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Code Section 409A…Here Today but Possibly Gone Tomorrow and Other Proposed Changes in the Tax Cuts and Jobs Act

Last week the House unveiled its tax overhaul plan, the Tax Cuts and Jobs Act (“Act”).  The Act’s proposals related to employee benefits and compensation are as follows:

Nonqualified Deferred Compensation

Perhaps one of the most talked about aspects of the Act (at least among benefits practitioners) is the demise of Code section 409A and the creation of its replacement, Code section 409B.

Under the proposed Code section 409B regime, nonqualified deferred compensation would be defined broadly to include any compensation that could be paid later than the March 15 following the taxable year in which the compensation is no longer subject to a substantial risk of forfeiture, but with specific carve-outs for qualified retirement plans and bona fide vacation, leave, disability, or death benefit plans.  Stock options, stock appreciation rights, restricted stock units, and other phantom equity are included expressly in the definition of nonqualified deferred compensation.

All

Help for Hurricane Harvey…and Irma and Maria, Too

September 14, 2017

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Help for Hurricane Harvey…and Irma and Maria, Too

September 14, 2017

Authored by: benefitsbclp

Employers seeking ways to help employees and their family members affected by Hurricanes Harvey, Irma, or Maria should consider the various relief made available by the Internal Revenue Service under Announcements 2017-11 and 2017-13 and Notice 2017-48.

Under Notice 2017-48, employers who maintain a leave-based donation program (there is still time to adopt one) can afford employees the opportunity to forgo their vacation, sick or personal leave in exchange for cash contributions made by the employer, before Jan. 1, 2019, to charitable organizations assisting those impacted by Hurricane Harvey.  The donated leave will be excluded from the donor employees’ income and wages and the employer will be able to deduct such contributions to a qualifying charitable organization as a business expense.  As always, the Notice includes specific guidelines that must be followed in order for employers and employees to take advantage of this relief.  Note

Telemedicine – An Expanding Landscape

According to one recent survey, telemedicine services (i.e., remote delivery of healthcare services using telecommunications technology) among large employers (500 or more employees) grew from 18% in 2014 to 59% in 2016.  Common selling points touted by telemedicine vendors include reduced health care costs and employee convenience.  However, state licensure laws imposing restrictions on telemedicine practitioners can often limit the value (or even availability) of telemedicine services to employees.

But that seems to be changing.

Texas Law Change

This summer Texas passed legislation (SB 1107) prohibiting regulatory agencies with authority over a health professional from adopting rules pertaining to telemedicine that would impose a higher standard of care than the in-person standard of care.  With the enactment of SB1107, the Texas Medical Board must revise portions of its existing telemedicine regulations, which had largely been viewed as some of the most restrictive in the country.  Key revisions proposed

The Tax Man Cometh Not to ID Protection Recipients Either

The Tax Man Cometh Not to ID Protection Recipients Either

January 5, 2016

Authored by: Chris Rylands and Denise Erwin

ID TheftLate last year, while you were probably busy picking out which bubbly to pop at the stroke of midnight, the IRS gave us another reason to celebrate. You may remember (as we wrote previously) the IRS said it would not require identity theft victims to include the value of identity theft restoration and protection services in their income. But what about for employers or others who provide ID theft in advance of a breach?

Well, after receiving a total of only four comments, the IRS decided to broaden the nontaxability of ID theft protection services. In providing this relief, the IRS cited comments indicating that organizations are increasingly providing ID protection services before a data breach occurs as a strategy to help with early detection of a breach and to minimize the

The Tax Man Commeth Not to Data Breach Victims

The Tax Man Commeth Not to Data Breach Victims

September 3, 2015

Authored by: Denise Erwin and Chris Rylands

ID TheftThe IRS has issued some favorable guidance on the tax treatment of identity protection services provided to data breach victims.  In Announcement 2015-22, the IRS indicated that when an organization experiences a data breach, and it provides identity protection services to individuals whose information may have been compromised, the IRS will not assert that the individual must include the value of the services in gross income.  In addition, the IRS says that when an employer provides such services as a result of a data breach involving the recordkeeping systems of the employer, or the employer’s agent or service provider, the employer will not be required to include the value of the services in the employee’s gross income and wages.  The Announcement also indicates that the IRS will not assert that these amounts

Don’t Miss the April 15th Deadline to File a Protective Refund Claim for 2010 FICA Tax!

As you may recall from our earlier post, the 6th Circuit held in U.S. v. Quality Stores, that severance payments made to employees in connection with an involuntary reduction in force were not “wages” subject to FICA taxes. This decision was contrary to published IRS guidance and created a split in the courts. In October of last year, the United States Supreme Court agreed to review the case and on January 14th, it heard oral arguments. The Supreme Court is expected to issue a ruling by the end of June.

Taxpayers may be entitled to a FICA tax refund if the decision is upheld by the Supreme Court on appeal. In order to preserve the right to a refund, taxpayers must file a protective claim before the applicable statute of limitations runs. As we previously reported in a post last year, the deadline to

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

News & Notes – November 30, 2012

News & Notes – November 30, 2012

November 30, 2012

Authored by: Chris Rylands

Now that we’ve returned from Thanksgiving and have finished off the leftover pumpkin pie, we wanted to share a few more recent benefits-related(ish) stories and other links.

  • In case you didn’t see it, last week the DOL issued compliance guidance for employee benefit plans in wake of Hurricane Sandy.
  • This blog post lists four ways to internally market your benefits and compensation programs.
  • One way you might help participation in your wellness programs is develop an app, says this article.
  • Are you having trouble keeping track of all the lawsuits about the PPACA contraceptive mandate?  Fortunately for you, Politico has a good summary.
  • Some other countries provide

Sports Celebrations as Employee Benefits

Sports Celebrations as Employee Benefits

July 18, 2012

Authored by: benefitsbclp

Everybody knows that everybody likes sports. According to the Sports Business Journal, employers are parleying their ties to sports teams, leagues and events into employee benefits. Internal marketing of a company’s sports sponsorship can boost morale, provide perquisites, enhance recruiting and publicize corporate philanthropy

For example, according to the Sports Business Journal, Discover Financial Services, an official sponsor of the National Hockey League, was able to display the Stanley Cup in its suburban Chicago headquarters for a half-day after the Blackhawks won the Stanley Cup in 2010. Workers were welcome to pay a visit to have a look and even have their pictures taken with the trophy. This year, the Cup was displayed in Discover’s New Castle, Del. office as a reward for winning an internal call center contest.

Other examples include pre-game hospitality sessions, free or discounted game tickets and discounted team merchandise, either as special rewards

W-2 Reporting of Health Coverage and EAPs, Wellness Programs, and On-Site Clinics

On Tuesday, the IRS released additional interim guidance on the health reform requirement to include the cost of health coverage on an employee’s Form W-2.  Employers are permitted, but not required, to report these amounts on 2011 W-2s issued by the end of this month, but reporting will be required for 2012 W-2s issued in January 2013.

Of particular interest in the guidance is the following Q&A:

Q-32: Is the cost of coverage provided under an employee assistance program (EAP), wellness program, or on-site medical clinic required to be included in the aggregate reportable cost reported on Form W-2?

A-32: Coverage provided under an EAP, wellness program, or on-site medical clinic is only includible in the aggregate reportable cost to the extent that the coverage is provided under a program that is a group health plan for purposes of § 5000(b)(1). An employer is not

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