Phishing Scam Targeting Emails Ending With “.edu”

The IRS released a notice on March 30, 2021 warning students and staff that they have received many complaints regarding recent emails, impersonating the IRS, targeted at educational institutions.  The emails use the IRS name and logo, with a subject line indicating the recipient may be owed a tax refund. 

The bogus emails are asking the recipient to provide sensitive information such as Name, Address, Social Security Number, Date of Birth, Driver’s License, and income.  This information then can be used to steal a person’s identity or file for a tax refund under the victim’s name.  If you believe you are owed a refund, the IRS recommends you go to the “Where’s My Refund” page on their website,

The IRS advises anyone who receives such an email to NOT click on the link in the email, but instead to report it to the IRS.  To report such emails to the IRS, save the email using “save as” or forward the email as attachment to   

To prevent identity theft, individuals can apply for an Identity Protection PIN, which helps prevent identity thieves from filing fraudulent tax returns under the victim’s name.

Since this scam seems to be targeted at educational institutions, students and staff should be on high alert for these types of emails to prevent possible identity theft.  If you are concerned that your personal data has been compromised, you can go to, to determine what steps should be taken.

SPS/GZ is a full-service tax reporting firm that provides personalized service and exceptional support, utilizing state-of-the-art technology to create and e-file Forms 1098-T, various 1099s and Affordable Care Act tax forms 3921 and 3922.  For more information, reach out to us at or call at (888)375-3049.  Our complete and affordable solution allows administrators to simply upload their tax form data file to our secure portal in a few easy steps and we handle everything else to keep your organization compliant. Contact us today!

American Rescue Plan Act of 2021

On Thursday, March 11, 2021, President Joe Biden signed a $1.9 trillion dollar bill, the American Rescue Plan Act of 2021 (ARP), into law. “This historic legislation is about rebuilding the backbone of this country and giving people in this nation, working people, middle class folks, people who built the country, a fighting chance,” President Biden said in the Oval Office before signing. “That’s what the essence of it is”. 

The legislation includes direct relief payments of up to $1,400 for individuals, major improvements to the affordability of healthcare coverage and access, funding for distribution of vaccines, and the reopening of schools and colleges.  Also included is an extension of Unemployment payments, an expanded Child Tax Credits program, as well as relief to states, local governments, veterans, farmers and foreign assistance.  

The president, vice president, first lady and second gentlemen, along with other members of the cabinet, are set to travel the country to explain ARP’s benefits to the public.  Governors, mayors, local community leaders and others will also help spread the word.  

ARP benefits include:

  • Giving $6 billion in the form of a $1,400 check to most Americans earning up to $75,000 
  • Extending a $300 weekly federal boost to unemployment benefits through August 2021 
  • Sending $350 billion to state and local governments whose revenue has declined because of COVID-19’s impact on their economies
  • Allocating $130 billion to assist in reopening schools and colleges
  • Allotting $30 billion to help renters and landlords weather economic losses 
  • Devoting $50 billion for small-business relief assistance 
  • Dedicating $160 billion for vaccine research, development and distribution needs 
  • Expanding the child tax credit up to $3,600 per child in 2021
  • Expanding 2021 premium subsidies for people who buy health insurance through the Affordable Care Act (“ACA”) on their own instead of getting it from an employer or a government program like Medicare or Medicaid

The changes to the Affordable Care Act provide significant funding to make premiums more affordable across the board.  Under the ARP, no one would have to pay more than 8.5% of income for a benchmark silver plan, which is the second cheapest plan available. 

As an example, those earning from 100% to 150% of the poverty line ($26,500 to $39,750 for a family of four) would go from a maximum premium of 4.14% to zero premium. Those earning twice the poverty threshold would move from a maximum outlay of 6.52% of income to 2%.

With every passing year, it appears more likely that the ACA will remain a part of America’s healthcare system, especially when improvements, such as through the ARP, continue to be passed.

SPS/GZ is a full-service tax reporting firm that provides personalized service and exceptional support, utilizing state-of-the-art technology to create and e-file Forms 1099, Affordable Care Act tax forms, and Forms 3921 and 3922.  Reach out today at or call at (888)375-3049.  

