IRS Gears Up for Health Care Law Appeals

by | Accounting News, Audit and Accounting, Healthcare, IRS, Tax

The Internal Revenue Service (IRS) is bracing for one of the biggest challenges it has faced in years: the implementation of the massive new health care legislation.

A few select provisions in the Patient Protection and Affordable Care Act of 2010 – the Affordable Care Act (ACA) for short – have already taken effect; however, the most controversial sections of the new law are not scheduled to kick in until 2014. According to a new report released by the Treasury Inspector General for Tax Administration (TIGTA) on January 5, 2012, the IRS Appeals Office is gearing up for the anticipated onslaught.

The TIGTA report indicates that the new law’s impact on appeals should be minimal for the next two years, but it expects the floodgates to open in 2014. The IRS Appeals Office has made some initial preparations, including reassigning some of its staff to the IRS ACA division, as well as creating an internal website with links to ACA-related IRS training, guidance, and other resources.

“Because of the potential for the ACA to affect most taxpayers, effective planning is critical to ensuring Appeals’ readiness to prepare for this legislation and resolve taxpayer requests in a timely and effective manner,” said J. Russell George, Treasury Inspector General for Tax Administration, in a press release.

The latest TIGTA report follows up on a mostly positive audit conducted last year. In that audit, TIGTA determined that the IRS appears to be on track in meeting the new technological challenges it can expect to face as a result of the health care legislation.

Under several key provisions in the new law, individuals who are not eligible for Medicare or Medicaid must obtain minimum health coverage, while businesses are generally required to offer minimum coverage to their employees. The IRS bears the burden of collecting penalties from taxpayers and business entities that fail to live up to their responsibilities. In addition, health insurance coverage will become available through exchanges operated by the individual states.

Currently, a qualified small business can claim tax credits for providing health insurance coverage to its employees. For 2014 and thereafter, an employer may benefit from tax credits offsetting part of the cost of offering coverage through one of the state-run exchanges.

The IRS expects to face numerous appeals on these issues as both individuals and employers grapple with the new ACA rules. In the meantime, what can you do? Tax professionals are advised to educate themselves well in advance of 2014 in order to be responsive to their clients’ needs.

Full Article: http://www.accountingweb.com/topic/fitness/irs-gears-health-care-law-appeals

Wrangling Continues over the Payroll Tax Cut

by | Accounting News, Audit and Accounting, CPA, IRS, QuickBooks, Tax Consulting, Uncategorized

By AccountingWEB Staff

Time is running out before the payroll tax rate automatically increases in two weeks, and the dispute over how to fund it continues.

The tax measure at issue would maintain the payroll tax rate at 4.2 percent for the year 2012 instead of allowing it to revert to 6.2 percent January 1. It’s a tax cut worth about $1,000 to families earning $50,000 a year. The payroll tax bill also would renew benefits for the long-term unemployed and prevent a cut in Medicare benefits for seniors.

This morning (December 19), the Associated Press reported that “Boehner spoke after a chaotic weekend in which Senate leaders first failed to agree on a full-year bill, then coalesced around the two-month extension that passed overwhelmingly, only to spark a revolt among GOP conservatives in the House.”

Here’s a summary of what’s been happening:

While the GOP-led House passed a bill on December 14 extending the tax cut, the legislation relied on a pay freeze and increased pension contributions for civilian federal employees. In addition, it raised Medicare premiums for seniors, and it raised a fee that’s charged to banks with mortgages guaranteed by Fannie Mae and Freddie Mac. The bill didn’t have the votes to pass the Senate.

On Friday, December 16, Senate leaders reached an agreement to pass a two-month extension on the payroll tax cut, keeping the 4.2 percent rate through February. The agreement requires the administration to decide within 60 days if the controversial 1,700-mile Keystone XL pipeline is in the nation’s best interests. Some environmental groups oppose the project, but several unions support it.

Senate Republican Leader, Mitch McConnell, said Keystone XL would create about 20,000 jobs. Critics say the figure would be fewer than 3,500, including fewer than 1,000 that would be permanent.

House Speaker, John Boehner, said Friday that his chamber will not sign off on an extension of the payroll tax cut without including a provision to force a quick decision on the pipeline construction.

Obama would prefer to postpone the controversial matter, and he threatened to veto any bill that forces a decision. Because the project crosses international borders, it requires White House approval. The administration complained that House Republicans are injecting “ideological issues into what should be a simple debate about cutting taxes for the middle class.”

Original Article: http://www.accountingweb.com/topic/tax/wrangling-continues-over-payroll-tax-cut