The health care law contains tax provisions that affect employers. The size and structure of a workforce–small or large–helps determine which parts of the law apply to which employers. Calculating the number of employees is especially important for employers that have close to 50 employees or whose workforce fluctuates during the year.

Two parts of the Affordable Care Act apply only to applicable large employers. These are the employer shared responsibility provisions and the employer information reporting provisions for offers of minimum essential coverage.

The number of employees an employer has during the current year determines whether it is an applicable large employer (ALE) for the following year. For example, you will use information about the size of your workforce during 2017 to determine if your organization is an ALE for 2018.

Applicable large employers are generally those with 50 or more full-time employees or full-time equivalent employees. Under the employer shared responsibility provision, ALEs are required to offer their full-time employees and dependents affordable coverage that provides minimum value. Employers with fewer than 50 full-time or full-time equivalent employees are not applicable large employers.

Who is a Full-time Employee?

There are many additional rules for determining who is a full-time employee, including what counts as hours of service, but in general:

• A full-time employee is an employee who is employed on average, per month, at least 30 hours of service per week, or at least 130 hours of service in a calendar month.
• A full-time equivalent employee is a combination of employees, each of whom individually is not a full-time employee, but who, in combination, are equivalent to a full-time employee.
• An aggregated group is commonly owned or otherwise related or affiliated employers, which must combine their employees to determine their workforce size.

Figuring the Size of the Workforce

To determine your workforce size for a year, you add your total number of full-time employees for each month of the prior calendar year to the total number of full-time equivalent employees for each calendar month of the prior calendar year and divide that total number by 12. If the result is 50 or more employees, you are an applicable large employer.

Employers with Fewer than 50 Employees

If an employer has fewer than 50 full-time employees, including full-time equivalent employees, on average during the prior year, the employer is not an ALE for the current calendar year. Therefore, the employer is not subject to the employer shared responsibility provisions or the employer information reporting provisions for the current year.

Information Reporting (Including Self-Insured Employers)

All providers of health coverage, including employers that provide self-insured coverage, must file annual returns with the IRS reporting information about the coverage and about each covered individual. The coverage is reported on a Form 1095-B, Health Coverage and the employer must also furnish a copy of Form 1095-B to the employee by March 2, 2018 (this date reflects a 30-day extension from the original due date of January 31).

Tax Credits

Certain employers may be eligible for the small business health care tax credit if they:

1. cover at least 50 percent of employees’ premium costs
2. have fewer than 25 full-time equivalent employees with average annual wages of less than $52,400 in 2017
3. purchase their coverage through the Small Business Health Options Program.

Employers with fewer than 50 full-time employees or full-time equivalent employees are not subject to the employer shared responsibility provisions.

Employers with 50 or More Employees

Information Reporting

All employers including applicable large employers that provide self-insured health coverage must file an annual return for individuals they cover and provide a statement to responsible individuals.

Applicable large employers must file an annual return–and provide a statement to each full-time employee–reporting whether they offeredhealth insurance, and if so, what insurance they offered their employees.

ALEs are required to furnish a statement to each full-time employee that includes the same information provided to the IRS by March 2, 2018. ALEs that file 250 or more information returns during the calendar year must file the returns electronically.

Employer Shared Responsibility Payment

ALEs are subject to the employer shared responsibility payment if at least one full-time employee receives the premium tax credit and any one these conditions apply. The ALE:

• failed to offer coverage to full-time employees and their dependents
• offered coverage that was not affordable
• offered coverage that did not provide a minimum level of coverage

Questions? Don’t hesitate to call for assistance.

• By Leon Clinton
• March 3, 2018

March 1

Farmers and Fishermen – File your 2017 income tax return (Form 1040) and pay any tax due. However, you have until April 17 to file if you paid your 2017 estimated tax by January 16, 2018.

March 12

Employees who work for tips – If you received $20 or more in tips during February, report them to your employer. You can use Form 4070.

March 15

Employers – Nonpayroll withholding. If the monthly deposit rule applies, deposit the tax for payments in February.

Employers – Social Security, Medicare, and withheld income tax. If the monthly deposit rule applies, deposit the tax for payments in February.

Partnerships – File a 2017 calendar year income tax return (Form 1065). Provide each partner with a copy of their Schedule K-1 (form 1065-B) or substitute Schedule K-1. To request an automatic 6-month extension of time to file the return, file Form 7004. Then file the return and provide each partner with a copy of their final or amended (if required) Schedule K-1 (Form 1065) by September 17.

