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ACA Basics: Minimum Standards

Does Your Customer’s Health Insurance Meet The Minimum Standards?

 The Affordable Care Act calls for individuals to have qualifying health insurance coverage for each month of the year, have an exemption, or make a shared responsibility payment when filing their federal income tax return next year.

Qualifying health insurance coverage, called minimum essential coverage, includes coverage under various, but not all, types of health care coverage plans. The majority of coverage that people have today counts as minimum essential coverage.

Examples of minimum essential coverage include: [Read more...]

Senators Wicker and Nelson Call on IRS to Address Tax Refund Fraud Bipartisan Coalition Urges Agency to Make Fraud Reduction a Top Priority

Senators Wicker and Nelson Call on IRS to Address Tax Refund Fraud Bipartisan Coalition Urges Agency to Make Fraud Reduction a Top Priority

WASHINGTON – U.S. Senators Roger Wicker, R-Miss., and Bill Nelson, D-Fla., today led a bipartisan group of 15 Senators in calling on Internal Revenue Service (IRS) Commissioner John Koskinen to update Congress regarding the agency’s efforts to prevent tax refund fraud using stolen identities.
[Read more...]

Information for Employers about Their Responsibilities Under the Affordable Care Act

Information for Employers About Their Responsibilities Under the Affordable Care Act 

If you are an employer, the number of employees in your business will affect what you need to know about the Affordable Care Act (ACA).

Employers with 50 or more full-time and full-time-equivalent employees are generally considered to be “applicable large employers” (ALEs) under the employer shared responsibility provisions of the ACA.  Applicable large employers are subject to the employer shared responsibility provisions.  However, more than 95 percent of employers are not ALEs and are not subject to these provisions because they have fewer than 50 full-time and full-time-equivalent employees. [Read more...]

IRS Allows Deduction for Local Lodging Expenses

New Rules Allow Deductions

Regulations issued under T.D. 9696 finalize rules the IRS put into effect in 2012 allowing employees to deduct certain expenses paid or incurred for local lodging as business expenses.

Normally, lodging expenses a taxpayer incurs while not traveling away from home are considered personal expenses under Sec. 262(a) and are not deductible. However, under the new rules, local lodging expenses that meet certain criteria will be considered ordinary and necessary business expenses and therefore deductible under Sec. 162.

To be deductible, local lodging expenses must meet a facts-and-circumstances test under Regs. Sec. 1.162-32(a) or qualify for a safe harbor under Regs. Sec. 1.162-32(b). Local lodging expenses paid by an employer on behalf of an employee may be deductible under Sec. 132 as a working condition fringe benefit if they meet the new tests. If an employee is reimbursed by the employer for local lodging expenses, the reimbursement amount may be excludable from the employee’s income if the expense allowance arrangement qualifies as an accountable plan under Sec. 62(c).

One factor considered under the facts-and-circumstances test is whether the expense is a “bona fide condition or requirement of employment imposed by the taxpayer’s employer.” Examples given in the regulations to illustrate the facts-and-circumstances test include employees who are required to stay at a local hotel during a work-related training session; professional athletes who are required to stay at a local hotel before a home game; an employee who is relocating for work and looking for a new home; an employee who has to stay at a hotel near the office while working long hours; and employees who occasionally are on call for a night duty shift and stay at a local hotel.

Under the safe harbor, local lodging expenses will be treated as an ordinary and necessary business expense if:

  • The lodging is necessary for the employee to participate fully in or be available for a bona fide business meeting, conference, training activity, or other business function;
  • The lodging does not exceed five calendar days and does not occur more than once each calendar quarter;
  • The employer requires the employee to remain at the activity or function overnight; and
  • The lodging is not extravagant or lavish and does not provide a significant element of personal pleasure.

In response to a comment, the final regulations clarify that expenses that do not qualify for the Regs. Sec. 1.162-32(b) safe harbor may nevertheless be deductible under the facts-and-circumstances test.

Taxpayers may apply the new rules to any tax year that is still open.




Source: IRS Regulation at 26 CFR Part 1. [TD 9696].

Lower Tax Refunds?

ACA Credits Could Mean Lower Tax Refunds

The Affordable Care Act (ACA) is already proving to be confusing and costly for consumers, with widespread premium increases and plan cancellations. Now, the Centers for Medicare and Medicaid Services (CMS) is warning tax preparers that their clients could face lower refunds in the coming tax season due to excessive tax credits on their 2013 returns.

