayward practitioners with kid gloves for the time being, don’t expect examiners to be as lenient during the 2015 tax-filing season. Repeat offenders could be slapped with penalties for as much as $5,000 per return. This isn’t the first time the IRS has addressed this issue. After sending out tens of thousands of such letters in the past, the IRS updated its posting of Letter 5105 on November 24, 2014. In the letter, Carolyn Campbell, Director of the Return Preparer Office, outlines the reason for the correspondence. It says that the IRS has reviewed tax returns the recipient prepared in the past year and discovered many have a high percentage of traits typically resulting in errors on Schedule C. The letter reminds tax preparers: Specifically, Letter 5105 covers the following: Due diligence: A paid tax return preparer must take numerous steps to prepare accurate tax returns on behalf of his or her clients. Due diligence and includes reviewing the applicable tax law to establish the relevance and reasonableness of income, credits, expenses and deductions on a return. Generally, you can rely in good faith without verification on information provided by a client, but you can’t ignore the implication of the information you have. Make reasonable inquiries if the information appears to be incorrect, inconsistent or incomplete. Schedule C reminders: To prepare an accurate Schedule C, you must ask your clients relevant and probing questions to help determine if the expenses are legit. Taxpayers may not fully understand the tax laws and may incorrectly believe that they can deduct expenses that don’t qualify. Furthermore, you should ask your clients if they have receipts to support the expenses and instruct them to keep them in case the IRS challenges deductions. Helpful resources
: The IRS provides valuable information about Schedule C on its website at www.irs.gov (Keyword: Recommended Reading for Small Businesses). In addition, its recommends that tax return preparers review the Schedule C instructions; Circular 230, Section 10.22, Diligence as to accuracy; and Circular 230, Section 10.34, Standards with respect to tax returns and documents, affidavits and other papers Potential consequences: 
Expect the IRS to get tougher in the future. It warns practitioners that they, as well as their clients, could face negative consequences from inaccurate returns. The IRS will be looking for improvement in future returns prepared by recipients of Letter 5510. Significantly, inaccurate returns may result in any of the following consequences: If the IRS examine a client’s return and find inaccuracies, the client may be liable for additional tax, interest, additions to tax and penalties. If you prepare a return for a client that has an understatement of tax liability due to an unreasonable position, the IRS may assess a minimum penalty of $1,000 per return (IRC Section 6694(a)). If you prepare a return for a client that has an understatement of tax liability due to reckless or intentional disregard of rules or regulations by the tax preparer, the IRS may assess a minimum penalty of $5,000 per return (IRC section 6694( ). Forewarned is forearmed: Pay extra-close attention to filings of Schedule C for 2014 returns. Don’t simply accept a client’s unsupported opinion or rely on spotty documentation. Remember its your name and reputation – not to mention your wallet – that is on the line Currently the only Schedule C Tax Returns that I am preparing are for clients that I am already doing the record keeping.

What stability, this expires in 8 days. Stability would be if this was extended thru 12/31/15 !

