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Same-Sex Marriage: New Developments & Impact on Employee Benefits

With over 1,100 federal statutory provisions in which marital status is a factor in determining access to statutory benefits, rights, or privileges, the outcome of the challenge to the constitutionality of laws adversely impacting same-sex marriages could have a significant effect on employee benefits.

Under the federal Defense of Marriage Act (DOMA), for purposes of federal law, the word “marriage” means only a legal union between a man and a woman, and the word “spouse” refers only to a person of the opposite sex who is a husband or a wife.  This means that under current law, Federal benefits available to opposite-sex spouses are not available to same-sex spouses even when they are legally married under state law.

Later this month, the Supreme Court will hear oral arguments on two cases that could change this result.  Windsor v. United States is a constitutional challenge to Section 3 of

IRS Audit Trends & Issues

IRS Audit Trends & Issues

February 25, 2013

Authored by: Chris Rylands and Lisa Van Fleet

Continuing our series of posts reporting on the recent TE/GE meetings, today we focus on the audit trends and issues that the IRS officials in attendance identified.  In addition to providing insight on the IRS’s focus, the list serves as a good compliance checklist for plan sponsors.  Are you making these errors?  If so, you can (and should) fix them now before the IRS comes knocking.

Areas of Focus. At the outset, it’s helpful to know where the IRS is looking for trouble, so you can have some idea where agents are coming from when you get the dreaded audit letter.  The officials at TE/GE gave these insights:

  • Most audits are focused on 3 or 4 particular issues depending on the market segment (i.e., the business of the employer) and the size of the plan (generally less than 100 participants is a small plan while other plans

IRS Talks About Play or Pay (and a Mini-Med Issue to Boot)

In one brief session at the recent TE/GE meetings, we heard from some of the IRS drafters of the PPACA shared responsibility/play or pay regulations under 4980H of the Internal Revenue Code.  They provided a few insights on upcoming guidance and raised one issue with which we disagree.

Employer Reporting. First, they said they are working on guidance on the employer reporting of health coverage to the IRS on Form 6056.  This is relevant to play or pay because they advised that the IRS intends to collect that information and compare it with who received premium tax credits and cost sharing reductions after the fact. (See our earlier discussion of the play or pay regulations to understand the interaction.)  Once they make that comparison, they will then pursue penalties.   This means that any play or pay penalties will not be assessed until 2015, at the

When the Government Speaks: DoL Enforcement Priorities

In this second post in our series of reflections from the recent Tax Exempt/Government Entities meeting with IRS and DoL officials, we’ll focus on the areas the DoL officials identified as enforcement priorities and some of the specific items they highlighted.

Health Plans.  As we previously posted, the DoL is starting to look at health plans and compliance with health care reform specifically.  They have also discovered that many plans lack what they consider to be a formal plan document.  They are starting to ask not just for proof of the plan document’s existence, but also proof of when it was adopted, going back to January 1, 2010.  Plan sponsors who have not adopted wrap plan documents for their health plans may want to consider implementing those soon.

ESOPs. ESOP enforcement continues to be a priority.  The officials stated that they believe appraisers are

When the Government Speaks: DoL Regulatory Initiatives

Last week I (Chris) had the good fortune to travel on Lisa’s behalf to Baltimore to attend an annual meeting of benefits practitioners with government representatives from the DoL and IRS national offices.  It served as a great opportunity to hear what guidance may be in the pipeline and what enforcement issues are catching the government’s attention.  Plan sponsors should take heed because those items getting the government’s regulatory or enforcement attention tend to (1) be very common and (2) serve as a good compliance check.  Over the next week or so, we’ll cover what they said and what you should be looking for coming down the pike.  First up: the Department of Labor’s regulatory agenda.  Based on statements from DoL officials:

  • No additional guidance is planned on the ERISA 408(b)(2) service provider fee disclosures at this time.  They talked with many service

Other Benefits Components of the, Ahem, “Relief” Act

So we know you’re probably tired of hearing about the fiscal cliff.  We know this because we are sure many of you nominated “fiscal cliff” as one of the “words” that should be banished from the English language in 2013.  However, there are some benefits provisions in the generally Orwellian-named American Taxpayer Relief Act.  Fortunately, they were not the ones we were worried might be included, and in fact, some of them actually provide some tax relief.

  • Educational assistance tax benefits, which previously had to be extended each year, are now “permanent” (as that term is generally used in tax law).
  • The same is true for adoption assistance.
  • The tax exclusion for transit benefits is now permanently on par with commuter parking (previously, the tax exclusion

Health Care Reform: What Are You Worried About? Tell Us!

We’re working on putting together a series of roundtables to help our clients and friends discuss their worries and strategies to deal with health reform/PPACA now that the Supreme Court has weighed in.  We want to make sure the program is helpful and impactful so we want to hear from YOU.  What are your biggest compliance concerns?  What do you want to hear more about?

  • Summaries of benefits and coverage,
  • Form W-2 reporting of the cost of health coverage,
  • $2,500 limit for health FSAs,
  • How to handle medical loss ratio rebates,
  • Preparing for the 2013 increase in Medicare tax,
  • 90-day limitations on waiting periods,
  • The “shared responsibility” (aka “play or pay”) penalties for employers,
  • Increased incentives for wellness programs,
  • Non-discrimination rules for insured health plans,
  • Automatic enrollment in health plans for employers with at least 200 employees,
  • Why employers
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