Tax Year 2020 Filing Tips

In COVID Tax Tip 2021-09, which was issued January 15, 2021, the IRS announced that it will begin accepting and processing 2020 tax year returns on Friday, February 12, 2021.  Tax Tip 2021-12 and COVID Tax Tip 2021-13 were issued in the first week of February 2021. In each update, the IRS encourages federal tax returns to be filed electronically and combined with direct deposit. Pandemic related delays associated with paper filing and a backlog are the main reasons given in all three statements.

Direct deposit is fast, secure, easy, and provides options, such as splitting refunds into more than one financial account. Checking, savings, health, education, and some retirement accounts are allowed.  U.S. Savings Bonds can also be purchased with refunds, up to $5,000.00, using IRS Form 8888.   

COVID Tax Tip 2021-13 covers a number of COVID-19 pandemic tax topics, including who should file a federal tax return, the Recovery Rebate Credit, the Unearned Income Credit, Unemployment Benefits, and two education credits.  

The majority of people with gross income of $12,400 or more are required to file federal tax returns.  Some with lower incomes aren’t required to file but should consider filing for a refund if they had federal income tax withheld because they may be eligible for tax credits.       

Millions of Americans are now receiving or have received taxable unemployment compensation during the pandemic. Taxable benefits include any of the special unemployment compensation authorized under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, enacted in spring, 2020.  Federal law allows recipients to choose to have a flat 10% withheld to help them avoid owing taxes on this income when they file. Form 1099-G should have been received in January 2021.   

Most eligible people have already received full Economic Impact payment amounts for the recovery rebate credit.  For those who are eligible and have not received the full amounts of the credits may be eligible to file a claim.  In order to file the claim, people must file a tax return, even if they are not normally required to file.    

The maximum Economic Impact Payments for qualifying individuals were:

  • $1,200 per person and $500 per qualifying child for the first payment
  • $600 per person and $600 per qualifying child for the second payment

Taxpayers with children, who are eligible for Earned Income Tax Credit, may be given temporary relief if their income was higher in 2019 than in 2020.  The Taxpayer Certainty and Disaster Tax Relief Act of 2020 can be used to figure your EITC for 2020.  See Publication 596, EIC.  

People, who don’t owe taxes, but pay certain higher education expenses may qualify for one of two education credits: The American Opportunity Credit, and the Lifelong Learning Credit, which would both use Form 8863.  

SPS/GZ is a full-service tax reporting firm that provides personalized service and exceptional support, utilizing state-of-the-art technology to create and e-file Affordable Care Act tax forms, Forms 1099, and Forms 3921 and 3922.  Reach out today at or call at (888)375-3049.  Our solution allows companies to simply upload their data file to our secure portal in a few easy steps and we handle everything else.

The Supreme Court Suggests That ACA Fate Isn’t Their Decision to Make

On Tuesday, November 10th, the Supreme Court heard arguments in the controversial and closely watched case, California v. Texas (known as Texas v. U.S. in the lower courts). Several Republican led states have joined the Trump Administration In a challenge to the 10-year old legislation.This is the third time that the Affordable Care Act, aka “ACA,” or “Obamacare,” has come before the high court.  

It is not clear how the Supreme Court will respond, in what is probably the most controversial case to date, especially since the pandemic is still raging and healthcare is on everyone’s minds.  The decision to invalidate the law could impact at least 20 million people who participate in exchanges. In addition, low-income adults who became eligible with the expansion of Medicaid would be affected. Most Americans are in favor of protecting two popular ACA provisions: protecting those with preexisting conditions and allowing parents to keep their children on their health insurance plans until the age of 26. 

Mongan told the justices of the court that they “should not invalidate any more of Congress’ work than absolutely necessary.” It would seem that Chief Justice Roberts and Justice Kavanaugh may side with the three liberal justices to uphold the ACA.  Both remarked that it isn’t the Supreme Court’s role to invalidate the Affordable Care Act, whether or not any one or more of ACA’s provisions are deemed unconstitutional. Roberts went on to say that if President Trump and the Republicans wanted to strike the law, they should have done it when they had the opportunity to, rather than leaving it up to the courts.      

California Solicitor General, Michael Mongan’s closing argument defending ACA follows: “The plain intent of the 2017 amendment was to make 5000A inoperative and unenforceable, not to impose the very commands this court said would be unconstitutional. And the current statutory framework makes clear that Congress wanted every other ACA provision to remain in effect if 5000A were unenforceable, because that’s the precise situation Congress created.” 