My apologies in advance, if I'm in error since I'm responding without referring to any resources. 1. This refers to employees of employers who are subject to the $2,000 per employee penalty for not providing affordable insurance. a. For 2015 employers with 100 or more FTE b. For 2016 employers with more than 50 FTE If the health insurance premium offered to the employee is deemed to be unaffordable then the employee can go to healthcare.gov where if the employee obtains insurance will potentially trigger the ACA $2,000 penalty Conversely, if the health insurance premiums are deemed to be affordable then the employee is blocked from obtaining insurance from healthcare.gov 2. The penalty is calculated both ways and whichever penalty is higher is the penalty due 3. In my state of Oregon, a single person with income below 15,360, if my memory is working, qualifies for Medicaid and is not subject to the ACA

ANOTHER ARTICLE FROM IOWA STATE UNIVERSITY: Updated: ACA’s Thorny Impact On More-Than-2% S Corporation Shareholders Kristy S. Maitre and Kristine A. Tidgren November 10, 2014 This article (updated November 6, 2014) discusses the Affordable Care Act's impact on more-than-two percent shareholders of S Corporations. Discussed is the ACA's impact on FICA and the IRC section 162(l)(5) self-employment health insurance premium deduction. This article also addresses the potential wide-ranging impact of new DOL Q&As. Overview The issue of reimbursing health care premiums for more-than-2% S corporation shareholders in the wake of the ACA was an issue we addressed briefly during the case studies at our August 22, 2014, Affordable Care Act (ACA) Seminar. Because this issue has sparked a number of questions, we wanted to follow-up with additional information. was an issue we addressed briefly during the case studies at our August 22, 2014, Affordable Care Act (ACA) Seminar. Because this issue has sparked a number of questions, we wanted to follow-up with additional information. Note: This area of the law is not well-defined and the IRS has not specifically addressed the issue. Instead, practitioners have been left to sort out the ACA fallout for these more-than-2% shareholders by reading and applying the relevant statutes and revenue rulings in light of known ACA requirements. The American Institute of Certified Public Accountants has requested formal guidance on the issue from the IRS. Until formal guidance is issued, we recommend advising your clients to err on the side of caution. It is also important to point out that the background law has not changed: Background Law To thoroughly analyze this complex issue, a review of the applicable background law is necessary: Taxation of Fringe Benefits Generally Employer-provided fringe benefits are taxable and must be included in the recipient’s pay unless the law specifically excludes them. Taxable fringe benefits are generally included in an employee’s wages in the year the benefit is received pursuant to IRC §451(a). Taxable fringe benefits are reported as W-2 wages for an employee, or as a Form 1099-MISC payment for an independent contractor. Exclusion from Income for Employer-Provided Health Benefits Generally Under IRC §105, amounts received as reimbursements by employees under an accident or medical insurance plan, and under §106, employer-provided health benefits (including reimbursement and insurance) are generally excluded from the income of employees. Included as “Wages” for More-Than-2% Shareholder-Employees of S Corporation Where health insurance premiums are paid by an S corporation, however, IRC §1372(a) requires that the S corporation be treated as a partnership and that any “more-than-2% shareholder-employees” be treated as partners.. Thus, health insurance premiums paid by the S corporation would be deductible by the S corporation as compensation to the more-than-2% shareholder-employee and included in the more-than-2% shareholder's Form W-2 as wages. I.R.C. §162(l) Above-the-Line Deduction IRC §162(l)(5) allows the more-than-2% shareholders the same above-the-line deduction for health insurance costs as self-employed individuals (even though 2% shareholder’s wages are treated as earned income), assuming that all of the other provisions of I.R.C. §162(l) are met. Under I.R.C. §162(l)(2)(B ), an above-the-line deduction is not allowed for any calendar month for which the shareholder is eligible to participate in any subsidized health plan maintained by any other employer of the shareholder or the spouse of the shareholder. For the requirements of I.R.C. §162(l)(5) to be met, I.R.C. §1372 (partnership taxation rules detailed above) must apply. In order for I.R.C. §1372 to apply, the S corporation must “establish” a “plan providing medical care coverage.” If the shareholder purchases his or her own health insurance with his or her own funds, a plan has not been “established” by the S corporation, and an I.R.C. §162(l) deduction would not be allowed. In late 2007, the IRS issued Notice 2008-1, which sets forth the criteria for more-than-2% shareholder-employees to qualify for the I.R.C. §162(l)(5) deduction. The Notice provides that a “plan providing medical care coverage” is “established” by the S corporation (and thus allows the