The IRS has released Form W-11 to help employers, including tax-exempt organizations, claim the special payroll tax exemption that applies to many newly-hired workers during 2010. The payroll tax exemption was created under the provisions of the Hiring Incentives to Restore Employment (”HIRE”) Act signed by President Obama on March 18, 2010. The HIRE Act created two new tax benefits to encourage employers to hire and retain new employees. Employers who hire previously unemployed workers this year (between February 3, 2010 and January 1, 2011) may qualify for a 6.2% payroll tax incentive, in effect exempting the employer from the employer’s share of social security tax on wages paid to these workers after March 18, 2010. However, employers would still need to withhold the employee’s 6.2% share of social security taxes, as well as income taxes. In addition, for each formerly unemployed worker retained at least one year, employers may claim a new hire retention credit of up to $1,000 per worker when filing annual income tax returns.
The HIRE Act requires that employers get a statement from each eligible new hire certifying under penalties of perjury that he or she was unemployed during the 60 days before beginning work or, alternatively, worked fewer than a total of 40 hours for anyone during the 60-day period. Employers can use Form W-11 to meet this statement requirement.
A list of frequently asked employer questions on the HIRE Act is available here.
On March 23, 2010, the President signed the Patient Protection and Affordable Care Act into law. The law expands health care coverage to 31 million currently uninsured Americans through a combination of cost controls, subsidies and mandates.
The National Summit on Health Care Fraud webcast.
Thursday, January 28, 2010 from 8:45 a.m. – 4:00 p.m. (CST)
As noted in a previous post, the IRS has developed a two-page check sheet to be used by IRS Exempt Organizations agents to gather data about the governance practices and the related internal controls of tax-exempt organizations under examination. The check sheet contains several questions from the governance section of the revised Form 990. The data will be included in a long-term study that the IRS hopes will create a better understanding of the relationship between governance practices and tax compliance. The check sheet and other governance-related materials are now available on the IRS website.
On October 22, 2009, the Equal Employment Opportunity Commission (”EEOC”) announced a revision of “EEO is the Law,” the notice that employers covered by federal anti-discrimination laws must post in the workplace. The revised version reflects current federal employment discrimination law, incuding information about the Genetic Information Nondiscrimination Act of 2008, which became effective November 21, 2009. The revised poster also includes updates from the Department of Labor.
Employers may either download and print the revised supplement from the EEOC website and post that document alongside the EEOC’s 2002 edition of “EEO is the Law,” download and post the November 2009 update from the EEOC website, or order copies of the new posters, which are available in English, Spanish, Chinese, and Arabic.
A recently released IRS private letter ruling denied tax exemption for a health information data exchange. A group of insurers and large employers formed an organization designed to aggregate and share health care data with the goal of improving healthcare quality and efficiency. The organization planned to gather, manage and process data on providers and the providers’ performance as to quality benchmarks, but did not require that this information be shared with the public. The IRS found that the organization’s benefits flowed primarily to its members and not to the general public. Further, the organization’s activities were similar to a “commercial business” in providing health care data analysis and distribution only to the organization’s members. It appears that the major flaw in the organization’s proposed operations was distribution of the data it gathered and analyzed was limited to its members, which were both employers and health plans. The organization functioned primarily to benefit its members and not the general public, and therefore, the organization was both operating for a non-exempt purpose and conferring a substantial private benefit on its members.
At approximately 2:00 a.m. on October 2, 2009, the Senate Finance Committee finished amending the latest health reform legislation. The Committee plans to take a final vote on the legislation next week, and President Obama has expressed confidence that Congress will approve a health reform package in 2009. The Committee worked through 564 amendments, including a softening of financial penalties to be imposed on those who do not obtain insurance and modification of taxes on high-cost health insurance policies.
The IRS announced that user fees will increase for all exempt organization applications postmarked after Jan 3, 2010. The increases involve IRS Forms 1023, 1024, and 1028 and are as follows:
- $400 for organizations whose gross receipts are $10,000 or less annually over a 4-year period
- $850 for organizations whose gross receipts exceed $10,000 annually over a 4-year period
- $3,000 for group exemption letters.
Also, the IRS noted that “Cyber Assistant,” a Web-based software program designed to help Code Sec. 501(c)(3) applicants properly complete the Form 1023 application, will become available sometime in 2010. When Cyber Assistant becomes available, the user fees will change again as follows:
- $200 for organizations using Cyber Assistant (regardless of size) to prepare their Form 1023
- $850 for all other organizations not using Cyber Assistant (regardless of size) to prepare their Form 1023.
Detailed information is available on the IRS web site.
The Kaiser Foundation recently updated its web site regarding state health data. The new information includes rates of unemployment, foreclosures, number of individuals receiving food stamps, etc. The site provides data on over 500 health topics by state, such as health spending, prescription drug costs, hospital expenses and trends, and physician demographics.
Wisconsin’s state profile can be found here.
As part of its continuing professional education program for Internal Revenue Service employees, the IRS recently conducted a series of internal training sessions on governance for tax-exempt organizations. The materials are available on the IRS website. The training materials include a combination of outlines and PowerPoint presentations explaining why the IRS is focused on nonprofit governance, emphasizing recommended governance measures and policies, and discussing the role of IRS employees as it relates to their review of governance issues. The IRS clearly intends to carry out a long-term study of nonprofit governance; the materials state that the IRS’ next steps regarding governance are to:
- Develop an examination check sheet regarding various governance topics to explore the link between good or bad governance and compliance with tax laws;
- Incorporate Form 990 questions and responses into compliance initiatives; and
- Continue training of both IRS employees and tax-exempt organizations.
If you have any questions regarding adopting or implementing the governance practices encouraged by the IRS, please contact our health law attorneys.