States, lawmakers, insurers, brokers, and tax reporting firms (like SPS/GZ) are waiting to see what the outcome will be and if any changes will be made to impact the insurance market and the Applicable Large Employer’s insurance and reporting mandates.  The Supreme Court’s ruling on this latest ACA challenge is not expected until the end of June.   

President-elect Joe Biden responded, “These ideologues are once again trying to strip health coverage away from millions of people. We’re going to build a health-care system that puts you and your families first and that every American can be proud of.” 

SPS/GZ is a full-service tax reporting firm that provides personalized service and exceptional support, utilizing state-of-the-art technology to create and e-file Affordable Care Act tax forms, Forms 1099, and Forms 3921 and 3922.  Reach out today at or call at (888)375-3049.  Our solution allows companies to simply upload their data file to our secure portal in a few easy steps and we handle everything else.

IRS encourages early ITIN renewal to prevent refund delays as last round of ITINs are set to expire

The IRS released IR-2020-181 on August 17, 2020.  This issue notifies taxpayers of deadlines and considerations as they renew Individual Taxpayer Identification Numbers (“ITINs”).      

Since 1996, the IRS has issued ITINs to taxpayers and family members who are not eligible to receive a Social Security Number (SSN).  Prior to the 2015 Protecting Americans from Tax Hikes (PATH) Act, ITINs could be used indefinitely. ITINs assigned prior to 2013 are scheduled to expire. The PATH Act placed renewal requirement provisions into effect, starting in October 2016.  Since then, taxpayers using expired ITINs face refund delays and ineligibility for certain tax credits.  Renewals are being processed now.  ITINs that do not have a middle digit of 88, 90, 91, 92, 94, 95, 96, 97, 98 or 99 and not used on a tax return for tax years 2017, 2018 or 2019 will not expire in 2020.

Estimates total more than 1 million taxpayers hold potentially expiring ITINs. Expiring ITIN holders may have already received a letter from the IRS informing them of the December 31,2020 expiration date. Those not required to file a tax return are not required to renew the ITIN, however, if future reporting is expected, renewal consideration should be given.  

Three groups of taxpayers who need to renew follow:

  • ITINs that have not been used on a tax return for tax years 2017, 2018 or 2019 will expire December 31, 2020. 
  • ITINs with middle digits 88 (For example: 9NN-88-NNNN) will expire December 31, 2020. 
  • ITINs with middle digits 90, 91, 92, 94, 95, 96, 97, 98 or 99, that were assigned before 2013 and have not already been renewed, will also expire at the end of this year. Even if the ITIN has been used in the last three years, if a filing requirement is expected in 2021, renewal is required. CP-48 Notice, informing taxpayers they need to renew their ITINs, will be sent in the coming months to inform taxpayers.  

What should you do if you need to renew your ITIN? To renew an ITIN, the taxpayer should complete Form W-7, “Application for IRS Individual Taxpayer Identification Number,” along with the required documentation. If you fall into one of the above categories, you do not need to wait to receive a CP-48 Notice to renew your ITIN. 

  • Three methods taxpayers can use to submit Form W-7 application package to renew their ITIN follow:
  1. IRS-authorized Certified Acceptance Agents or Acceptance Agents around the country 
  2. Form W-7 is to be completed and mailed, along with original identification documents or certified copies of the documents from the issuing Agency, to the IRS address listed on the form (identification documents will be returned within 60 days). A federal tax return is not required, however, a note explaining why an extension is being requested is required.   
  3. Schedule an appointment at an IRS Taxpayer Assistance Center to present documents to the IRS in-person rather than mailing documents.

The ITIN assignment date can be found on the CP565 ITIN Assignment notice.  If you no longer have your CP565, call the IRS at 1-800-829-1040 within the U.S., or 1-267-941-1000 (not a toll-free number) if you are outside the U.S.

SPS/GZ is a full-service tax reporting firm that provides personalized service and exceptional support, utilizing state-of-the-art technology to create and e-file Forms 1099, Affordable Care Act tax forms, and Forms 3921 and 3922.  Reach out today at or call at (888)375-3049.  Our solution allows companies to simply upload their 1099 data file to our secure portal in a few easy steps and we handle everything else.