shareholder to take the §162(l)(5) deduction) if: The S corporation makes the premium payments for the accident and health insurance policy covering the 2-percent shareholder employee (and his or her spouse or dependents, if applicable) in the current taxable year; or The 2-percent shareholder makes the premium payments and furnishes proof of premium payment to the S corporation and then the S corporation reimburses the 2-percent shareholder-employee for the premium payments in the current taxable year. Note: If the accident and health insurance premiums are not paid directly by the S corporation or reimbursed to the employee by the S corporation and included in the 2-percent shareholder-employee’s gross income, a plan providing medical care coverage for the 2-percent shareholder-employee is not established by the S corporation and the 2-percent shareholder employee is not allowed the deduction under §162(l). FICA Although the health insurance premiums paid by an S corporation on behalf of its more-than-2 % shareholder-employees are included as “wages” for income tax purposes, the value of these premiums has long been excluded from “wages” for FICA purposes. IRS Announcement 92-16 clarified that accident and health payments “made under a plan to benefit employees” are exempt from FICA tax, pursuant to I.R.C. §3121(a), which states as follows: (a) Wages. For purposes of this chapter, the term "wages" means all remuneration for employment, including the cash value of all remuneration (including benefits) paid in any medium other than cash; except that such term shall not include— (2) the amount of any payment (including any amount paid by an employer for insurance or annuities, or into a fund, to provide for any such payment) made to, or on behalf of, an employee or any of his dependents under a plan or system established by an employer which makes provision for his employees generally (or for his employees generally and their dependents) or for a class or classes of his employees (or for a class or classes of his employees and their dependents), on account of— (B ) medical or hospitalization expenses in connection with sickness or accident disability. This statute thus exempts from FICA tax liability those payments “made to employees generally” “under a plan or system established by an employer” on account of “medical or hospitalization expenses…” Announcement 92-16 states, “For this exclusion to apply, the payments must be made under a plan or system for employees and their dependents generally or for a class (or classes) of employees and their dependents. Thus, whether amounts of this type are actually subject to social security or Medicare tax depends on whether in the particular case the taxpayer satisfies the requirements for the exclusion.” ACA Impact The above background law has not changed. What has changed is the ability of S corporations to reimburse their employees (including more-than-2% shareholder employee) for health insurance premiums used to purchase an individual health insurance policy without running afoul of ACA market reforms. As detailed in the seminar and in this article, employer premium payment plans (used to purchase insurance other than employer-provided group health care insurance) are considered group health plans that violate the market reforms of the ACA, thus subjecting their sponsors to potential fines of up to $100 per day per employee per violation. That could amount to $36,500 per year per employee per violation. Note: It is important to remember that if an employer (including an S corporation) has only one participant in a group health plan, ACA market reforms do not apply. Consequently, a single-employee S corporation may continue to reimburse a more-than-2% shareholder-employee for health insurance premiums as before. The amount is included in wages, an above-the-line deduction is allowed to the shareholder, and FICA need not be charged. If the company has more than one shareholder, but only one is reimbursed for insurance, that shareholder’s reimbursement may also be treated the same way. As was discussed at the seminar, S corporations with more than one employee (and other small businesses) that have traditionally reimbursed their employees on a pre-tax basis for their individual health care premiums must now either (1) eliminate their health benefits entirely or (2) establish group health insurance coverage for their employees. Note that if the S corporation chooses to offer group health insurance coverage to its employees, the taxation rules for that benefit as applied to more-than-2% shareholders have not changed. The health insurance premiums paid on behalf of more-than-2% S corporation shareholder-employees are deductible and reportable by the S corporation as wages, the payments are included in the shareholder’s wages for income tax purposes, and the benefits are not subject to Social Security or Medicare (FICA) or Unemployment (FUTA) taxes. But may an S corporation reimburse its S corporation shareholders for health insurance premiums outside of a group health plan? Do the same rules preventing this reimbursement to regular employees apply to S corporation shareholders? The answer is that we do not know. The Departments have provided