Tag: IRS

Five Stories that Matter in Michigan This Week – January 6, 2023

  1. The Federal “Speak Out Act” Takes Effect

The Speak Out Act took effect on December 7, 2022, which prohibits employers from requiring employees to sign pre-dispute agreements that contain nondisclosure clauses or non-disparagement clauses that would have the effect of silencing employees concerning claims of sexual harassment or sexual assault.

Why it Matters: Requiring employees to sign such agreements is now a violation of federal law. Employers should review their current employee confidentiality agreements and revise them as necessary, keeping in mind that many state laws also limit what terms can be included in an NDA or similar agreements.

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  1. IRS Announces 2023 Standard Mileage Rates

The IRS announced the 2023 standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical, or moving purposes. Beginning on January 1, 2023, the rate for business use is 65.5 cents per mile, an increase of 3 cents from the 2022 midyear rate.

Why it Matters: Self-employed individuals who operate an automobile for business use, as well as employers who reimburse employees who use their own vehicles to conduct business, should take note of these changes.

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  1. FTC Proposes Rules Banning Noncompete Agreements for Workers

On January 5, 2023, the Federal Trade Commission (FTC) published a proposed rule that would effectively ban the use of non-compete clauses in most employment agreements. The FTC’s guidance in proposing the rule says that 1-in-5 American workers are bound by some form of non-compete clause or agreement.

Why it Matters: These regulations (if adopted) will have wide-ranging impacts across many sectors of the economy. Employers should keep a close eye on these rules and be prepared to amend or revise their employment agreements accordingly.

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  1. Fed Issues Final LIBOR Replacement Rule

The United Kingdom’s Financial Conduct Authority (FCA), announced that the U.S. dollar LIBOR will cease after June 30, 2023. On December 16, 2022, the Federal Reserve Board issued its final rule governing the replacement of LIBOR as an interest rate benchmark.

Why it Matters: The final rule is complex. Businesses using LIBOR as a benchmark or index should make note of this upcoming change. Fraser Trebilcock attorneys will continue to monitor the situation and provide updates. Contact your Fraser Trebilcock attorneys if you have any questions.

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  1. Estate and Lifetime Gift Tax Exemption Update

Per the IRS, the 2023 Estate and Lifetime Gift Tax Exemption has increased from $12.06 million to $12.92 million. Additionally, the use of electronic signatures for Estate and Gift Tax forms has been extended to October 31, 2023.

Why it Matters: Individuals should take note of the increase in 2023 and plan accordingly. If you have any questions, please contact your Fraser Trebilcock estate planning attorney.

Related Practice Groups and Professionals

Labor, Employment & Civil Rights | Aaron Davis
Business & Tax | Mark Kellogg
Business & Tax | Robert Burgee
Business & Tax | Norb Madison
Trusts & Estates | Marlaine Teahan

Five Stories that Matter in Michigan This Week – November 18, 2022

  1. Proposed Modifications to Michigan Court Rules Seek to Make Pandemic-Inspired Changes Permanent, Making it Harder to Evict Tenants

During the COVID-19 pandemic, Michigan’s court rules related to landlord-tenant eviction procedures were modified in some ways to utilize video conferencing and to make certain proceedings more efficient, and modified in other ways that made it more difficult for landlords to evict residential and commercial tenants.

Why it Matters: Pursuant to recently proposed amendments to Michigan Court Rule 4.201, Michigan’s State Court Administrative Office has taken steps to make many pandemic-era changes to minimize evictions permanent. Some of the proposed rules are allowing a judge to adjourn trial for at least seven days if a default judgment is not entered, and staying an eviction case if a tenant has applied for rent assistance. Learn more from our Fraser Trebilcock real estate attorneys on the matter.

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  1. Michigan Small Business Growth Remains Strong

According to a recent report from the small Business Association of Michigan, Michigan’s entrepreneurial economy continues to grow. Among other things, SBAM’s Entrepreneurship Score Card shows that Michigan small businesses have outperformed U.S. averages in terms of the percentages of businesses being opened and revenue.