S Corporations – File a 2017 calendar year income tax return (Form 1120S) and pay any tax due. Provide each shareholder with a copy of Schedule K-1 (Form 1120S), Shareholder’s Share of Income, Credits, Deductions, etc., or a substitute Schedule K-1. If you want an automatic 6-month extension of time to file the return, file Form 7004 and deposit what you estimate you owe.

Electing large partnerships – File a 2017 calendar year return (Form 1065-B). Provide each partner with a copy of Schedule K-1 (Form 1065-B), Partner’s Share of Income (Loss) From an Electing Large Partnership. This due date applies even if the partnership requests an extension of time to file the Form 7004.

S Corporation Election – File Form 2553, Election by a Small Business Corporation, to choose to be treated as an S corporation beginning with calendar year 2018. If Form 2553 is filed late, S treatment will begin with calendar year 2019.

April 2

Electronic filing of Forms 1097, 1098, 1099, 3921, and 3922 – File Forms 1097, 1098, 1099, 3921, and 3922 with the IRS (except a Form 1099-MISC reporting nonemployee compensation). This due date applies only if you file electronically. Otherwise, see February 28. The due date for giving the recipient these forms generally remains January 31.

Electronic Filing of Form W-2G – File copies of all the Form W-2G (Certain Gambling Winnings) you issued for 2017. This due date applies only if you electronically file. Otherwise, see February 28. The due date for giving the recipient these forms remains January 31.

Electronic Filing of Forms 8027 – File copies of all the Forms 8027 you issued for 2017. This due date applies only if you electronically file. Otherwise, see February 28.

Electronic Filing of Forms 1094-C and 1095-C and Forms 1094-B and 1094-B – If you’re an applicable Large Employer, file electronic forms 1094-C and 1095-C with the IRS. For all other providers of essential minimum coverage, file electronic Forms 1094-B and 1095-B with the IRS. Otherwise, see February 28.

• By Leon Clinton
• March 1, 2018

Starting in February 2018, individuals with “seriously delinquent tax debts” will be subject to a new set of provisions courtesy of the Fixing America’s Surface Transportation (FAST) Act, signed into law in December 2015.

The FAST Act requires the IRS to notify the State Department of taxpayers the IRS has certified as owing a seriously delinquent tax debt and also requires the State Department to deny their passport application or deny renewal of their passport. In certain instances, the State Department may revoke their passport.

Taxpayers affected by this law are those with a seriously delinquent tax debt, generally, an individual who owes the IRS more than $51,000 in back taxes, penalties and interest for which the IRS has filed a Notice of Federal Tax Lien and the period to challenge it has expired, or the IRS has issued a levy.

Taxpayers can avoid having the IRS notify the State Department of their seriously delinquent tax debt by doing the following:

• Paying the tax debt in full
• Paying the tax debt timely under an approved installment agreement,
• Paying the tax debt timely under an accepted offer in compromise,
• Paying the tax debt timely under the terms of a settlement agreement with the
• Department of Justice,
• Having requested or have a pending collection due process appeal with a levy, or
• Having collection suspended because a taxpayer has made an innocent spouse election or requested innocent spouse relief.

However, a taxpayer’s passport won’t be at risk under this program if an individual:

• Is in bankruptcy
• Is identified by the IRS as a victim of tax-related identity theft
• Has an account that the IRS has determined is currently not collectible due to hardship
• Is located within a federally declared disaster area
• Has a request pending with the IRS for an installment agreement
• Has a pending offer in compromise with the IRS
• Has an IRS accepted adjustment that will satisfy the debt in full

For taxpayers serving in a combat zone, and who also owe a seriously delinquent tax debt, the IRS postpones notifying the State Department and the individual’s passport is not subject to denial during this time.

Taxpayers who are behind on their tax obligations should come forward and pay what they owe or enter into a payment plan with the IRS and may qualify for one of several relief programs, including the following:

• Taxpayers can request a payment agreement with the IRS by filing Form 9465, Installment Agreement Request. Taxpayers can download this form from IRS.gov and mail it along with a tax return, bill or notice. Some taxpayers may be eligible to use the online payment agreement to set up a monthly payment agreement for up to 72 months.
• Financially distressed taxpayers may qualify for an offer in compromise, an agreement between a taxpayer and the IRS that settles the taxpayer’s tax liabilities for less than the full amount owed. The IRS looks at the taxpayer’s income and assets to determine the taxpayer’s ability to pay.

If you owe back taxes and are worried your passport could be revoked because of unpaid taxes, please contact the office.

• By Leon Clinton
• February 26, 2018