Things to Know about Affordability rules for ACA Reporting in 2020

Although there have been attempts by the Trump administration to repeal the Affordable Care Act (“ACA”), it is still in effect and there is important information you should be aware of for 2020 ACA reporting.  As always, healthcare costs need to be affordable under the new 2020 guidelines.

If you are an Applicable Large Employer (“ALE”), which is a company that employs 50 or more full-time, or full-time equivalent employees, healthcare cost for single-only coverage cannot exceed 9.78% of household income for 2020.   There are three ways to measure affordability under the ACA. If an employer satisfies affordability under one of these three safe harbors, their insurance is considered affordable.

  1. The Federal Poverty Level (“FPL”) Safe Harbor:  The federal poverty level for 2020 is $12,760 for the continental U.S.  The federal poverty level safe harbor is calculated by multiplying $12,760 by .0978 and dividing by 12.  To use the federal poverty level safe harbor, the monthly cost for single-only coverage should not exceed $103.99 per month, (12,760 x .0978)/12).
  2. W-2 Safe Harbor:  This is based on household income for Box 1 – Wages, from the W-2 Form.  For example, if an employee had an annual salary of $45,000 a year, you would check affordability by multiplying their salary by .0978 and dividing by 12 to get the maximum amount the employee should pay for single-only coverage per month.  In this scenario, the employee should not pay more than $366.75 per month, ((45,000 x .0978)/12)
  3. Rate of Pay Safe Harbor: This is most useful for hourly employees. To utilize the Rate of Pay safe harbor, you should multiply an hourly worker’s lowest rate of pay by 130 hours (for rate of pay employer assumes 130 hours per month regardless of the number of hours worked) and the cost should not be more than 9.78% for single-only coverage. For example, an employee earning $15/hour should not pay more than $190.71 per month, ((130 x $15) x .0978). 

If insurance premiums are not considered affordable, the employer can be penalized.  The penalty for 2020 is $3,860.00 per employee per year.  This is applied to all employees and not just the employees who were not offered affordable coverage.  Typically, this penalty is discovered when an employee, who is classified as full-time, has received a premium tax credit, or has gone onto the Marketplace for coverage.  These penalties can be significant, so it is important that companies evaluate their workforce and healthcare plans to determine which safe harbor makes the most sense for their organization when it comes to ACA reporting.

To learn more about ACA compliance and what affordability safe harbor might best fit your needs, please contact SPS/GZ at or call (888)375-3049.

Navigating Erroneous Employment Tax Credits in 2020

On July 27, 2020, IR-2020-169 was issued by the IRS,  granting a temporary regulation and a proposed regulation to employers under the Families First Coronavirus Response Act (“Families First Act”) and the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”).  IR-2020-169 issued a proposed regulation to reconcile advance payments of refundable employment tax credits and recapture the benefit of these credits, when necessary, to employers who had paid sick leave and paid family leave.

Employers with fewer than 500 employees are generally required to provide paid sick leave for up to 80 hours and paid family leave for up to 10 weeks if the employee is unable to work or telework due to related COVID-19 reasons. Qualified employers are entitled to fully refundable tax credits to cover the cost of leaves that are required under these acts.

An additional credit available under The CARES Act provides credit for employers experiencing economic hardship due to COVID-19. Certain employers who pay qualified wages to their employees are entitled to the employee retention credit.

The IRS is in the process of revising the following forms: Form 941, Form 943, Form 944, and Form CT-1.  Employers will use these returns to claim paid sick and family leave and employee retention credits.

Advance payment of the credits, up to the total allowable amounts, may also be received by employers.  Form 7200, Advance Payment of Employer Credits Due To COVID-19 has been created for employers to request the advance.  On employment tax returns, employers will be required to reconcile any advance payments claimed on Form 7200 with total credits claimed and total taxes due. 

Any credit amount that exceeds the allowable taxpayer amount is considered to be an erroneous refund.  Regulations released on July 27, 2020 allow the IRS to efficiently recover any refund while preserving taxpayer administrative protections. 

SPS/GZ is a full-service Affordable Care Act (“ACA”) reporting firm that provides personalized service and exceptional support, utilizing state-of-the-art technology to create and e-file ACA forms.  Reach out today at or call at (888)375-3049.  SPS/GZ welcomes the opportunity to be your trusted ACA tax form reporting provider. 