Why it Matters: Small businesses have always been the backbone of economic growth in Michigan and across the country. This report highlights the resilience of Michigan entrepreneurial economy.

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  1. Business Planning for the Future

A lot of small-to-medium size businesses devote time and focus on their near-term future but may not think of what 5-10 years will bring. The value of a business can often be in the ability to transition it to a new owner, but some business owners are unsure how to set themselves up to be successful in this arena.

Why it Matters: Capitalizing on the ability to plan for the long-term will aid your business in any transitions that may occur. Learn more here.

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  1. CRA Issues Michigan Consumer Advisory

Earlier this week, CRA issued a bulletin giving notice to consumers that a marijuana business that operates as both a state-licensed medical and adult-use recreational, Green Culture, sold unregulated products that may have contained several contaminants, such as mold and/or bacteria.

Why it Matters: Following the investigation, the CRA suspended both of Green Culture’s licenses. Marijuana businesses should heed this as a warning, the CRA are cracking down on businesses that do not follow the strict guidelines and rules laid out by the state agency.

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  1. IRS Announces 2023 Cost-of-Living Adjustment for Retirement and Health and Welfare Benefit Plans

The Internal Revenue Service recently announced 2023 cost-of-living adjustments for retirement and health and welfare benefit plans. The significant adjustments reflect the increase in inflation over the last year. The adjustments are detailed in IRS Notice 2022-55. For example, the contribution limit for a Simple 401(k) will increase to $15,500 in 2023 from $14,000 in 2022, and for a Health FSA, limits will increase to $3,050 in 2023 from $2,850 in 2022.

Why it Matters: Business owners and employers should be aware of these adjustments and share this information with employees as we approach the new year. If you have any questions regarding these adjustments, please contact our Employee Benefits team.

Related Practice Groups and Professionals

Real Estate | Jared Roberts
Business & Tax | Mark Kellogg
Cannabis Law | Sean Gallagher
Employee Benefits | Robert Burgee

Now is the Time to Optimize Your Tax-Planning Strategies for 2022 and Beyond

With year-end quickly approaching, reducing taxes is on many people’s minds. It’s been a tumultuous few years, with many changes to people’s individual circumstances and tax laws at state and federal levels. Now is the time to focus on your year-end taxes and engage in estate and income tax planning opportunities.

At Fraser Trebilcock, our tax attorneys have made sure you don’t have to start your preparations from scratch with year-end tax considerations.

Estate and Gift Tax Planning

The IRS recently announced that, due to inflation, the estate tax exemption will be increased to $12.92 million for individuals in 2023 ($25.84 million for married couples), up from $12.06 million in 2022. Currently, the lifetime gift tax exemption amount tracks the federal estate tax exemption for decedents of $12.06 million (and $12.92 for 2023). Keep in mind, however, that the lifetime estate and gift tax exemption amount is set to be cut in half at the start of 2026.

If you’re thinking about beginning an annual gifting program, or want to continue a program you’ve already started, there are some things you should know. From an estate and gift tax planning perspective, the most commonly used method for tax-free giving is the annual gift tax exclusion. This method allows you to give up to $16,000 for 2022 (increasing to $17,000 in 2023) to each donee, without reducing your estate and lifetime gift tax exclusion amount. It’s also important to note that there is no limit to the number of people to whom you may make such gifts, and that the annual gift tax exclusion is applied on a per-donee basis.

Additionally, you and your spouse could choose to combine your exemptions into a single gift from either of you. By sharing in the gift of one spouse, married donors may double the amount of the exclusion to $32,000 in 2022, or $34,000 next year. This method of transfer could help you save family income taxes, where income-earning property is given to family members in lower income tax brackets, who are not subject to the “kiddie tax.”

