Tax provisions in the Senate health care bill

16 Aug

Tax provisions in the Senate health care bill

Senate Republicans on Thursday released a draft bill that would repeal many provisions of the Patient Protection and Affordable Care Act (PPACA), P.L. 111-148. The Senate bill, called the Better Care Reconciliation Act of 2017, differs in many respects from the House-passed American Health Care Act, H.R. 1628, but like the House bill, it would repeal many of the tax provisions enacted by PPACA.

The text of the bill released on Thursday is labeled a “discussion draft,” and the text of the bill the Senate eventually votes on may differ. Also, because the Senate and House health care bills are different, either the House would have to vote on the Senate version, or the chambers would have to hold a conference to reconcile the differences.

Here is an overview of the Senate bill’s tax provisions:

  • The bill would eliminate the limitation on recapture of excess advance payments of Sec. 36B premium tax credits after 2017.
  • It would limit eligibility for the premium tax credit to taxpayers whose income does not exceed 350% of the federal poverty line (instead of the current 400%) and modify how the credit works, effective for tax years after 2019.
  • It would repeal the Sec. 45R small business health insurance tax credit after 2019.
  • It would eliminate the Sec. 5000A individual health insurance mandate by reducing the penalty to zero, effective retroactively to Jan. 1, 2016.
  • It would reduce the Sec. 4980H penalty under the employer mandate to zero, effective retroactively to Jan. 1, 2016.
  • It would temporarily repeal the Sec. 4980I “Cadillac” excise tax on certain high-cost employer-sponsored health insurance plans and health plan benefits after 2019. (Its effective date was previously delayed until 2020.) However, after 2025, the tax would come back into effect.
  • It would eliminate the prohibition on using health savings accounts (HSA), Archer Medical Savings Accounts (MSAs), health flexible spending arrangements (FSAs), and health reimbursement arrangements to pay for over-the-counter medicines.
  • The amount of the penalty on distributions from HSAs and Archer MSAs that are not used for qualified medical expenses would be reduced.
  • The Sec. 125(i) limitation on contributions to health FSAs would be repealed for tax years beginning after Dec. 31, 2017.
  • The annual fee imposed on pharmaceutical manufacturers and importers under PPACA Section 9008 would no longer be imposed after 2017.
  • The Sec. 4191 medical device excise tax would be repealed, effective for sales after Dec. 31, 2017.
  • The annual fee imposed on health insurance providers under PPACA Section 9010 would no longer be imposed after 2017.
  • The bill would repeal the Sec. 139A elimination of a deduction for expenses allocable to a Medicare Part D subsidy.
  • The income threshold for itemizing medical expense deductions under Sec. 213 would revert to 7.5% from its current 10%, effective for tax years beginning after Dec. 31, 2016.
  • The 0.9% Medicaid surtax under Sec. 3101 would be repealed, effective for remuneration received after Dec. 31, 2022.
  • The 10% excise tax on indoor tanning services would be repealed, effective Oct. 1, 2017.
  • The 3.8% net investment income tax would be repealed for tax years beginning after Dec. 31, 2016.
  • The Sec. 162(m)(6) $500,000 federal income tax deduction limitation for compensation paid by a covered health insurance provider would not apply to tax years beginning after Dec. 31, 2016.
  • The bill would increase the HSA contribution limit to equal the amount of the deductible and out-of-pocket limitations for high-deductible health plans (HDHPs).
  • Married taxpayers would both be allowed to make catch-up contributions to the same HSA.
  • An HSA established within 60 days of the start of coverage under an HDHP plan would be treated as having been established on the date coverage under the health plan begins, allowing medical expenses incurred before the establishment of the HSA to be treated as qualified medical expenses.

Alistair Nevius (Alistair.Nevius@aicpa-cima.com) is the JofA’s editor-in-chief, tax.

20 Oct

Corporate tax audit

Walter Wotman, owner and head CPA of Tax Champions and his staff have successfully represented a vast array of businesses through the audit process. It doesn't matter if your business is large or small. We make sure that every client is treated with the same professionalism to ensure the best results possible in each and every case. We have all heard horror stories of businesses representing themselves through an audit with little to no experience. Don't wait until you are in the middle of an audit to decide that you need help. Although we are able to jump in if this is the case, it is always better for our firm to be involved with the audit form the beginning. We make sure that every client has an understanding of the audit process and what to expect from start to finish.

20 Oct

Penalty Abatement Representation

As with most dealings with the IRS, requesting a penalty abatement can be difficult to accomplish on your own without extensive knowledge of tax law and experience in dealing with the specifics of what may or may not qualify for a successful penalty abatement and in many cases it may take appealing the denial of the abatement in order to have a successful outcome. Although penalty abatement is never guaranteed, having an experienced CPA or other licensed tax professional will typically give you your best shot at a favorable outcome.