PCORI Fee Deadline of July 31, 2020 is Quickly Approaching

The July 31, 2020 fee deadline for the Patient-Centered Outcomes Reseach Institute (“PCORI”) is quickly approaching. The payment due on July 31st 2020, covers the plan year for the previous calendar year, see schedule below. The IRS released  Notice 2020-44 on June 8, 2020.  In this notice, a revised applicable rate was increased from $2.45 to $2.54 for plan sponsors and self-insured health insurance polices.  The increased rate should be used to calculate the fee for plans within the time frame between October 1, 2019 and before October 1, 2020.  The PCORI fee was established under the Affordable Care Act (“ACA”) to fund research, helping physicians, policy makers and patients, make informed healthcare decisions based on evidence-based medicine.  

The PCORI fee has been extended to either 2029 or 2030, an additional 10 years, depending on the plan end date, with the enactment of the 2020 Further Consolidated Appropriations Act. Originally under the ACA, they were set to expire for plan years ending after September 30, 2019.  The fees are reported annually on the second quarter IRS Form 720 by self-funded plan employers directly. The fee is calculated by multiplying the average number of covered lives under the plan or policy by the applicable rate. In addition to the rate increase, the notice also offers transition relief for companies that were not expecting the fees to be collected.  Transition relief applies to plan years ending between October 1, 2019 and October 1, 2020. The IRS is allowing plan sponsors and self-insured companies to use any “reasonable method” to calculate fees.  Employers with fully funded health plans are not required to file, at this time, as insurance carriers are paying PCORI fees and pass the cost on to the employer.

Now more than ever, it is prudent for businesses to utilize certified professionals and robust solutions for their ACA reporting needs. Contact SPSGZ to learn more about ACA compliance, click here.  


February 1, 2018 – January 31, 2019$2.45July 31st 2020
March 1, 2018 – February 28, 2019$2.45July 31st 2020
April 1, 2018 – March 31, 2019$2.45July 31st 2020
May 1, 2018 – April 30, 2019$2.45July 31st 2020
June 1, 2018 – May 31, 2019$2.45July 31st 2020
July 1, 2018 – June 30, 2019$2.45July 31st 2020
August 1, 2018 – July 31, 2019$2.45July 31st 2020
September 1, 2018 – August 31, 2019$2.45July 31st 2020
October 1, 2018 – September 30, 2019$2.45July 31st 2020
November 1, 2018 – October 31, 2019$2.54July 31st 2020
December 1, 2018 – November 30, 2019$2.54July 31st 2020
January 1, 2019 – December 31, 2019$2.54July 31st 2020

IRS website link follows: 

5 Reasons to Consider Stock Plan Administration Outsourcing Services

Is your stock administration department stretched too thin this year? How are your department goals working for you?  Have you been bogged down with online meetings and reporting?  Are there enough hours in the day for you to do all that you need to do?  Do you have projects that are not getting your attention due to your daily work?  Are you overwhelmed and consumed with challenges?

SPS/GZ is ready to jump in and come to your assistance with your E*TRADE’s Equity Edge Online (“EEO”) platform.  We offer short-and long-term remote stock plan administration staffing and outsourcing services.  Our experienced team is flexible and accustomed to working remotely.  Five immediate tasks that SPS/GZ will manage in order to relieve the burden of administering your equity compensation program follow:

  1. Knowledgeable certified equity professionals manage all daily stock plan activity
  2. Transaction processing from start to finish
  3. Assistance with equity accounting and financial reporting
  4. EEO database maintenance, as well as database clean-up (if requested)
  5. Communication with company HR, accounting, payroll, and legal contacts; act as liaison between transfer agent and broker 

*** SPS/GZ also handles IRC 6039 and 1099 reporting to assist companies with year-end tax reporting responsibilities

Why hobble through the year when our comprehensive services can bring peace of mind and assurance that allow you to free up your time to carry on? 

SPS/GZ’s team of certified professionals (CEPs, CPAs) offer affordable, best-in-class administration solutions.  Our comprehensive offerings include EEO database audits and implementations, managing all daily administration processes and database maintenance. 

SPS/GZ distinguishes itself with our dedication to details, customized & creative solutions, and our commitment to exceeding our clients’ service expectations.  Our stock plan administration outsourcing and consulting clients know who their representatives are and call on them to obtain prompt answers to their questions and swift resolution of complex issues. 