no guidance on this issue. We can only set forth what is known at this point (which is ever-changing). New Department of Labor Q & A Creates New Concern Although they don't reference S corporations or their more-than-two percent shareholders at all (no guidance on this issue has done so), Department of Labor Q & A's released on November 6, 2014, raise concern that the act of reimbursing more-than-two-percent shareholders (outside of an employer-provided group health insurance arrangement) in the manner required under 2008-1 for a section 162(l) deduction may be viewed by the Department as establishing a group health plan subject to ACA market reforms. The Q & A at issue reads: Q1: My employer offers employees cash to reimburse the purchase of an individual market policy. Does this arrangement comply with the market reforms? No. If the employer uses an arrangement that provides cash reimbursement for the purchase of an individual market policy, the employer's payment arrangement is part of a plan, fund, or other arrangement established or maintained for the purpose of providing medical care to employees, without regard to whether the employer treats the money as pre-tax or post-tax to the employee. Therefore, the arrangement is group health plan coverage within the meaning of Code section 9832(a), Employee Retirement Income Security Act (ERISA) section 733(a) and PHS Act section 2791(a), and is subject to the market reform provisions of the Affordable Care Act applicable to group health plans. Such employer health care arrangements cannot be integrated with individual market policies to satisfy the market reforms and, therefore, will violate PHS Act sections 2711 and 2713, among other provisions, which can trigger penalties such as excise taxes under section 4980D of the Code. Under the Departments' prior published guidance, the cash arrangement fails to comply with the market reforms because the cash payment cannot be integrated with an individual market policy. This Q & A makes clear that the Department is not basing its determination of the existence of an illegal employer payment plan on whether the reimbursement is made on a pre-tax or post-tax basis. What seems to matter to the Department is simply whether the employer is reimbursing the employee under an arrangement that could meet the definition of a "group health plan." I.R.C. §5000(B )(1) (which sets forth the applicable definition under I.R.C. §9932(a)) defines a "group health plan" as: a plan (including a self-insured plan) of, or contributed to by, an employer (including a self-employed person) or employee organization to provide health care (directly or otherwise) to the employees, former employees, the employer, others associated or formerly associated with the employer in a business relationship, or their families. Given the breadth of the definition, it is arguable that employer reimbursement of shareholder premiums establishes a group health plan subject to the ACA market reforms. Again, neither the DOL nor IRS has set forth guidance relating to S corporations and their reimbursements of health insurance premiums for more-than-two percent shareholders. Arguments can be made to support the continued reimbursement of premiums to S corporation more-than-two percent shareholders so that they can receive their section 162(l) deduction. Nonethess, the stakes are high. Thus, we believe that the best guidance in the wake of this Q & A is to avoid all employer reimbursements of health care premiums outside of an employer-provided group health care plan, including those to more-than-two percent shareholders, until further guidance is issued by the Departments. This latest communication has affirmed the Administration's clear policy to eliminate such benefits. Conclusion Please let us know if you have any follow-up questions regarding this information. It is a thorny issue that will evolve. We will keep you informed of any further communication we receive concerning the issue. As we know, it is of great importance to you and your clients as you move forward to comply with the ACA provisions. We are hopeful that IRS will issue clarifying guidance in the near future. Copyright 2014 Center for Agricultural Law and Taxation. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without express written permission

IN DEPTH ARTICLE FROM IOWA STATE UNIVERSITY: Updated! Health Reimbursement Plans Not Compliant with ACA Could Mean Exorbitant Penalties Kristine A. Tidgren November 10, 2014 This article discusses the significant impact the Affordable Care Act has had on employer healthcare reimbursement options, including the significant penalties faced by plans violating the ACA's market reforms. This article has been updated to explain a new set of crucial Questions and Answers that were posted by the Department of Labor on November 6, 2014. Overview As we settle into the second half of 2014, it is imperative that farmers, ranchers, and other small employers evaluate their health reimbursement plans to ensure that they comply with Affordable Care Act (ACA) requirements. As of January 1, 2014, a number of long-time options became illegal under the ACA. Lest employers are tempted to ignore this issue, they should know that offering