20 Oct

Penalty Abatement Forms

The form used for the most common circumstances for abatement certain penalties is the 843 Request for Abatement and Refund form. Some of the reasons for utilizing this form for an abatement or refund would be for additional tax caused by certain delays or errors by the IRS, an employer error or over withheld tax among various other reasons.

20 Oct

First time penalty abatement

There are several ways to accrue penalties with the IRS such as failing to pay your tax bill on time, filing your taxes late or not filing at all to name a few. The IRS will agree to abate certain penalties through the First Time Penalty Abatement waiver which can be applied for a single tax period. Many taxpayers are not aware that they may qualify for this abatement and it is helpful to speak to an experienced CPA firm to determine if having them negotiate an abatement will likely be successful for your particular circumstance.

20 Oct

Negotiated Settlements

Working with the IRS when you owe them more money than you can afford to pay is never a fun process which lands many tax payers into more trouble by accepting an agreement that they cannot afford. The IRS will always try to get you to pay as much money as quickly as possible using a traditional installment agreement which breaks your tax debt into payments over a certain amount of months, regardless of whether this is affordable or not. What they seldom mention over the phone is that there are various settlement and repayment programs available based on one's ability to pay which can make your payment affordable and even reduce the overall tax liability. Determining which program will be most beneficial and will save the most money is difficult when you have no idea what is available. Hiring an experienced CPA firm to ensure the most favorable results for your specific circumstance is a great option but make sure you do your due diligence before choosing a firm. Tax Champions has over 35 years experience negotiating on behalf of our clients and maintains an accredited A+ Better Business Bureau rating with zero complaints and can help with any type of state or federal tax problem.

20 Oct

Unfiled taxes

The number one issue that tends to lead to most other tax problems is having unfiled tax returns. The IRS will not consider any type of negotiated settlement or payment agreement until a tax payer is current with their filings. In certain cases, when a number of years go by without filing, the IRS will file "substitute returns" which do not take into consideration your deductions and generally lead to a higher tax debt than when the taxes are filed by your tax professional. As a client of Tax Champions, we will prepare and file all applicable unfiled tax returns to bring you current, quickly and accurately to ensure the least amount of tax liability possible which is the first step before working out a negotiated settlement or when of the various repayment programs which may further reduce the overall tax liability paid to the IRS.

20 Oct

Negotiated Settlements for tax debt

Dealing with a tax debt that you are not able to pay in full can be a stressful circumstance that is extremely difficult to deal with. The IRS has not made it any easier with hours of being on hold and then when you finally get a live person, there is little compassion for your situation. The IRS representatives who answer these call's job is to try to get as much money from you as quickly as possible and the payment plans they offer in many cases are not within ones budget, making a bad situation worse. The truth is that there are many IRS payment programs which are based on a tax payer's ability to pay and in many cased can result in a reduction of what is paid back to the IRS. Our firm has almost 40 years of experience navigating these programs on behalf of our clients. Our firm will perform a full review of your financial picture to determine which program is going to be most favorable for our client and will negotiate to achieve the best results.

20 Oct

Business Tax Audits

There are few things worse for an owner than receiving a notice in the mail that your business has been selected for audit. Although it is possible to go through the audit process on your own, without knowledge of tax law and the audit process you are at the mercy of the auditor. With representation from an experienced CPA or Enrolled Agent, the audit process can be a much smoother ordeal as your representative handles the heavy lifting in dealing with the IRS and uses their experience to achieve the most favorable outcome possible. Walter Wotman of Tax Champions has represented a vast array of businesses large and small through audit and with almost 40 years experience dealing with the IRS on behalf of small businesses, our firm is ready to take on your audit or any of your personal or business tax needs.

16 Jul

Tax Tips for Truck Drivers

As a long haul truck driver you spend most of your life on the road, and taking care of the little things can be problematic.  We have seen a sharp rise in long haul truckers who become our clients.  They typically have not filed tax returns for many years.  And their records to assist us in filing their tax returns are generally not good. Follow these tax tips for truck drivers to make sure you don’t over pay your taxes and get into trouble with the IRS.

#1 Retain your driver log for up to ten years.

This is a written log of when and where you’ve driven.  This will aid us in computing the many tax deductions needed to properly report your correct taxable income to the IRS. You don’t want to over report your income and there are many rules for an independent driver versus an employee driver.

#2 Keep a log of your expenses.

Keeping a log for each trip expenses would help greatly when preparing your tax return.  It takes only a few minutes each day.

An employee driver would only look to his out of pocket each year connected to his employment. This could be license fees or meals away from home which exceeded the per diem.  An independent driver has so much more to worry about. You need to keep track of such as truck mileage, repairs, fuel, lodging, meals, licenses, fees, insurance, and many other items which the driver pays for during the year.  When you don’t keep an account of these expenses each year, you will likely over report your taxable income because you have forgotten to claim an expense.

#3 Use a credit card for business expenses.

Credit card records can be easily transposed into a tax return.

Keep on truckin

Copyright Tax Champions 2017