Contact us today to schedule a call with the team.  What are you waiting for?   

IRS Releases Draft of Forms 1094-C and 1095-C for ACA Reporting

On July 13, 2020, the IRS released Drafts of the Forms 1094-C and 1095-C for tax year 2020 Affordable Car Act (“ACA”) reporting. The Form 1094-C has remained the same as previous years, but there have been some significant changes to the Form 1095-C. In Part II of the Form 1095-C, the IRS has added two new fields: “Employee’s Age on January 1” in the top portion of Part II, as well as Line 17, “Zip Code”.  Additionally, there were new codes added to Line 14, “Offer of Coverage,” labeled 1K through 1S.  These changes were made in response to the Departments of Health and Human Services, Labor, and Treasury’s final ruling, “Promoting Healthcare Choice and Competition Across the United States”, which now allows companies to offer Individual Coverage Health Reimbursement Arrangement (“ICHRAs”) to their employees, to be used in combination with nongroup coverage.   ICHRAs are a type of Health Reimbursement Accounts (“HRAs”).  The coding on Form 1095-C for companies using ICHRAs (a type of HRAs) is complex and requires significant modification to the existing software platforms and service offerings for ACA. 

An HRA is an account-based health plan that allows employers to offer a monthly allowance, tax-free, to employees, which can be used to reimburse qualified out-of-pocket medical expenses including reimbursement for the monthly cost of individual plans through the Marketplace or private insurance companies. Currently, there are four types of HRAs:

HRA Integrated with Employer-Sponsored Health Coverage – An integrated HRA, is an HRA that is offered with another group health plan, that on its own meets the ACA requirements. 

This type of HRA is typically linked with a high deductible health plan.

Individual Coverage HRA (ICHRAs) – If an employer offers employees an individual coverage HRA, Employees and their dependents must be enrolled in individual health insurance coverage before being eligible for any reimbursements under the Individual Coverage HRA.  

Qualified Small Employer HRAs (QSEHRA)– Small Employers, non-applicable large employers, who don’t offer group health plans to their employees can help employees pay for medical expenses through a QSEHRA.

Excepted Benefit HRA (EBHRAs) – The Excepted Benefit HRA offers employers of any size an opportunity to use pretax money to reimburse certain limited expenses such as, vision, dental or other benefits that would not fall under the ACA required covered health benefits. Companies offering EBHRAs must also offer group health coverage. Employees do not need to enroll in the group health plan to participate in the excepted benefit HRAs.  An employer cannot offer both an excepted benefit HRA and an ICHRA to the same employee.

As of January 1st, 2020, Individual Coverage HSAs (ICHRAs) is an option for companies to meet the ACA regulation of Minimum Essential Coverage (“MEC”) for Applicable Large Employers (“ALEs”), which are companies with 50 or more full-time or full-time equivalent employees, as long as the ICHRA is affordable. Line 17 was added to the Form 1095-C, which is populated monthly, with the zip code the employer used to determine affordability. Affordability can be based on either the employee’s primary residence or the employee’s primary employment site zip code. As discussed above, there also has been an addition of eight Series 1 codes (1L, 1M, 1N, 1O, 1P, 1Q, 1R & 1S) for Line 14, to report the employer’s offer of an Individual Coverage HRAs (ICHRAs) and seven Series 1 codes that are identified as “reserved for future use.”

The variety of HRAs and their requirements can be very complicated.  Therefore, if your company is considering incorporating an HRA plan as part of your healthcare strategy, it is advisable to discuss your options with your company’s insurance broker.  Also, if your company is an ALE, it is important to ensure that the plans are compliant and that the ALE is meeting all obligations under the Affordable Care Act, including the reporting requirements, to avoid exposure to possible penalties.

Now more than ever, it is prudent for ALEs to utilize certified professionals and robust solutions for their ACA reporting needs.

To learn more about ACA compliance, click here.

We are here to help!  Please contact SPS/GZ  with any questions you may have about ACA reporting.