noncompliant plans subjects them to a possible excise tax of $100 per day per employee per violation. ACA violations are no small matter. ACA Market Reforms Beginning January 1, 2014, the ACA implemented a number of “market reforms,” which dictate the types of coverage any valid group health plan must offer. Included in these reforms are the requirements that a group health plan impose “no annual dollar limits” on essential health benefits and that that the plan provide preventive health services (such as colonoscopies and mammograms) without any out-of-pocket costs. Noncompliant Plans Face Big Penalties What surprises many is that these requirements apply not only to traditional group health plans but also to employer health reimbursement plans. This is because under the Internal Revenue Code, employer reimbursement plans are considered to be “group health plans.” Consequently, if an employer reimburses its employees tax free for the cost of acquiring health insurance on the individual market, the employer has established a “group health plan” subject to ACA market reforms. Because such a plan imposes an annual dollar limit up to the cost of the individual market coverage purchased, it violates the “no annual dollar limits” requirement of the ACA. Similarly, because standalone employer payment plans do not provide preventive services without cost-sharing in all instances, they violate the preventive services requirements of the ACA. In IRS Notice 2013-54, issued last fall, the Treasury Department and the Department of Labor made clear that such plans are no longer allowed. This prohibition applies to a number of long-used standalone health care reimbursement plans that are not integrated with an ACA-compliant group health care plan. Although some exceptions apply, the ACA has made the following types of reimbursement plans illegal (subjecting their sponsors to the possible $100/day/employee/violation penalty tax): Standalone §105 medical reimbursement plans (including Health Reimbursement Arrangements (HRAs)) Employer payment of individual health insurance premiums on a pre-tax basis Standalone §125 salary-reduction plans for employee health insurance premiums Exceptions to ACA Requirements There are some exceptions to these ACA reforms. Specific exemptions from the ACA requirements include: Plans with fewer than two participants who are current employees Plans that provide only ancillary benefits, including: Accident-only coverage Disability income Certain limited-scope dental and vision benefits Certain long-term care benefits Benefits under an employee assistance program, if the program does not provide significant benefits in the nature of medical care or treatment Because of the above exceptions, HRAs reimbursing only dental or vision expenses, for example, are still allowed. Furthermore, a sole proprietor with a single employee can continue to offer an HRA to that employee without also providing a group health care plan. A sole proprietor farmer, for example, can employ his wife and have the family medical expenses reimbursed through her HRA. Add another employee, however, and the plan is noncompliant. The ACA does allow employers to offer HRAs if they are integrated with an employer-provided group plan offering ACA-compliant coverage. The integration rules are complex, but to offer an integrated plan, the employer must offer group health care coverage to all employees eligible for the HRA, and the employees must be covered under a compliant group health care plan (although that plan may be offered through another provider (such as the employee’s spouse)). An HRA can never be integrated with a health care plan purchased through the online Marketplace or on the individual market. Similar to integrated HRAs, Healthcare Flexible Spending Accounts offered through a §125 cafeteria plan are acceptable under the ACA if (1) the employer also offers other group health insurance coverage and (2) the maximum benefit payable to the employee does not exceed the greater of two times the employee’s salary reduction election for the year, or $500 plus the amount of the participant's salary reduction election. Compliant Plans Small employers (fewer than 50 full-time employees) should remember that they are not required to provide health insurance to their employees under the ACA. If they do, however, the plan must be ACA-compliant. The following types of plans are still allowed under the ACA: ACA-approved group health plans ACA-approved high-deductible health plan (HDHP) (great option when coupled with a Health Savings Account) Note: A qualifying HDHP is a healthcare plan that satisfies certain requirements with respect to minimum deductibles and maximum out-of-pocket expenses. An HDHP would cover, on average, at least 60% of the cost of all benefits. Group health plans acquired through the SHOP exchange (This SHOP plan may then allow for §125 salary- reduction arrangements and may also qualify the employer for the small employer health insurance premium credit.) Employer payment plans where an employee's premiums are paid with salary deductions on an after tax basis (the employer is just performing the administrative function of forwarding the employee’s premium to the insurer at the