An APA Webinar: Top Federal Regulatory Items for 2017

Date: Tuesday, March 14, 2017Time: 1:00 – 2:00 p.m. ET • 12:00 – 1:00 p.m. CT • 11:00 a.m. – 12:00 p.m. MT • 10:00 – 11:00 a.m. PT

Webinar Leader:Laurie Savage, CCEP, Compliance Analyst, Paychex, Inc.

Jessica Curtin, QKA, CPFA, TGPC, Compliance Analyst, Paychex, Inc. Andy Gargana, Senior Federal Compliance Analyst, Paychex, Inc.

Tammy Tyler, MBA, PHR, SHRM-SCP, Senior Employment Law Compliance Analyst, Paychex, Inc.Upcoming Webinar:

Avoiding IRS Penalties the Successful Way – Wednesday, March 15, 2017For more information: www.americanpayroll.org/course-conf/webinars

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Top Federal Regulatory Items for 2017

Agenda

● Payroll Tax and Legislative Updates● Affordable Care Act (ACA)● Employment Law● Retirement

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Payroll Tax and Legislative Updates

Early Filing Date for W-2s

● Impacts both paper and electronically filed W-2s

● Many states are enacting this change

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Preventing Tax Return Fraud

● Earlier W-2 due date

● Truncation of SSNs

● 2017 W-2, Box 9, Verification code

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Moving Forward…

● Potential Payroll Tax Impacts

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Affordable Care Act (ACA)

Affordable Care Act Status

● Budget reconciliation instructions

● Limitations of budget reconciliation

◦ Provisions that may be removed or changed via budget reconciliation

● Obstacles to repeal and replace

● Executive order

● Potential state actions

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Affordable Care Act – Employer Shared Responsibility (ESR)

● Applicable large employers (ALEs) are subject to IRC §4980H and the reporting requirements under IRC§6056

● ALEs risk potential penalties if a full-time employee receives a premium tax credit and the ALE did not offer minimum essential and affordable health insurance coverage

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Affordable Care Act – Employer Shared Responsibility (ESR)

● ALEs may be assessed information furnishing/filing penalties (§6721 & §6722) if they do not furnish/file Forms 1094-C and 1095-C accurately and timely

● ESR requires unprecedented coordination of data information and analysis across multiple departments from insurance, payroll, and HR

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ESR Changes ● §4980H(b) (ESR) affordability safe harbor

percentage change

◦ Affordability safe harbors threshold increased to 9.69% for 2017 (previously 9.66% in 2016)

● ESR reporting on 2016 Forms 1094-C and 1095-C

◦ New codes added to distinguish conditional spousal coverage

◦ Clarification for controlled or affiliated service group

◦ Multi-employer relief extended through 201611

● §4980H transition relief phased out in 2016

● §4980H penalty amounts increase

◦ 2017 annualized amount of $2,260 §4980H(a) (previously $2,160 in 2016) and $3,390 for §4980H(b) (previously $3,240 in 2016)

ESR Changes

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● Good-faith relief and furnishing dates extended in 2016

◦ Extended furnishing deadline to March 2, 2017 for 2016 Forms 1095-Cs

◦ Extended good-faith effort relief for 2016 tax year filing

ESR Changes

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Notices Employer May Receive● §4980H assessable payment

◦ ALEs will receive notice that one or more full-time employees received a premium tax credit and their potential liability

● Furnishing/filing penalties

◦ For late, incomplete, or inaccurate information returns (1094-C and 1095-C)

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Notices Employer May Receive● Premium Tax Credit notifications

◦ To assist in assessing whether an individual qualifies for an advanceable premium tax credit (APTC)

◦ Employer may appeal any inaccurate information

◦ All employers including non-ALEs (not subject to ESR) will receive these notices

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Qualified Small Employer Health Reimbursement Arrangements

● Eligible Employers

◦ Not an ALE as defined by IRC §4980H

◦ Do not offer a group health plan to any employees

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Qualified Small Employer Health Reimbursement Arrangements

● Purpose◦ Allow small employers to offer non-integrated HRAs

◦ The arrangements are not subject to ACA group market reforms, as a result the IRC §4980D excise tax of $100/day per applicable person does not apply