CMS initially accepted the consumer’s estimates of income and other data, but subsequently verified that data through independent sources. That process revealed some 1.2 million households with income-related data mismatches, and another 966,000 individuals with citizenship or immigration data matching issues, as of May 30th. [Read more...]

New Direct Deposit Limits Could Affect Preparers and Their Customers

In an effort to combat fraud and identity theft, new IRS procedures effective January 2015 will limit the number of refunds electronically deposited into a single financial account or pre-paid debit card to three.

The fourth and subsequent refunds automatically will convert to a paper refund check and be mailed to the taxpayer.

Taxpayers also will receive a notice informing them that the account has exceeded the direct deposit limits and that they will receive a paper refund check in approximately four weeks if there are no other issues with the return. Taxpayers can track their refunds at Where’s My Refund?

The vast majority of taxpayers will not be affected by this limitation, and the IRS still encourages taxpayers and tax preparers to continue to use direct deposit. It is the fastest, safest way for taxpayers to receive refunds.

The direct deposit limit will prevent criminals from easily obtaining multiple refunds. The limit applies to financial accounts, such as bank savings or checking accounts, and to prepaid, reloadable cards or debit cards.

However, the limitation may affect some taxpayers, such as families in which the parent’s and children’s refunds are deposited into a family-held bank account. Taxpayers in this situation should make other deposit arrangements or expect to receive paper refund checks.

The new limitation also will protect taxpayers from preparers who obtain payment for their tax preparation services by depositing part or all of their clients’ refunds into the preparers’ own bank accounts. The new direct deposit limits will help eliminate this type of abuse.

Direct deposit must only be made to accounts bearing the taxpayer’s name. Preparer fees cannot be recovered by using Form 8888 to split the refund or by preparers opening a joint bank account with taxpayers. These actions by preparers are subject to penalty under the Internal Revenue Code and to discipline under Treasury Circular 230.

Source: IRS at

Tax Extenders Bill Stalled In Senate

Await November Elections

One of the casualties of the coming election in Congress is a bill that would extend a package of 50 tax breaks worth $85 billion over the next 10 years to individuals and businesses. The bill has been stalled by Senate republicans angered by the refusal of Sen. Harry Reid to permit any amendments to the bill.

Work began on passage of the bill, which covers tax breaks for auto race tracks, wind energy, school teacher expenses, Puerto Rican rum producers, multinational corporations and others, in May of this year. They are collectively known as “tax extenders” because they expired at the end of 2013. New legislation would revive these credits until the end of 2015.

Republicans want to divide the bill and vote on individual projects, while Democrats are pushing for a single vote on a single bill. Since 36 seats in the Senate are up for re-election, Senator Reid is blocking action on the bill until after the elections.

A compromise bill was passed by voice vote of the Senate Finance Committee earlier this year, but failed to gain traction enough for a vote of the whole Senate.



Sources: Various, including Reuters, Forbes, and National Journal.

IRS Identifies Five Easy Ways to Spot Suspicious Calls

Consumer Alert

The Internal Revenue Service has re-issued a consumer alert providing taxpayers with additional tips to protect themselves from telephone scam artists calling and pretending to be with the IRS.

These callers may demand money or may say you have a refund due and try to trick you into sharing private information. These con artists can sound convincing when they call. They may know a lot about you, and they usually alter the caller ID to make it look like the IRS is calling. They use fake names and bogus IRS identification badge numbers. If you don’t answer, they often leave an “urgent” callback request. [Read more...]

IRS: Publication 1304 (Individual Tax Stats) For 2012 Now Available

Statistics of Income

The Internal Revenue Service today announced the availability of Statistics of Income—2012,

Individual Income Tax Returns Complete Report (Publication 1304). U.S. taxpayers filed 144.9 million individual income tax returns for tax year 2012, down 0.3 percent from 2011. The adjusted gross income less deficit reported on these returns totaled $9.1 trillion, which is an 8.7-percent increase from the prior year. [Read more...]

Part II: Representation- Before US Tax Court

Part II: Representation- Before US Tax Court

© Ben A. Tallman EA

This is the second part in a three part series on Representation.  If you missed the first part, please go back to the previous issue to catch-up.  We had discussed the IRS letters that trigger certain actions and responses on your part, as the client’s representative.  Below is the fifth paragraph dealing with our last level of response before going to US Tax Court.  The earlier paragraphs can be found in the previous article. [Read more...]