April 18, 2011

Excellent news: late last-week, President Obama signed into law the REPEAL of the requirement under PPACA that, effective January 1, 2012, employers would have to report to the IRS any purchase of goods or services pertaining to a single transaction for any amount greater than $600.00.  Therefore, your organization need not concern itself whatsoever with the (prospective) changes in the IRS Form 1099 regulations œenacted by this provision going forward. 

Further reading regarding this matter can be found in the following article:

http://www.reuters.com/article/2011/04/14/us-usa-taxes-healthcare-idUSTRE73462D20110414

As always, please feel free to contact our office with any questions!

Best Regards,

Michael J. Cramer, J.D.
Compliance Officer, Beneflex Insurance Services, Inc.

Dear Friend,

Last Thursday (April 7, 2011), Governor Brown officially signed AB 36.  While neither the California Franchise Tax Board nor the Economic Development Department have issued guidance pertaining to this matter, one aspect that has immediate practical implications is the fact that any individual (who was taxed on overage dependent coverage) who has NOT yet filed his/her California 2010 tax return will not have to account for this on his/her 540 form.  Due to the timing of this matter (i.e., April 18 being less than two weeks away), you may wish to inform your employees of this development at your earliest possible convenience.

Also, those of you who have not amended your payroll/accounting structure in order to comply with the previously-valid law need no longer be concerned with changing your systems.  For those of you who have changed your systems, be advised that we will update you immediately once either (or both) the FTB or the EDD have issued official guidance pertaining to this matter.

Best Regards,

Michael J. Cramer, J.D.
Compliance Officer, Beneflex Insurance Services, Inc.

Dear Friend,

The following three recent health care reform-related administrative issues may be of interest
to your organization:

Cost of Health Coverage Reporting on Employees` W-2 Forms FURTHER DELAYED (for certain organizations)

According to IRS Notice 2011-28, available for viewing at: http://www.irs.gov/newsroom/article/0,,id=237894,00.html

For certain employers and with respect to certain types of coverage listed below, the requirement to report the value of coverage will not apply for the 2012 Forms W-2 (the forms required for the calendar year 2012 that employers generally are required to provide employees in January 2013) and will not apply for future calendar years until the IRS publishes guidance giving at least six months of advance notice of any change to the transition relief.

 The transition relief applies to the following:

(1) employers filing fewer than 250 Forms W-2 for the previous calendar year (for example, employers filing fewer than 250 2011 Forms W-2 (meaning Form W-2s for the calendar year 2011, which generally are filed with the SSA in early 2012) will not be required to report the cost of coverage on the 2012 Forms W-2 (which generally are filed with the SSA in early 2013); [emphasis mine]

Assembly Bill 36 Enrolled and Presented to Governor Jerry Brown for his Signature on March 30, 2011:

On Wednesday, March 30, 2011, AB 36 “which will amend California`s Franchise Tax Board regulations to conform with IRC 105/106, therefore allowing coverage to œoverage dependents to be granted free of CA-state tax consequences to the employee”passed its final state-legislative hurdle in the state senate.  Speculation exists that Governor Brown may sign AB 36 within the next few weeks; we will apprise you when/if this occurs.

If in fact Governor Brown does sign this bill, those of you who have taken the (legally correct) step of previously amending your payroll systems to comply with the (presently-existing) overage dependent tax consequences will need to take further action to comply with the NEW law. 

We will apprise you immediately with a general notice if/when the Franchise Tax Board/Economic Development Department issues their amended guidelines.

Update on the PPACA-Amended Form 1099 Requirement (Potential Repeal):

As you are no doubt aware by now, one provision contained within PPACA was the requirement that, beginning in 2012, employers must account for any transaction (including purchases of goods) for more than $600 with a 1099 Form.  Due to this provision`s wild unpopularity, concerted efforts are currently underway in US Congress to repeal it; it is quite possible that the bill currently (likely) to pass in the US Senate will be presented to President Obama for his signature within the next two weeks. 

As with AB 36, we will apprise you immediately if/when this 1099 provision is repealed.

If you feel that any of the above warrants further clarification, free to contact our office with questions pertaining to these (or any other benefits-related) matters!

Best Regards,

Michael J. Cramer, JD
Compliance Officer, Beneflex Insurance Services, Inc.
805.684.5100  x108
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