It is important that employers make sure they are aware of the distinction between a small employer and a large employer when it comes to the health care laws and other tax provisions. According to the Affordable Care Act (“ACA”), companies that have 50 or more full-time or full-time equivalent employees are considered Applicable Large Employers (“ALEs”). As an ALE, companies are subject to the employer shared responsibility provision, which requires employers to offer minimum essential coverage that is “affordable” and provides “minimum value” to their full-time employees and their dependents, or face a possible penalty by the IRS. Along with offering health coverage that meets ACA requirements, ALEs are responsible for furnishing Form 1095-C to employees and e-filing these forms with the IRS.  Form 1095-C, which is entitled, “Employer-Provided Health Insurance Offer and Coverage,” indicates the months employees were offered affordable, minimum value health insurance during the year.  ALEs are also required to file Form 1094-C, “Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns,” with the IRS. The reporting requirement is necessary to determine if an employee is eligible to claim the Premium Tax Credit, offered pursuant to the ACA, for any months during the calendar year.   

To determine if your company is an ALE for the current tax reporting year, an employer would add its total number of full-time employees (someone who works 30 or more hours a week) 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. Full-time equivalent employees are calculated by adding all the part-time employees’ hours for the month divided by 120. If the number of full-time AND full-time equivalent employees is over 50, the employer must offer health coverage to their employees and fulfill this reporting obligation. If a company has affiliates with common ownership, the consolidated employer group is treated as a single employer for determining ALE status and thus, the employee counts of FT and FTEs employees should be combined.

If an employer is not considered an ALE and has fewer than 25 employees, it may be eligible for a Small Business Health Care Tax Credit (“SBHCTC”), which could offer a savings of 50% off the costs it pays for its employees’ premiums. To be eligible for the SBHCTC, an employer needs to meet the following criteria:

– Purchase coverage through the Small Business Health Options Program (SHOP) Marketplace 

– Pay average wages of less than $50,000 a year per full-time equivalent, adjusted for inflation.

– Pay at least 50% of the qualified employees’ health care premiums

It is important to note that the employer mandated reporting requirements under the ACA apply to any self-insured company, regardless of size. The annual reporting requirement for self-insured companies include the disclosure of health coverage for their employees and dependents. Self-insured employers that are not ALEs need to complete Forms 1095-B and the transmittal Form 1094-B to meet the ACA reporting requirements. If an employer is an ALE and self-insured, they need to report health coverage information as required by fully-insured companies. In addition, they also need to complete information on the health coverage for their dependents in Part III of the 1095-C Form.

For more information on ACA reporting requirements depending on the size of your company please visit the IRS website.

Sound complicated? It is! Now more than ever, it is prudent for ALEs to utilize certified professionals and robust solutions for their ACA reporting needs.

To learn more about ACA compliance, click here.We are here to help! Please contact SPS/GZ with any questions you may have about ACA reporting.

IRS Providing Temporary Relief for Retirement Plan Participants to Remotely Sign Elections

On June 3,2020, the IRS released Notice 2020-42. This notice provides temporary administration relief and flexibility to participants or beneficiaries and plan administrators in qualified retirement plans and other tax-favored retirement arrangements.

For the period between January 1,2020 through December 31,2020, participants or beneficiaries and plan administrators will be relieved of the physical presence requirement.  In states that allow remote notarization, individuals are now able to access electronic mediums to be used to make participant elections.  The electronic system must be designed to preclude any person other than the participant to make the election. In addition, the system must also provide reasonable time to review, make changes or to rescind the terms of the election before it becomes effective, as well as provide a way to confirm the election, either in writing or under a system to include applicable notice requirements.  In the case where a participant election is witnessed by a plan representative, the individual may use an electronic system with audio-video technology.  As permitted by the Coronavirus, Aid, Relief, and Economic Security Act (“CARES Act”), guidance is also given to accommodate social distancing practices in local shutdowns where the intent is to safely facilitate payments of COVID-19 related plan loans and distributions.  SPS/GZ is a full-service ACA reporting firm that provides personalized service and exceptional support, utilizing state-of-the-art technology to create and e-file ACA forms.  Let SPS/GZ be your trusted ACA tax form reporting provider.

IR 2020-119 Provides Guidance on Employer Leave-based Donation Programs That Aid COVID-19 Pandemic Victims

The IR 2020-119 was released by the IRS on June 11, 2020.  Highlighted is Notice 2020-46 where guidance is given to employers regarding cash payment donations that are made to charitable organizations that aid and assist COVID-19 victims.  Notice 2020-46 explains that in situations where employees have forgone sick, vacation and person leave time, employees will not receive the value of the donation as income and therefore, cannot be claimed as deductions.  This notice clarifies that employers may deduct these cash payments as a business expense or as a charitable donation.  Respective requirements must be met in either section. 