employee's request). Health Savings Accounts One option that remains attractive in light of the ACA is the health savings account (HSA). Individuals and their employers can contribute pretax dollars to an HSA, in which the contributed amounts can grow tax free. As long as the HSA funds are used to pay qualified out-of-pocket medical expenses, they are never subject to federal income tax. It is not necessary for a person to have earned income to contribute to an HSA. For more detailed information regarding HSAs, see this article. To qualify for an HSA, an individual must: 1. Be covered under an HDHP, 2. Have no disqualifying health coverage, 3. Not be enrolled in Medicare, 4. Not have received Veterans Administration (VA) medical benefits within the prior three months, and 5. Not be eligible to be claimed as a dependent on another person’s tax return. In 2014, the contribution limits to an HSA are $3,300 for an individual and $6,550 for a family. Employer Alternatives and New Department of Labor Guidance On November 6, 2014, the Department of Labor issued new Q & A's restricting employers' choices beyond the restrictions made evident by Notice 2013-54. According to the Q & A, an employer cannot give an employee cash to purchase insurance coverage on the individual market, even if the employer treats the cash as wages, withholding income tax and FICA/FUTA taxes. Essentially, the Department has directed employers to stay out of the health insurance arena completely unless purchasing group health plans for their employees. Notice 2013-54 had specified that employers could forward post-tax payments to private health insurance companies at the request of their employees for the purchase of the employees' individual health insurance. The Notice referred to this as a "payroll practice" that was still acceptable. The most recent Q & A (reprinted here) clarifies that this "payroll practice" exception is very narrow. Q1: My employer offers employees cash to reimburse the purchase of an individual market policy. Does this arrangement comply with the market reforms? No. If the employer uses an arrangement that provides cash reimbursement for the purchase of an individual market policy, the employer's payment arrangement is part of a plan, fund, or other arrangement established or maintained for the purpose of providing medical care to employees, without regard to whether the employer treats the money as pre-tax or post-tax to the employee. Therefore, the arrangement is group health plan coverage within the meaning of Code section 9832(a), Employee Retirement Income Security Act (ERISA) section 733(a) and PHS Act section 2791(a), and is subject to the market reform provisions of the Affordable Care Act applicable to group health plans. Such employer health care arrangements cannot be integrated with individual market policies to satisfy the market reforms and, therefore, will violate PHS Act sections 2711 and 2713, among other provisions, which can trigger penalties such as excise taxes under section 4980D of the Code. Under the Departments' prior published guidance, the cash arrangement fails to comply with the market reforms because the cash payment cannot be integrated with an individual market policy.(6) The Q & A also shuts down certain plans that have been marketed by several benefits companies as an acceptable alternative in the wake of the ACA. The Q&A states: Q3: A vendor markets a product to employers claiming that employers can cancel their group policies, set up a Code section 105 reimbursement plan that works with health insurance brokers or agents to help employees select individual insurance policies, and allow eligible employees to access the premium tax credits for Marketplace coverage. Is this permissible? No. The Departments have been informed that some vendors are marketing such products. However, these arrangements are problematic for several reasons. First, the arrangements described in this Q3 are themselves group health plans and, therefore, employees participating in such arrangements are ineligible for premium tax credits (or cost-sharing reductions) for Marketplace coverage. The mere fact that the employer does not get involved with an employee's individual selection or purchase of an individual health insurance policy does not prevent the arrangement from being a group health plan. DOL guidance indicates that the existence of a group health plan is based on many facts and circumstances, including the employer's involvement in the overall scheme and the absence of an unfettered right by the employee to receive the employer contributions in cash. Second, as explained in DOL Technical Release 2013-03, IRS Notice 2013-54, and the two IRS FAQs addressing employer health care arrangements referenced earlier, such arrangements are subject to the market reform provisions of the Affordable Care Act, including the PHS Act section 2711 prohibition on annual limits and the PHS Act 2713 requirement to provide certain preventive services without cost sharing. Such employer health care arrangements cannot be integrated with individual market policies to satisfy the market reforms and, therefore, will violate PHS Act sections 2711 and 2713, among other provisions, which can