◦ Extends previously expired relief from IRC §4980D excise tax to Employer Payment Plans beginning on or before 12/31/2016 that pay or reimburse employees for health insurance premiums

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Qualified Small Employer Health Reimbursement Arrangements

● Benefit

◦ Permits employers to reimburse up to $4,950 for employee medical expenses ($10,000 for family) annually with limited variation for eligible employees based on age and family size

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Employment Law

Minimum Wage Rates

● 19 states increased their minimum wage rate on January 1, 2017

● 31 States above federal minimum wage● Multiple rates – regional, employer size● Local minimum wage ordinances were

more popular than ever before

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Final Overtime Rule Status

● U.S. DOL released its final overtime rule to raise the salary thresholds for white collar exemptions from overtime pay

● Federal Judge issued a preliminary injunction

● What’s next??

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Worker Misclassification

● The U.S. DOL, IRS, and State Agency Enforcement Efforts continued through 2016

● The DOL has entered into partnerships with the IRS and 37 states

● DOL webpage on Worker Misclassification● BLR survey

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Paid Sick and Family Leave

● President and U.S. DOL pushed for expanded paid leave in 2016

● Arizona and Washington passed paid sick leave laws; New York passed paid family leave

● Greatest activity for paid sick leave legislation is at the local level

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USCIS Releases Revised Form I-9

● USCIS published a revised Form I-9; New form must be used as of 1/22/17

● Increase in USCIS fines● Revised regulations impacting verification

procedures effective 1/17/17

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Retirement

State Retirement Plan Initiatives

● Fate of ERISA preemption ruling for states, cities, and federal agencies● Ruling expected to be challenged in courts

(SCOTUS has taken interest in ERISA cases)● Possible expansion of ruling to exempt

private sector auto-IRA offerings from ERISA

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State Retirement Plan Initiatives

● Programs face challenges: set-up costs are expensive, fiduciary accountability; legislation insulates employers

● State of Illinois program data collection is now in effect

● State of Oregon to launch their program by July 1, 2017

● Next states will be Washington, California, Connecticut, Massachusetts, New Jersey, and Maryland

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Retirement Enhancement & Savings Act (RESA)

● Introduced by Senator Orrin Hatch (R-UT) in Nov 2016

● Bill has bipartisan support; expected reintroduction during new session of Congress

● Increase the credit for small employers to start-up plans

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Retirement Enhancement & Savings Act (RESA)

● $500 Credit for 3 Years for small employers that adopt a new plan with an automatic enrollment provision

● Increased penalties for failure to file retirement plan returns

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Retirement Enhancement & Savings Act (RESA)

● Endorsement of Open MEPs (Pooled Employer Plans)o Unrelated employers allowedo Elimination of bad apple ruleo Reduced administrative burdeno Economies of scale

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DOL’s Fiduciary Rule● Jan 6 - Protecting American Families’

Retirement Advice Act (Joe Wilson (R-SC)) requests 2 year delay

● Jan 13 - DOL release of 2 additional FAQs for consumers, service providers

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DOL’s Fiduciary Rule● Feb 3 – Presidential memorandum by

President Trump directs DOL reviewo Does NOT order a delay of the

regulationo Specific criteria to evaluate/consistency

with the Administration’s policieso Acting Secretary Hugler - DOL

considering legal action for delay

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DOL’s Fiduciary Rule● Secretary of Labor nominee Andrew

Puzder confirmation issues

● Regardless of the future of the Rule, firms have changed business practices, expected to continue

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Form 5500● DOL, IRS, and Pension Benefit Guaranty

Corporation (PBGC) have proposed changes to Form 5500 for plan year 2019

o Comment period

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Form 5500● IRS guidance on filing 2016 Form 5500

outlines the following:o Should not enter Preparer’s Information

on the bottom of pageo Should not answer IRS questions at line

4o and 6a through 6d on Schedule H and I

o Should not answer Part VII – IRS Compliance Questions on Schedule R

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Form 5500● IRS guidance on filing 2016 Form 5500

outlines the following:o Should not enter Preparer’s Information

on the bottom of pageo Should not answer IRS questions at line

4o and 6a through 6d on Schedule H and I

o Should not answer Part VII – IRS Compliance Questions on Schedule R

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