Have children in college? Qualifying tuition payments may also be made or continued, in addition to medical payments. These amounts do not count against the annual exclusion limit.

Another thing to remember is that if you’re required to submit a written valuation in connection with your annual gifting program, you might be able to utilize a single valuation, for gifts made in December of 2022 and January of 2023.

Income Tax Planning

Since we know that everyone would love to potentially reduce their overall tax liability for 2022, it’s important to consider various income tax planning techniques before years’ end. When evaluating appropriate planning techniques, you should review the overall impact of any such planning for the two-year period of 2022 and 2023.

Traditional income tax planning options include the postponement of income until 2023, as well as accelerating deductions into 2022. This strategy might allow you to claim larger deductions, credits, and other tax breaks for 2022 that are phased out over varying levels of adjusted gross income (AGI). If there’s a chance you might be in a lower tax bracket next year, it may be advantageous to try to arrange with your employer to defer a bonus that you may be entitled to until 2023.

With regard to accelerating deductions, consider using a credit card to pay deductible expenses before the end of the year, including charitable contributions. This can increase your 2022 deductions, even if you don’t pay your credit card until after the end of the year. If you expect to owe state and local income taxes when filing your return next year, consider asking your employer to increase withholding of state and local taxes (or pay estimated tax payments of state and local taxes) before the end of the year, so that you might deduct those taxes for 2022.

Other common elements of income tax planning may also include selling capital assets (such as stock investments) for the purpose of generating a capital loss to offset any capital gains that you have already realized for the year. When considering year-end tax planning moves, it is also important to take into account the potential impact of such planning on the alternative minimum tax for 2022, so be sure to consult with your tax attorney.

If you’re on the higher end of income earners, be wary of the additional 0.9% Medicare tax that applies to individuals receiving wages with respect to employment in excess of $200,000 ($250,000 for married couples filing jointly and $125,000 for married couples filing separately).

Retirement Planning for 2022

It’s never the wrong time to put a little extra focus on your retirement planning, especially towards the end of the year as tax-saving opportunities continue. As a taxpayer, you still have the ability to convert funds in a traditional IRA (including SEPs and SIMPLE IRAs), §401(a) qualified retirement plans, §403(b) tax-sheltered annuities or §457 government plans into a Roth IRA. You also might want to consider converting money which is currently invested in depressed stocks (or mutual funds) into a Roth IRA if you are eligible to do so.

These are just a few of the year-end tax planning considerations that you can make before the calendar turns to 2023, so make sure to consider your options while you still have time. And don’t forget that your taxpayer circumstances are unique, so not all of these suggestions will benefit everyone. To ensure that your specific needs are considered, discuss any techniques with a qualified tax advisor before making any changes.

This alert serves as a general summary, and does not constitute legal guidance. Please contact us with any specific questions.

Attorney Elizabeth M. Siefker

Elizabeth M. Siefker is an attorney at Fraser Trebilcock in the trusts and estates practice group focusing on estate planning, elder law, and business planning. You can reach her at esiefker@fraserlawfirm.com, or at 517.377.0801.

Five Stories that Matter in Michigan This Week – November 4, 2022

  1. IRS Announces 2023 Cost-of-Living Adjustment for Retirement and Health and Welfare Benefit Plans

The Internal Revenue Service recently announced 2023 cost-of-living adjustments for retirement and health and welfare benefit plans. The significant adjustments reflect the increase in inflation over the last year. The adjustments are detailed in IRS Notice 2022-55. For example, the contribution limit for a Simple 401(k) will increase to $15,500 in 2023 from $14,000 in 2022, and for a Health FSA, limits will increase to $3,050 in 2023 from $2,850 in 2022.

Why it Matters: Business owners and employers should be aware of these adjustments and share this information with employees as we approach the new year. If you have any questions regarding these adjustments, please contact our Employee Benefits team.