trigger penalties such as excise taxes under section 4980D of the Code. It appears from these Q&As that if an employer provides or has provided post-tax cash to an employee with the requirement that the money be used for health care coverage, it will be considered a group health plan subject to ACA reform requirements. The payroll practices exception appears to apply only to the scenario where the employee has requested the money be forward to his or her insurance issuer. This set of Q&As is problematic for employers who did not modify their non-compliant plans prior to January 1, 2014. The prevailing wisdom has been that employers could gross up wages, pay taxes, and remedy the problem retroactively. This new guidance casts doubt on that "solution." Steps to Compliance So now that it's November, what do employers do about existing non-compliant plans? At $100 per employee per day, few will enthusiastically pay the penalty. Taxpayers are supposed to self-report any penalties on Part II of Form 8928. The form instructions say: No tax is due for any failure... if it is established to the satisfaction of the Secretary of the Treasury that no one liable for the tax knew, or exercising reasonable diligence would have known, that the failure occurred. Additionally, no tax is due if the failure... was due to reasonable cause and not due to willful neglect and the failure was corrected during the 30-day period beginning on the first date anyone liable for the tax knew , or exercising reasonable diligence would have known, that the failure existed. Practitioners whose employer-clients have ineligible plans should document their efforts to notify their clients of the problems. Once the practitioner tells the client, the 30-day period begins to run. Practitioners should have a recommended solution for the client, probably including immediate termination of any non-qualified plans and notice to affected employees. And remember that any corrective plan must be completed in 30 days. Should the employer then report the violation on Form 8928? The form offers an option of entering "0" for the tax due if taxpayers believe they qualify for exemption. Failure to report likely makes it more difficult to claim the exemption if the IRS discovers the problem on its own. It's likely the IRS will be generous in allowing exemptions in this first year of the problem. Unfortunately, it's never good to have to count on IRS generosity. We will continue to keep you posted regarding any new guidance in this area. Impact on Employees Small employers weighing their options for 2014 and beyond should also consider the impact their health care offerings will have on their employees. Employees without access to employer-provided minimum essential coverage that is affordable can now purchase health insurance on the federal or state health care exchange. For those with incomes falling between 100% and 400% of poverty-level, they will be entitled to a premium tax credit (PTC) to offset the cost of their premiums. These PTCs can make the cost of health insurance very affordable. If an employer offers health coverage to its employees (including an excepted standalone HRA to a single employee), that offering will make their employees ineligible to purchase insurance on the health care exchanges and will prevent them from receiving PTCs[1]. If the employer decides instead to forego health benefits altogether and increase wages to account for the lost benefit, the employee will pay increased FICA and income taxes and will likely receive a reduced PTC on the health care exchange because of the higher wage. In other words, there is no way for such employers to put their employees in the same position as they were before the ACA without increasing their costs significantly. Conclusion Given the steep penalties accompanying ACA violations, small employers must ensure that their 2014 reimbursement plans line up with ACA requirements. Those with questions should seek professional guidance immediately, while there’s still time to make adjustments

Tom, I agree with everything you said, except that when there is no stated interest, that IRS "Imputed Interest Rules & Regulations" will apply which means that prior years returns will need to be amended .

As 2015 quickly approaches, BASE® wants to make sure that all of your clients are in compliance with the Affordable Care Act's regulations regarding premium reimbursement plans. On November 6, 2014, the Department of Labor clarified that not only is it prohibited to allow pre-tax reimbursement arrangements, but also post-tax reimbursements of individual health insurance premiums. This regulatory change not only alters premium reimbursement plans, but it also prohibits Partnerships and most S-Corporations from taking the Self-Employed Health Insurance Deduction on the Form 1040. Many employers are unaware of the changes and are exposed to risk of the $100 per employee per day ACA penalty. If you have clients: With one employee, they can utilize a Section 105 HRA as they are exempt from the provision of ACA. Call 1-888-386-9680 for more details. With two or more employees and they are reimbursing health insurance premiums on a pre or post-tax basis, they are at risk for ACA penalties.

