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What’s Next with the Affordable Care Act for the Retail and Restaurant Sectors?

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The Affordable Care Act has left business owners scratching their heads on how they can manage a successful business while offering affordable coverage or paying substantial fines for non-compliance. Some industries are more vulnerable to health care reform than others, especially the retail and food services sector. The tumultuous task of monitoring employees’ hours and determining a standard measurement period – all while continuing to run a lucrative business – remains a serious concern for those in industries that once relished their unique professional flexibility.

National Restaurant Association Requests Changes to ACA
Opponents of the ACA warned that full-time employees would soon be replaced with part-time workers on a grand scale. Because of looming difficulties to continued growth in the restaurant industry, the National Restaurant Association (NRA) asked that its advocacy efforts focus on changing the current law structure that places employees who work 30 hours per week in full-time status. In addition, the association is looking for the government to simplify calculations that categorizes businesses as a large employer as defined by the ACA.

As it stands currently, businesses determine whether their employee is of full-time status through a standard measurement period. A standard measurement period is a time period chosen by the employer that is no less than three months, but does not exceed 12 months. This period determines the employer’s status for the upcoming stability period, which begins Jan. 1, 2015. Restaurant owners use the aforementioned calculations to determine the number of full-time employees they have. Therefore, if a restaurant determines they had 50 full-time employees in 2014, they would qualify as a large employer in 2015.

The White House’s Response
Despite pending difficulties associated with health care reform, the White House indicated that the restaurant industry has shown the fastest job growth of any industry in the retail and food services sector.  The report showed that restaurants had better than expected growth in sales and increased their employees’ average weekly hours since the announcement of the ACA. These findings denounce the notion that the food services sector is shifting to part-time hours; however, the same cannot be said for world’s largest retailer, Wal-Mart.

Wal-Mart Moves to Part-Time and Temporary Employees
It was reported in June that nearly half of Wal-Mart’s stores are hiring part-time and temporary employees in an effort to avoid purchasing insurance or facing penalties associated with non-compliance.  The shift was made to avoid having to provide healthcare to 95 percent of employees who work more than 30 hours a week or pay potential fines totaling $2,000 per employee after the first 30 employees. For retailers like Wal-Mart, they are using the full 12 month measurement period to determine eligibility; therefore, temporary workers will have to wait a year before finding out if they are eligible – dependent upon still being employed by the retailer.

What’s Next for the Restaurant and Retail Industries?
At this point, both the retail and restaurant industries must sit and wait on Congress to reconvene to discuss the issue after Labor Day. The IRS announced in July it expects to publish rules for implementing reporting requirements this summer, but as we close-in on the end of summer it leaves restaurant owners and retailers with a weary feeling of discontent.



Author Bio:

Jason Bodin has been the communications pulse for a number of organizations, including Paycom, where he serves as director of public relations and corporate communications. He helped launch Paycom’s blog, webinar platform and social media channels. He aided in the development of Paycom’s tool to assist organizations in complying with the Affordable Care Act, one of the largest changes in health care the country has seen. A graduate of the University of Oklahoma, Bodin previously worked for ESPN and FoxSports. In his free time, he enjoys adventuring with his family, reading and strengthen his business acumen.

Deadline Extended

Employer Deadline Extended for Furnishing 2017 ACA Forms

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Distribution of 2017 Affordable Care Act (ACA) Forms 1095-B or -C to your employees has been extended.

As issued in Notice 2018-06, the IRS has extended the deadline from Jan. 31 to March 2. (However, the deadline to provide Forms W-2 and 1099 to employees and contract workers remains as Jan. 31.)

Filing deadlines unchanged

While the deadline to furnish forms was extended, the filing deadlines remain the same: Feb. 28 for paper forms, and April 2 for electronic forms.

IRS Notice 2018-06 emphasizes that employers who do not comply with the due dates for furnishing or filing are subject to penalties under sections 6722 or 6721.

Good-faith transition relief extended

The IRS also announced the extension of good-faith transition relief. This may allow an employer to avoid some penalties if it can show that it made good-faith efforts to comply with the information reporting requirements for 2017.

This relief applies only to incorrect and incomplete information reported on the ACA forms, and not to a failure to file or furnish the forms in a timely manner. Additionally, the IRS stated it does not anticipate extending either the good-faith transition relief or the furnishing deadline in future years.

Contact a trusted tax professional if you have questions on how this may affect your business specifically.

Click here to read more about how the ACA is affect by the new Tax Cuts and Jobs Act.

Disclaimer: This blog includes general information about legal issues and developments in the law. Such materials are for informational purposes only and may not reflect the most current legal developments. These informational materials are not intended, and must not be taken, as legal advice on any particular set of facts or circumstances. You need to contact a lawyer licensed in your jurisdiction for advice on specific legal problems.

