Affordable Health Care Act – Partial Reprieve.

Under the Affordable Care Act (“ACA”), businesses with over 50 full time employees were required to provide minimum affordable coverage to all employees beginning in 2014 or pay a penalty of $2,000 per non-covered employee. The IRS just announced that the implementation of that portion of ACA has been delayed for 1 year, until 2015. Other aspects of ACA remain unchanged.

 

IRS Smart Phone App:

The IRS has a smart phone App that offers tools and information. The IRS just released update 3.0 to their App, IRS2Go. The update allows people to receive content in Spanish. Here is a link to the IRS Website where you can get more information about IRS2Go.

 

Political Non-Profit Organizations

In the June edition of Tax Law Explained, I addressed the growing inquiry into whether the IRS inappropriately and/or illegally targeted conservative organizations that were applying for tax exempt status through IRC Section 501(c) (4). At that time, the inquisition was in full swing. In my June, 2013 Tax Law Explained article, I suggested that:

  1. Determining qualification for tax exempt status is based upon a facts and circumstances test.
  2. It is difficult to discern a qualifying applicant under Section 501(c) (4).
  3. People often want the name of their organization to indicate their purpose, so it was entirely plausible that some IRS employees working in the Cincinnati office would consider the name of an organization as one of many factors in trying to decipher the intended purpose of the organization.
  4. It was too early to conclude as to whether the IRS did something wrong and whether there was some broader conspiracy. However, it was clear that the matter had become a political circus.

Here are a few updates worth noting:

  1. Over the objection of the Chairman of the House Committee on Oversight and Government Reform (Rep. Darrell Issa), previously sealed portions of a key interview were released. As it turns out, there was no evil Obama/Democrat conspiracy after all:
  2. John Shafer (a self identified conservative Republican) launched the screening program on behalf of the IRS after a surge in applications from organizations that appeared to be political (which might not qualify for tax exempt status). Mr. Shafer also stated that he had no reason to believe that the White house was involved.
  3. The IRS did not single out conservative sounding organizations. The IRS’s Cincinnati office selected a number of applicants for scrutiny, with names that included key liberal sounding words such as “Occupy” and “Progressive”.
  4. The IRS was genuinely trying to do their job…which includes trying to determine whether an organization qualifies for tax exempt status or whether it is a political organization.
  5. The National Taxpayer Advocate issued a report to Congress addressing issues relating to IRC Section 501(c) (4). This was summarized in an IRS Newswire (IR-2013-63) on June 26, 2013. Here is a link to IR-2013-63:

Among other things, it stated:

  1. The real crisis facing the IRS is that Congress has given the IRS inadequate funding to accomplish its mission.
  2. While IRC Section 501(c) (4) (i.e. the statute) requires that an organization be operated “exclusively” for the promotion of social welfare, the Regulations use the word “primarily”. The standard should be clarified (i.e. is it “exclusively” or is it “primarily”) and made less vague.
  3. Under the current tax laws, IRC Section 501(c) (4) applicants do not have the right to judicial recourse if they believe that the IRS was unfair in denying tax exempt status. The IRS recommended that Congress enact laws changing this so that they can seek judicial recourse.

 

 

7/2013

Copyright ©, Keith B. Baker – 2013

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