FROM MALWAREBYTES: Looking ahead: 2015 Ah, the security predictions! Everybody loves them, don’t they? Well, we’re not going to use our crystal ball for this one, but instead we, bloggers at Malwarebytes Unpacked, shared some of our thoughts on the trends we think will be most noticeable. On the mobile side, we expect ransomware to be a major issue. We have already seen mobile malware variants that encrypt phone data and demand payment to retrieve. Pre-existing phone backup options will make this threat less severe, however many users still might be willing to pay to get their data back. With more people using mobile devices to bank, it’s becoming more popular for malware authors to exploit. Creating a fake site that looks like a mobile banking site may be a bit easier for cyber criminals since many sites are limited to keep the data processing of the site low. In the Exploit Kits world, there will be more fileless payloads. In an effort to circumvent detection a special breed of malware doesn’t leave a physical file on the system but rather only runs in memory. This will likely be a trend adopted by new and existing exploit families in 2015 and the antivirus and anti-malware communities will have to quickly adapt to contain the wave. We expect a major Internet of Things (IoT) attack in the new year against an Internet connected device that was previously not connected. Take for example a thermostat that can be controlled over the internet. Cloud security is now more important than Desktop security, this is due to the fact that users are uploading tons of personal data like images or documents to ‘cloud’ storage. This makes it easy for an attacker to gain access if they are able to compromise the account. In addition, with the trend of users making purchases, downloading games, songs, movies, etc. through cloud services, the attractiveness of these accounts has increased and we will see more of an effort against gamers and video/music streamers. Potentially Unwanted Programs (PUPs) are a nuisance to the modern user because of their high requirements for system resources and constant bombardment of advertising. However, we have seen numerous instances this year of PUPs actually going a step further and installing near-malicious and full-malicious software on the host system. This trend may very well become more prevalent in the coming year as the war against junk software leads some developers to dabble in illegal activities to make a profit. Phishers will continue to use sophisticated and effective tactics to get users to hand over their information. It’s also highly likely that, due to the bombardment of Personal Information stealing breaches at large companies, the pool of spear phishing targets will be larger and not just limited to the selected few (like executives)

1065

Even if I had one I wouldn't pass it on and neither should you. An LLC operating agreement should be tailored to the situation and the members of the LLC. Everyone always assumes that everyone is going to live happily ever after. A well drafted agreement will spell out the details of how disagreements, departures, and dissolution will be handled. Years ago one of my clients which had two brothers as exactly equal owners ended up in court with dueling attorneys and $20,000 in legal fees because nothing was spelled out as to how disagreements and departures would be handled. An Operating Agreement is a very important document which needs to be done right. It's not a meaningless piece of paper to keep the bank happy.

I would send her a past due letter for the $200. In addition, I would state that payment must be received by December 31st in order to continue our accountant / client relationship. If she pays you, then I would insist on a signed client engagement letter with a fee stated in advance $ 450 or ? for 2014 and if you want to get rid of her insist on 50 % of your fee in advance.

Actually for me, the most interesting thing was that there were not any revenue or expense offsets, for the first time in many many years.

Yeah, I got the same email and several things caught my attention: 1. Usually you would expect to see a resume of the company and the principals - there isn't one 2. Gives a street address in Cheyenne WY - No registration of the name with the WY Secretary of State. 3. Checked with the IRS Website - No firm in WY listed as an approved software provider or an approved transmitter Frankly this could be from anywhere and it could be anyone - No way to tell if it's reputable firm or if it's scam. My writeup and payroll processing software are cloud based, so I don't have a problem with being in the cloud. However anyone who would sign up with this solicitation is taking a blind leap of faith.