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May 8, 2009 by Kerry Fitzgerald
Posted in: COBRA, Communication, Employment law, Records documentation, Special Report, Terminations
The Internal Revenue Service just let you off the hook for what could’ve been a big administrative hassle this year-end.

IRS recently announced it won’t require any information reporting (i.e., Forms W-2 or 1099) for COBRA premium assistance payments employers make on behalf of terminated employees.

There’s a tradeoff, of course. It’s likely that because you don’t have to officially inform employees of the subsidy amount, recipients will have to call you when they prepare their personal federal tax returns.

Some will have to pay back a portion of the subsidy, e.g., those with adjusted gross income of $125,000 or more; $250,000 for married taxpayers filing jointly. Assistance eligibility phases out completely for people with modified gross incomes of $145,000 or more; $290,000 for joint filers. They’ll return the subsidy amount by increasing their tax liability on the Form 1040.

To prevent your phone from ringing off the hook, consider compiling subsidy info throughout the year, as your company makes the premium payments, and issue a simple statement at year-end along with your W-2s or 1099s.

What you’ll need
The info you’ll need should be easy enough to find. As part of the COBRA subsidy program, the American Recovery and Reinvestment Act requires employers to maintain the following documentation:

• Dates and amounts of the assistance eligible individuals’ 35% share of the premium.
• A copy of the invoice or other supporting statement from the insurance carrier (when you have an insured plan) and proof of timely payment of the full premium to the insurance carrier required under COBRA.
• Proof of the (1) premium amount and (2) coverage provided to the assistance eligible individuals. (Self-insured plans only.)
• Attestation of involuntary termination, including the date of the involuntary termination (which must be between 9/1/08 and 12/31/09), for each covered employee whose involuntary termination is the basis for eligibility for the subsidy.
• Proof of each assistance eligible individual’s eligibility for COBRA coverage at any time during the period between 9/1/08 and 12/31/09, and election of COBRA coverage.
• Social Security Numbers of all covered employees,  the amount of the subsidy reimbursed with respect to each covered employee,  and whether the subsidy was for one individual or two or more individuals.
• Other documents necessary to verify the correct amount of reimbursement. Note that although your company must maintain this documentation, you’re not required to submit it with your Form 941.

The IRS launched a Web site for small business owners and the self-employed at www.irs.gov/smallbiz. A section called “Starting, Operating or Closing a Business” covers IRS rules on hiring family members, record-keeping, employer ID numbers and selecting a business structure. The “Industries/Professions” section provides information about tax regulations. “Operating a Business” has resources on hiring, employment taxes and wage reporting requirements. The “Business Expenses” section defines the types of costs you can and cannot deduct from your taxes. Visit www.irs.gov/smallbiz.

Learn more about making your business succeed. www.score.org

A temporary suspension has been placed on the E-verification system until February 20th. The original compliance date of January 15th was extended after a lawsuit was filed by the Society for Human Resources Management (SHRM) and the U.S. Chamber of Commerce, along with other entities.

For more information, see http://www.hrmorning.com/e-verify-for-contractors-delayed-until-feb-20/.

Employers: go to www.socialsecurity.gov/employer and select Business Services Online.

It’s safe and secure; no paper forms to purchase; no software needed; get an extra 30 days to file (until the last day of March); get an immediate receipt of filing, and more.

The Cache Chamber of Commerce and the Salt Lake Chamber partnered with the Department of Homeland Security and the Department of Justice to bring to Utah employers an educational workshop addressing critical immigration procedures for businesses.  The topic of the workshop was the E-Verify System and employer discrimination.Businesses will be using this system to verify employee eligibility with new-hires. They will need to comply with SB-81 which will take affect on July 1, 2009.  Presently, the State of Utah  requires any business doing business with them to be using this system.   If you were unable to attend this training,  packets from the Department of Justice are available at the Cache Business Resource Center, Rm 1901. 1400 North & 1000 West (Bridgerland Applied Technology College – West Campus)

You can go online and check out the ICE (Immigration and Customs Enforcement) mutual agreement between Government and Employers at www.ice.gov.