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When many states implemented stay at home orders to help slow the spread of COVID-19, small businesses were faced with many challenges on how they would pay bills and cover their payroll when they weren’t allowed to open and conduct business.  In the rush to help individuals and small businesses, the government passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which had a provision specifically focused on helping small businesses, the Paycheck Protection Program (PPP) Loan program.  This component of the bill allowed businesses to apply for a loan in which the funds would be used to maintain their payroll and cover some operating costs.  If the employer met the criteria under the PPP loan guidelines, the loan would be forgiven.  While the money was helpful, there were issues with the initial parameters to have the loan forgiven.  

On June 5th, 2020 President Trump signed into law the Paycheck Protection Program Flexibility Act of 2020 which amends the original PPP Loan requirements to have the loan forgiven by borrowers.  These changes were in response to many small businesses that claimed they would be unable to meet the strict criteria that were laid out originally to have the loan forgiven because of the delayed opening of their businesses and reduced occupancy as a result of the social distancing obligations.   The chart below summarizes the changes.

If you are a small business and have been affected by the COVID-19 pandemic, now is the time to act if you want to apply for a PPP loan.  The Small Business Association (SBA) is in charge of determining loan forgiveness and has released the application and instructions.  Seeing that the future spread of the Coronavirus is unknown, there could be additional changes in the months ahead.   

States and Businesses Watching California’s AB5

California Assembly Bill 5 (“AB5”), also known as the “gig worker bill,” went into effect on Jan. 1, 2020.  AB5 is based on a September 2018 case in which the California Supreme Court ruled in the Dynamex Operations West, Inc. vs. Superior Court of Los Angeles.  With few exceptions, this bill was designed to require California companies that hire freelancers and independent contractors to reclassify them as employees.  Some in the trucking industry are moving out of California in response to AB5 fears and others are taking the wait-and-see approach.  Uber, Lyft, DoorDash, Instacart, and Postmates are watching court cases involving the trucking industry.  More than 50 professions and types of businesses are exempt, including insurance agents, attorneys, real estate agents, service providers, certain photographers & graphic designers, HR professionals, and other specific types of business-to-business contractors and referral agencies. 

AB5 assumes that workers are employees unless the company that hires them can pass an “ABC” Test.

  1. The worker is free to perform services without control or direction of the business.
  2. The worker is performing work tasks that are outside the usual course of business activities.
  3. The worker is customarily engaged in the work performed in an independently established trade, occupation, or business of the same nature. 

The Amway Corp. has found itself back in court in 2020, being sued by William Orage, former Amway IBO.  Orage is seeking back minimum wages from the giant for himself and others in California.  Amway, the 8+ billion-dollar, largest direct selling giant, has been using the independent business owner model for 60 years and is not a stranger to court cases.  Other MLM companies in California and across the US are watching to see how this case plays out. 

Judicious employers will best prepare by seeking legal counsel that specializes in employment law and independent contractors.  When  establishing business-to-business relationships with independent contractors, companies will need to take appropriate steps to stay compliant. Risk assessments, in the way of audits, are recommended to understand the classification of independent contractor processes.  Comprehensive audits should include the following:

  • Billing and invoicing processes
  • Contractual terms
  • Documentation processes
  • Engagement guidelines
  • Independent Contractor or Freelancer incorporation interactions
  • Independent Contractor or Freelancer incorporation requirements
  • Levels of control
  • Rate negotiations 
  • Technology Separations
  • Work structures

AB5 specifically exempts business-to-business contractors from the ABC Test.  The IRS uses a different test than California for differentiating employees and independent contractors.  We have yet to see how the IRS will treat this differentiation with respect to ACA reporting.  Employers with more than 50 or more full-time employees are required to offer affordable, Minimum Essential Coverage (MEC) for at least 95% of their full-time workforce and their dependents. California businesses, starting in 2020, following AB5 rules, will most likely need to extend health insurance coverage offers to more of their employees. 

Sound complicated? It is! Now more than ever, it is prudent for businesses to utilize certified professionals and robust solutions for their ACA reporting needs. Contact SPSGZ to learn more about ACA compliance, click here.

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