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  1. Viridis North, LLC Can Proceed with Lawsuit Against CRA

In November 2021, the CRA (formerly known as the MRA), issued its largest ever marijuana recall because of concerns over safety tests conducted by two companies, Viridis Laboratories, LLC, and Viridis North, LLC. These two companies filed a lawsuit against four individuals who were employed by the CRA in their individual capacities. Last week, U.S. District Court Judge Paul L. Maloney granted an order in part motion to dismiss all claims alleged by Viridis Laboratories, LLC, and Viridis North, LLC, except for, “Plaintiff Viridis North’s claim for violation of its substantive due process rights.” Viridis Labs. v. Kluytman, 1:22-cv-283, 12(W.D. Mich. Oct. 27, 2022).

Why it Matters: The decision by the Court allows Viridis North LLC to proceed with its lawsuit in determining whether or not there was a violation of their substantive due process rights stemming from the November 2021 marijuana recall. Fraser Trebilcock attorneys will monitor the situation as developments continue.

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  1. Year End Gift Tax Planning Perspective

If you’re thinking about beginning an annual gifting program, or want to continue a program you’ve already started, there are some things you should know. From an estate and gift tax planning perspective, the most commonly used method for tax-free giving is the annual gift tax exclusion. This method allows you to give up to $16,000 for 2022 (increasing to $17,000 in 2023) to each donee.

Why it Matters: The method allows you to give up $16,000 without reducing your estate and lifetime gift tax exclusion amount. It’s also important to note that there is no limit to the number of people to whom you may make such gifts, and that the annual gift tax exclusion is applied on a per-donee basis.

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  1. Department of Labor Issues New Proposed Rule on Independent Contractors

The U.S. Department of Labor recently issued a Notice of Proposed Rulemaking that, if adopted, would change the standard for analyzing a worker’s classification as either an employee or independent contractor.

Why it Matters: Employers who misclassify employees can face severe financial consequences. That’s why it is important that organizations remain diligent in analyzing their workers’ classifications. Learn more on the subject.

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  1. EV Company Relocating to MI Recipient of Funds from MSF

A Utah-based electric vehicle company that is set to relocate their headquarters to southeastern Michigan, received a $2.5 million Michigan Business Development Program performance-based grant from the Michigan Strategic Fund to aid in the move.

Why it Matters: Officials in Michigan have been working hard to grow Michigan’s economy, and these programs are an incentive for businesses that are looking to relocate or expand their footprint in the state.

Related Practice Groups and Professionals

Employee Benefits | Robert Burgee
Cannabis Law | Sean Gallagher
Trusts & Estates | Elizabeth Siefker
Labor, Employment & Civil Rights | David Houston
Energy, Utilities & Telecommunications | Michael Ashton

Five Stories that Matter in Michigan This Week – June 17, 2022

Five Stories that Matter in Michigan This Week – June 17, 2022; Legal, Legislative, and Regulatory Insights

  1.  Court of Appeals Considers Arguments in Significant No-Fault Case

An important case involving Michigan’s auto no-fault law is before the Michigan Court of Appeals. The dispute in the case of Andary, et al v. USAA Casualty Insurance Company, et al is focused on whether the no-fault reforms passed in 2019 apply retroactively for people injured before the law was passed. The plaintiffs in the case argue that retroactive application is unconstitutional.

Why it Matters: The circuit court in this case sided with insurers. To the extent that the appellate court reverses in favor of plaintiffs, it could create considerable uncertainty in the no-fault insurance marketplace in Michigan.

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  1. Michigan Supreme Court Blocks Republican Candidates for Governor from Ballot

The Michigan Supreme Court recently denied requests by three Republican candidates for governor to be placed on the primary ballot, after state election officials ruled that their campaigns had submitted forged signatures. Fraser Trebilcock election law attorney Garett Koger was quoted by The New York Times in an article discussing the Michigan Supreme Court’s decision.