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Posted in ACA, Blog, Compliance, Featured

Erin Maxwell

by Erin Maxwell


Author Bio:

As a compliance attorney for Paycom, Erin Maxwell monitors legal and regulatory changes at the state and federal level, focusing on health and employee benefits laws, to ensure the Paycom system is updated accordingly. She previously served as assistant general counsel at Asset Servicing Group in Oklahoma City. She holds a bachelor’s degree from the University of Central Oklahoma and a J.D. from the University of Oklahoma. Outside of work, Maxwell enjoys politics, historical mysteries and spending time with her family.

Employers Unaffected by ACA Changes in New Tax Law

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On December 22, President Trump signed the Tax Cuts and Jobs Act. The bill includes a provision that reduces the penalty for not complying with the Affordable Care Act’s (ACA) individual mandate to $0, effectively removing the penalty for individuals who do not have health insurance coverage after the effective date of Jan. 1, 2019.

However, this update will not impact employers, since the law does not remove the employer mandate (the requirement that large employers offer health insurance coverage to their full-time employees or pay a penalty) or the associated employer reporting requirements. Large employers subject to the mandate still face penalties if they fail to comply with either, and the IRS has begun sending out notices with preliminary assessments of the employer shared responsibility penalty for tax year 2015.

Employers subject to the employer mandate should continue to comply and be prepared to file Forms 1094 and 1095 with the IRS in accordance with the normal deadlines.

For the 2017 tax year, the deadlines to provide Forms 1095-C to employees is Jan. 31, 2018.  The deadline to file Forms 1094-C and 1095-C with the IRS is Feb. 28, 2018 if filing paper forms, and April 2, 2018, if filing electronically.

Disclaimer: This blog includes general information about legal issues and developments in the law. Such materials are for informational purposes only and may not reflect the most current legal developments. These informational materials are not intended, and must not be taken, as legal advice on any particular set of facts or circumstances. You need to contact a lawyer licensed in your jurisdiction for advice on specific legal problems.

Posted in ACA, Blog, Compliance, Featured

Erin Maxwell

by Erin Maxwell


Author Bio:

As a compliance attorney for Paycom, Erin Maxwell monitors legal and regulatory changes at the state and federal level, focusing on health and employee benefits laws, to ensure the Paycom system is updated accordingly. She previously served as assistant general counsel at Asset Servicing Group in Oklahoma City. She holds a bachelor’s degree from the University of Central Oklahoma and a J.D. from the University of Oklahoma. Outside of work, Maxwell enjoys politics, historical mysteries and spending time with her family.

ACA Employer Shared Responsibility Payments

IRS Quietly Prepares to Assess ACA Employer Shared Responsibility Payments

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Late last week, without announcement, the IRS amended a FAQ about its planned process for assessing employer shared responsibility payments (ESRPs) under the Affordable Care Act (ACA). Previously, the document suggested that further guidance would be forthcoming, prior to notifying affected applicable large employers (ALEs) about potential penalties owed under the federal health care law’s employer mandate.

That statement is now gone. In its place are several questions and answers detailing how the IRS will notify companies that they may owe an ESRP. In addition, the IRS intends to send assessments for the 2015 tax year in “late 2017,” which gives the agency approximately six weeks to do so.

Deadlines

The IRS notification will take the form of Letter 226J, which will include a month-by-month payment summary and a list of employees who:

  • were full-time employees for at least one month of the tax year
  • also received a premium tax credit
  • and did not allow the employer to qualify for an affordability safe harbor or other relief

While Letter 226J will indicate the employer’s deadline to respond, recipients generally will have 30 days from the letter’s printed date to contest its information. Then, following correspondence between the IRS and the ALE, if the agency determines the employer indeed is liable for an ESRP, the IRS will issue a demand and instructions for payment, via Notice CP 220J.

The FAQ’s changes to describe specific procedures and deadlines represent the clearest indication we have received that the IRS soon will notify ALEs that they may owe an ESRP for 2015. If such notifications are sent within the next few weeks, it will mark significant news.

For more on ACA, check out the October 2017 article: Trump Announces 2 Changes to ACA 

Tags: , ,
Posted in ACA, Blog, Featured

Erin Maxwell

by Erin Maxwell


Author Bio:

As a compliance attorney for Paycom, Erin Maxwell monitors legal and regulatory changes at the state and federal level, focusing on health and employee benefits laws, to ensure the Paycom system is updated accordingly. She previously served as assistant general counsel at Asset Servicing Group in Oklahoma City. She holds a bachelor’s degree from the University of Central Oklahoma and a J.D. from the University of Oklahoma. Outside of work, Maxwell enjoys politics, historical mysteries and spending time with her family.

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