January 2018 Focus
Forms 1095 — Deadline Extension by IRS
On December 22nd, the IRS released Notice 2018-6, which states that organizations now have an additional 30 days to provide Forms 1095-B or 1095-C to employees, with the new deadline being March 2, 2018. This extension was offered after the Department of Treasury and agency determined that a large number of employers, insurers, and other providers falling under the ACA mandate needed more time to gather, analyze, and prepare the forms to be provided to individuals. The IRS is encouraging employers to furnish these forms to employees as soon as they are able, though. Employers do not have to wait until this new deadline to distribute these forms.
Because of this extension, employees may not receive their forms by the time they are ready to file their individual tax return, but per an IRS news release, these forms "are not required to file." Individuals who use this form to determine whether they may claim the premium tax credit can prepare their returns by using other insurance information about their health coverage, such as their Form W-2, to show they had ACA-compliant health coverage during the year.
NOTE: Despite this extension, the IRS did not see a need to extend the filing deadlines for these forms with the IRS by the employer, whether by paper or electronically, so those remain the same:
- February 28th for paper filing
- April 2nd for electronic filing
New Legislation Under 2017 Tax Act
The 2017 tax act, signed into law on December 22, 2017, by President Trump, affects employers in many ways, but most significantly it:
- Alters income tax withholdings beginning in 2018. The IRS expects to issue initial guidance on new withholding tables for payroll systems in January, which will allow individuals to start seeing the benefits of this change as early as February. Employers should consult with their payroll vendors to ensure that their systems adjust properly considering the impending IRS guidance. Most individuals will be paying 1-4% less in federal taxes; however, there will be no changes to Medicare and Social Security tax withholdings. The benefit of this new withholding bracket will vary greatly among individuals, dependent upon salary amount. For example, individuals who see a $2,000 decrease in annual taxes would only see an increase of $76 in their net pay each paycheck, if paid bi-weekly.
- Changes the deductibility of executive employee benefit programs beginning in 2018. This act will limit the tax deductions that businesses can claim for certain employee benefits, and likely cause many employers to reevaluate their executive compensation offerings. Particularly, tax-exempt entities should review their current executive compensation benefits, and consider using protective language in any new arrangements to allow for modifications or reductions to their offerings, going forward.
- Repeals the ACA's mandate that individuals obtain ACA-compliant health coverage, effective in 2019. Specifically, the legislation reduces the tax penalty to zero for individuals going without coverage. It will not alter the ACA's mandate that ALEs offer their full-time workers ACA-compliant health coverage, though, nor will it change employers' reporting obligations under the ACA. This penalty repeal expects to significantly lessen the number of employees who enroll in employer-sponsored health coverage, leading to many employers escaping the employer mandate penalties. However, considering the employer and individual mandates were intended to go hand in hand, it is expected that the repeal of one mandate may lead to the repeal of the other. This probably will not happen any time soon, but it is certainly going to be on the legislative radar. For now, employers subject to the ACA must comply with all its coverage and administrative requirements.
New EEOC Wellness Program Incentives Effective in 2019
U.S. District Judge John Bates issued an opinion on December 20th stating that EEOC regulations governing employee wellness programs will be vacated effective January 1, 2019. The current regulations will remain in effect through 2018 to allow the EEOC time to develop new rules, and give companies adequate time to design new programs. Employers should closely monitor developments of new wellness program regulations, and seek legal counsel to ensure their new programs comply with all applicable laws. Dates to be cognitive of are March 30, 2018, which is the court-ordered date for the EEOC to provide a status report, and August 2018, at which time a notice of proposed rulemaking is expected.
Payroll and Human Resource Basic Training Class Dates
Do not wait, sign up today. Below is the current class schedule to be held at the Ridgeland Campus of Holmes Community College. The cost of each class is $300 and includes a desk reference for future use.
- Payroll Basics will be held Feb. 14th.
- HR Basics will be held Feb. 15th.
Classes are limited to the first 24 registrants. Click below to register for upcoming classes.
ProSential Group Webinars for January
As a client of MWG Employer Services, we are pleased to offer free, monthly educational webinars through ProSential Group. Previous webinars are available through the ProSential Group Client Portal. To register for this month's webinars, click on the links below.
Legal Aspects of Wellness Programs
Thursday, January 11th
Form I-9 Compliance for Employers
Thursday, January 18th