Why it Matters: The Republican primary for governor has been chaotic, to say the least. Five of ten candidates have now been removed from the primary ballot. Candidate Ryan Kelley was arrested by federal agents this week and charged with four misdemeanors related to his alleged attendance at last year’s U.S. Capitol riot. And former Detroit police chief James Craig announced that he is mounting a write in campaign for the August 2 primary. These different scenarios all highlight the need for experienced election law counsel.

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  1. IRS Does Rare Mid-Year Adjustment to Mileage Rates

The Internal Revenue Service recently announced that it has increased the 2022 mileage rates for the last six months of the year in response to high gasoline prices, including rates for business travel, deductible medical or moving expenses, and deduction for charitable contributions. Learn more about the new mileage rates here.

Why it Matters: Midyear increases in mileage rates are rare. Accordingly, self-employed individuals who operate an automobile for business use, as well as employers who reimburse employees who use their own vehicles to conduct business, should take note of the changes.

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  1. New Education and Information Requirements for Michigan Schools

New legislation was recently enacted requiring schools to provide informational materials on post-secondary education options. The Michigan Department of Education must create informational packets, including information about Advanced Placement programs, all public universities and community colleges in the state, and student loans and tuition assistance, that will be distributed to all students in 8th to 12th grades each year. In addition, by overwhelming margins, the Michigan House and Senate recently passed legislation that would mandate personal finance education at the high school level.

Why it Matters: To remain economically competitive, it is important that Michigan continues to focus on having a well-educated workforce in order to attract and retain employers.

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  1. City of Detroit Faces Lawsuits Over Adult-Use Recreational Licenses

JARS Cannabis and House of Dank, two companies that own medical marijuana dispensaries licensed in Detroit, are suing the City of Detroit over the revised ordinance claiming that the new law would signal the end for existing medical marijuana facilities already in the area. The two companies pointed to a provision in the revised ordinance that prevents existing medical facilities in the area from getting a recreational license until 2027.

Why it Matters: State law mandates that municipalities cannot adopt “unreasonably impracticable” adult-use cannabis ordinances. As the City of Detroit faces multiple lawsuits over their revised ordinance, other municipalities may face the same issue.

Related Practice Groups and Professionals

Insurance Defense | Emily Vanderlaan

Election Law | Garett Koger

Business & Tax | Liz Siefker

Cannabis | Klint Kesto

IRS Announces Increase for 2022 Mileage Rates

On June 9, 2022, the Internal Revenue Service announced that it has increased the 2022 mileage rates for the last six months of the year in response to high gasoline prices. The new mileage rate for business travel will be 62.5 cents per mile, up 4 cents from the rate that has been effective since the beginning of 2022. The new rate for deductible medical or moving expenses, which is available for active-duty members of the military, will be 22 cents, also up 4 cents from the effective rate at the start of the year. The mileage rate that applies to the deduction for charitable contributions remains fixed by the Internal Revenue Service at 14 cents per mile. These new rates will become effective on July 1, 2022.

Attorney Elizabeth Siefker

Elizabeth M. Siefker is an attorney at Fraser Trebilcock in the trusts and estates practice group focusing on business planning, estate planning, and elder law. You can reach her at esiefker@fraserlawfirm.com, or at 517.377.0801.

Client Alert: Updated PCORI Fees Payable in 2022

In Notice 2022-4, the Internal Revenue Service set forth the PCORI amount imposed on insured and self-funded health plans for policy and plan years that end on or after October 1, 2021 and before October 1, 2022.

Background

The Patient-Centered Outcomes Research Institute (PCORI) fee is used to partially fund the Patient-Centered Outcomes Research Institute which was implemented as part of the Patient Protection and Affordable Care Act.

The PCORI fees were originally set to expire for plan years ending before October 1, 2019. However, on December 20, 2019, the Further Consolidated Appropriations Act was enacted and extended the fee to plan years ending before October 1, 2029.

