The Washington Report
November 13, 2017
IRS Publishes Notice on Leave Donations for Victims of California Wildfires
On November 9, 2017, the Internal Revenue Service (IRS) published Notice 2017-70, which provides guidance on the treatment of leave-based donation programs to aid victims of the California wildfires. In the Notice, the IRS states “In response to the extreme need for charitable relief for victims of the 2017 California Wildfires, employers may have adopted or may be considering adopting leave-based donation programs. Under leave-based donation programs, employees can elect to forgo vacation, sick, or personal leave in exchange for cash payments that the employer makes to charitable organizations described in Section 170(c) of the Internal Revenue Code (Section 170(c) organizations).” The Notice provides guidance for income and employment tax purposes on the treatment of cash payments made by employers under leave-based donation programs for the relief of the wildfire victims.
IRS Notice 2017-70 is available here.
You Have Mail—IRS Starts Enforcing ACA's Employer Mandate Penalties
With the failure of the Affordable Care Act (ACA) “repeal and replace” effort in Congress, the Internal Revenue Service (IRS) will start notifying employers of penalties owed for failing to comply with the ACA’s mandate to offer health care coverage to full-time employees.
On November 2, 2017, the IRS updated its Q&A website to provide information on Letter 226J, by which the IRS will notify an employer that the employer may owe a penalty, formally known as an Employer Shared Responsibility (ESR) payment, for not complying with the ACA’s employer mandate. The guidance addresses how an employer may respond in the event the employer is notified by the IRS of a potential penalty and how to make the ESR payment if required.
This Aon bulletin discusses:
- How the ESR payments work;
- Letter 226J—How the IRS will notify an employer if an ESR payment is due;
- Responding to Letter 226J—and what to do after receiving Letter 227; and
- Making the ESR payment
Because there are consequences (outlined in this bulletin) for an employer’s failure to respond to the IRS on a timely basis, employers should determine what internal procedures are necessary to ensure that Letter 226J will be identified upon receipt and delivered to the appropriate individuals so that a response can be timely issued.
This bulletin is available here.
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