July 2015 Tax Snacks


Tax Snacks: Bite-size tax news and information on the fly

Date to Remember

August 15:

Forms 990 for calendar-year tax-exempt entities are due. (Returns were due in May, but those who filed an extension have until August 15. A second extension can be filed, extending the deadline to November 15.)

Christmas in July?

As has too often been the custom, last year just before Christmas, Congress passed some long-expected tax law extensions for many benefits that had expired at the end of the previous year. Most were extended retroactively to 1/1/14, but then expired again a couple short weeks later on 12/31/14. Comically, Senate Finance Committee Chairman Ron Wyden (D-Oregon) quipped at the time “This tax bill doesn’t have the shelf life of a carton of eggs.”

No one is suggesting we should hold our breath for another extension, but the Senate Finance Committee has started a similar process a bit early this year, by addressing draft legislation known as JCX-101-15, which originated in the Joint Committee on Taxation. It contains a number of familiar “extenders,” including bonus depreciation, increased Section 179 benefits, exclusion of discharge of indebtedness income related to principal residences, tuition deductions, mortgage insurance premium deductions, the research credit (there’s even discussion of making that one permanent), new markets tax credit, work opportunity tax credit, and several energy credits. Significantly, it would extend those benefits not only to 2015, but also through 2016.

There is no telling where this will end up, but those of you interested in seeing the proposal can download it here.

Part-time workers may not cause an employer to be subject to the ACA penalty tax

Starting in 2015, if you are an “applicable large employer” that does not offer affordable health coverage that provides a minimum level of coverage to your full-time employees (and their dependents), you may be subject to an Employer Shared Responsibility payment if at least one of your full-time employees receives a premium tax credit for purchasing individual coverage on one of the new Affordable Insurance Exchanges, also called a Health Insurance Marketplace (Marketplace). Also, effective in 2015, applicable large employers are required to file information returns with the IRS and provide statements to their full-time employees about the health insurance coverage they offered.

Employers with 50 or more full-time and full-time-equivalent employees are generally considered to be applicable large employers under the employer shared responsibility provisions of the Affordable Care Act. When determining if your organization is an applicable large employer, you must measure your workforce by counting all your employees. However, there is an exception for seasonal workers.

If an employer’s workforce exceeds 50 full-time employees for 120 days or fewer during a calendar year, and the employees in excess of 50 who were employed during that period of no more than 120 days were seasonal workers, the employer is not considered an applicable large employer.

A seasonal worker for this purpose is an employee who performs labor or services on a seasonal basis. For example, retail workers employed exclusively during holiday seasons are seasonal workers.

The terms seasonal worker and seasonal employee are both used in the employer shared responsibility provisions, but in two different contexts. Only the term seasonal worker is relevant for determining whether an employer is an applicable large employer subject to the employer shared responsibility provisions. For this purpose, employers may apply a reasonable, good faith interpretation of the term seasonal worker.

Disclaimer of Liability: This publication is intended to provide general information to our clients and friends. It does not constitute accounting, tax, or legal advice; nor is it intended to convey a thorough treatment of the subject matter.