The fee is calculated by using the average number of lives covered under a plan and the applicable dollar amount for that plan year. Code section 4375 imposes the fee on issuers of specified health insurance policies. Code section 4376 imposed the fee on plan sponsors of applicable self-insured health plans. This Client Alert focuses on the latter.

Due to the fact that the US Department of Health and Human Services did not publish updated National Health Expenditures tables for 2021, this year’s fees are based on the projections set out in the 2020 tables. As such, plans should pay close attention to next year’s fee changes as the accuracy of 2020’s projections may be affected by current inflationary trends.

Adjusted Applicable Dollar Amount

Notice 2022-4 sets the adjusted applicable dollar amount used to calculate the fee at $2.79. Specifically, this fee is imposed per average number of covered lives for plan years that end on or after October 1, 2021 and before October 1, 2022. For self-funded plans, the average number of covered lives is calculated by one of three methods: (1) the actual count method; (2) the snapshot method; or (3) the Form 5500 method.

Deadline and How to Report

The PCORI fee is due by August 1, 2022 (as the typical due date, July 31, 2022, falls on a Sunday), and must be reported on Form 720.

Instructions are found here (see Part II, pages 8-9).

The Form 720 itself is found here (see Part II, page 2).

Form 720, as well as the attached Form 720-V to submit payment, must be used to report and pay the requisite PCORI fee to the IRS. While Form 720 is used for other purposes to report excise taxes on a quarterly basis, for purposes of this PCORI fee, it is only used annually and is due by July 31st of each relevant year.

As previously advised, plan sponsors of applicable self-funded health plans are liable for this fee imposed by Code section 4376. Insurers of specified health insurance policies are also responsible for this fee.

  • For plan years ending on or after October 1, 2017 and before October 1, 2018, the fee is $2.39 per covered life.
  • For plan years ending on or after October 1, 2018 and before October 1, 2019, the fee is $2.45 per covered life.
  • For plan years ending on or after October 1, 2019 and before October 1, 2020, the fee is $2.54 per covered life.
  • For plan years ending on or after October 1, 2020 and before October 1, 2021, the fee is $2.66 per covered life.
  • For plan years ending on or after October 1, 2021 and before October 1, 2022, the fee is $2.79 per covered life.

Again, the fee is generally due no later than July 31 (see above for 2022 date) of the year following the last day of the plan year.

As mentioned above, there are specific calculation methods used to configure the number of covered lives and special rules may apply depending on the type of plan being reported. While generally all covered lives are counted, that is not the case for all plans. For example, HRAs and health FSAs that are not excepted from reporting only must count the covered participants and not the spouses and dependents. The Form 720 instructions do not outline all of these rules.

More information about calculating and reporting the fees can be found here.

Questions and answers about the PCORI fee and the extension may be found here.

As you are well aware, the law and guidance are continually evolving. Please check with your Fraser Trebilcock attorney for the most recent updates.

This alert serves as a general summary, and does not constitute legal guidance. Please contact us with any specific questions.

Robert D. Burgee is an attorney at Fraser Trebilcock with over a decade of experience counseling clients in business transactions, civil matters, regulatory compliance, and employee matters. Robert also has a background in employee benefits, having been a licensed agent since 2014. You can reach him at 517.377.0848 or at bburgee@fraserlawfirm.com.

Aaron L. Davis works in employee health and welfare benefits. He is also Chair of the firm’s labor law practice and serves as Firm Secretary. He has litigation experience in a diverse range of employment matters, including Title VII, the Age Discrimination and Employment Act, the Americans with Disabilities Act, the Family Medical Leave Act, and the Fair Labor Standards Act. You can reach him at 517.377.0822, or email him at adavis@fraserlawfirm.com.

Ward off 2022 Tax Season Flu – File Early and Electronically

My grandfather was very understated, if he said he was “concerned” it meant he was worried sick about it. If he said he was “worried,” he meant, “all hands on-deck, 5 alarm fire, women and children to the life boats.” So, it is with that the Internal Revenue Service kicked off the 2022 tax filing season this week with an urgent reminder to taxpayers to take extra precautions this year to file an accurate tax return electronically to help speed refunds. “Urgent” may be a bit of an understatement. IRS commissioner, Chuck Rettig, recently commented, “In many areas, we are unable to deliver the amount of service and enforcement that our taxpayers and tax system deserves and needs.” He also noted the agency’s inability to respond to a record number of phone calls. 

As of the start of this tax season, the IRS has at least 10 million unprocessed returns from last year. Paper is kryptonite to the IRS, accounting for most of their backlog and workforce requirements during tax season. Certainly, yes, the pandemic and the requirement to work remotely has contributed to the IRS’s woes this year, but it’s not just COVID-19 affecting the IRS, there are systemic issues as well. Since 2010, the number of individual returns has increased nearly 20%, while the agency’s workforce has shrunk 17%. This circumstance has caused the IRS to pivot its workforce at its various Service Centers (offices where the bulk of most of the IRS customer facing functions occur) from their normal functions to simply processing returns and, where possible, requiring overtime by IRS employees. Anecdotally, IRS Service Centers are shutting down their taxpayer service operations for the next 5 or 6 months just to process returns. And, the IRS announced just today, January 28, its’ intention to stop some notices to taxpayers as they increase resources to process backlogged returns. “We decided to suspend notices in situations where we have credited taxpayers for payments but have no record of the tax return being filed,” the IRS said in a statement. “In many situations, the tax return may be part of our current paper tax inventory and simply hasn’t been processed.” This action is designed to ward off additional correspondence with taxpayer that would only add to the paper logjam plaguing the agency.

So, what can you do to avoid or minimize your tax season frustration? Filing early and electronically is a way – perhaps the only way – to avoid frustration. 

Filing electronically and early has the added benefit of receiving your tax refund sooner. Several factors can determine when you may receive your tax refund, including: 

  • How early you file
  • Whether the return is e-filed or sent by mail
  • If you are claiming certain credits (especially EITC and CTC)
  • If you have an existing debt to the federal government
  • The COVID stimulus payments sent out earlier in 2021 will not affect your income tax refund (however, if you were entitled to a stimulus check, but did not receive one, it can be added to your 2022 refund as a credit . . . but it will slow receipt down). 

The chart below shows the 2022 IRS Refund Schedule. Of course, it is not exact – the internal situation at the IRS and your own situation could cause delays. 

IRS Accepts E-Filed Return By: Direct Deposit Sent (Or Paper Check Mailed One Week Later):
January 24January 31 (February 11)**
January 31February 11 (February 18)*
February 7February 18 (February 25)*
February 14February 25 (March 4)*
February 21March 4 (March 11)*
February 28March 11 (March 18)
March 7March 18 (March 25)
March 14March 25 (April 2)
March 21April 1 (April 9)
March 28April 8 (April 15)**
April 4April 15 (April 22)**
April 11April 22 (April 29)**
April 18April 29 (May 6)
April 25May 6 (May 13)
May 2May 13 (May 20)
May 9May 20 (May 27)
May 16May 27 (June 4)
May 23June 4 (June 11)

* = Returns with EITC or CTC may have refunds delayed until March to verify credits.

** = Filing during peak season can result in slightly longer waits.

If you have any questions, please contact your Fraser Trebilcock attorney.

Fraser Trebilcock attorney Paul V. McCord has more than 20 years of tax litigation experience, including serving as a clerk on the U.S. Tax Court and as a judge of the Michigan Tax Tribunal. Paul has represented clients before the IRS, Michigan Department of Treasury, other state revenue departments and local units of government. He can be contacted at 517.377.0861 or pmccord@fraserlawfirm.com.

Client Alert/Reminder: Form W-2 Reporting Due for Employer-Provided Health Care / Disclosure Due to CMS for Medicare Part D

Upcoming Deadlines: (1) Form W-2 Reporting of Employer-Provided Health Coverage; and (2) Medicare Part D Notices to CMS

Reminder: Form W-2 Reporting on Aggregate Cost of Employer Sponsored Coverage

Unless subject to an exemption, employers must report the aggregate cost of employer-sponsored health coverage provided in 2021 on their employees’ Form W-2 (Code DD in Box 12) issued in January 2022. Please see IRS Notice 2012-09 and our previous e-mail alerts for more information.

The following IRS link is helpful and includes a chart setting forth various types of coverage and whether reporting is required; see here.

Please note this is a summary only and Notice 2012-09 should also be consulted. The IRS has issued questions and answers regarding reporting the cost of coverage under an employer-sponsored group health plan, which can be found here.

If you have questions regarding whether you or your particular benefits are subject to reporting, please feel free to contact us.

Deadline Coming Up for Calendar Year Plans to Submit Medicare Part D Notice to CMS

As you know, group health plans offering prescription drug coverage are required to disclose to all Part D-eligible individuals who are enrolled in or were seeking to enroll in the group health plan coverage whether such coverage was “actuarially equivalent,” i.e., creditable. (Coverage is creditable if its actuarial value equals or exceeds the actuarial value of standard prescription drug coverage under Part D). This notice is required to be provided to all Part D eligible persons, including active employees, retirees, spouses, dependents and COBRA qualified beneficiaries.

The regulations also require group health plan sponsors with Part D eligible individuals to submit a similar notice to the Centers for Medicare and Medicaid Services (“CMS”). Specifically, employers must electronically file these notices each year through the form supplied on the CMS website.

The filing deadline is 60 days following the first day of the plan year. If you operate a calendar year plan, the deadline is the end of February. If you operate a non-calendar year plan, please be sure to keep track of your deadline.

At a minimum, the Disclosure to CMS Form must be provided to CMS annually and upon the occurrence of certain other events including:

  1. Within 60 days after the beginning date of the plan year for which disclosure is provided;
  2. Within 30 days after termination of the prescription drug plan; and
  3. Within 30 days after any change in creditable status of the prescription drug plan.

The Disclosure to CMS Form must be completed online at the CMS Creditable Coverage Disclosure to CMS Form web page found here.

  1. The online process is composed of the following three step process: Enter the Disclosure Information;
  2. Verify and Submit Disclosure Information; and
  3. Receive Submission Confirmation.

The Disclosure to CMS Form requires employers to provide detailed information to CMS including but not limited to, the name of the entity offering coverage, whether the entity has any subsidiaries, the number of benefit options offered, the creditable coverage status of the options offered, the period covered by the Disclosure to CMS Form, the number of Part D eligible individuals, the date of the notice of creditable coverage, and any change in creditable coverage status.

For more information about this disclosure requirement (including instructions for submitting the notice), please see the CMS website for updated guidance found here.

As with the Part D Notices to Part D Medicare-eligible individuals, while nothing in the regulations prevents a third-party from submitting the notices (such as a TPA or insurer), ultimate responsibility falls on the plan sponsor.

This email serves solely as a general summary of the Form W-2 reporting requirements and CMS disclosure for Medicare Part D.

Elizabeth H. Latchana specializes in employee health and welfare benefits. Recognized for her outstanding legal work, in both 2019 and 2015, Beth was selected as “Lawyer of the Year” in Lansing for Employee Benefits (ERISA) Law by Best Lawyers, and in 2017 as one of the Top 30 “Women in the Law” by Michigan Lawyers Weekly. Contact her for more information on this reminder or other matters at 517.377.0826 or elatchana@fraserlawfirm.com.

Brian T. Gallagher is an attorney at Fraser Trebilcock specializing in ERISA, Employee Benefits, and Deferred and Executive Compensation. He can be reached at (517) 377-0886 or bgallagher@fraserlawfirm.com.