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More Legal News
New Year, New Worksheets and Forms
Our TaxPlace subscribers have access to a number of helpful resources for the 2016 tax season. Also, don't forget to check out our webinar and seminar replays. New uploads are coming soon!
As we store away the wrapping paper and pull out the New Years’ hats and horns, we thought it would be a good time to review the significant agricultural law developments of 2015. While this review is not comprehensive or intended to rank the topics in order of importance, it does demonstrate how much can change in a year. So, pour that last glass of egg nog and savor the last few hours of the year. If this list is any indication, it’s going to be a busy 2016.
The Clean Water Rule: Waters Rage
Water quality was a hot topic in agricultural law in 2015. The EPA and Army Corps unveiled their long-awaited final Clean Water Rule on May 27, 2015. Originally called the Waters of the United States Rule (or WOTUS), the controversial proposed rule had been pending for more than a year. The final rule, which made several changes and added several exemptions, did not allay the fears of its detractors. In fact, upon publication of the Rule on June 29, 2015. litigation immediately ensued.
The Rule is facing legal challenges on many fronts. In addition to the majority of States in the Union, many other plaintiffs—including farm groups, industry groups, and even environmental groups—have filed legal complaints challenging the Rule. Most plaintiffs are asking the courts to vacate the Rule in its entirety. Most of the lawsuits filed by states were initiated by the attorneys general of those states. In mid-November, Iowa Governor Terry Branstad joined the North Dakota lawsuit on behalf of the State of Iowa. Although the various complaints seek multiple forms of relief, they generally ask the courts to declare that the rule is unlawful because it...
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On Friday, December 18, 2015, President Obama signed into law a massive bill authorizing $1.1 trillion in spending and $680 billion in tax cuts. While we have become accustomed to waiting until year-end (or sometimes new year) to see already-expired tax cuts temporarily revived, this new law actually makes permanent (or largely extends) several important tax breaks. For this reason, the Protecting Americans from Tax Hikes Act of 2015 is different from its predecessors. The new Act provides welcomed certainty for farm producers and others who often base purchasing or investment decisions on their tax consequences.
Signed into law almost one year to the date after last year’s Tax Increase Prevention Act of 2014, the new Act permanently implements, instead of temporarily resurrecting, several provisions of particular interest to farm producers. Following is a summary of the new Act’s key provisions.
Section 179 Deduction
Perhaps most important to farmers, the new Act permanently implements an enhanced “Section 179” deduction, sometimes called expense method depreciation. As of January 1, 2015, this deduction decreased to $25,000, with an investment ceiling of only $200,000. Amending I.R.C. § 179, the new Act allows farmers and small businesses to deduct $500,000 of the tax basis of certain business property or equipment during the year in which the property was placed into service. The spending cap is increased from $200,000 to $2 million, meaning that the deduction will begin a dollar-for-dollar phase-out only when the taxpayer spends more than $2 million on qualifying assets. These changes are implemented with a retroactive effective date of January 1, 2015. Future amounts will be indexed for inflation.
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On December 28, 2015, IRS issued Notice 2016-4, extending the deadline (for tax year 2015 only) for those required to comply with ACA information reporting requirements. This article provides background for and a summary of the new reporting requirements, as impacted by the new guidance. It also provides a helpful summary chart.
The Affordable Care Act instituted a number of changes to the Internal Revenue Code to facilitate the implementation of a new nationwide healthcare system. IRC § 5000A, added to the Code by §1501(b) of the ACA, generally provides that individuals must (1) have minimum essential coverage, (2) qualify for an exemption from the minimum essential coverage requirement, or (3) make an individual shared responsibility payment at the time they file their federal income tax returns. This individual shared responsibility payment requirement (which was implemented first for the 2014 tax year) is one of the backbones of the system. Without this penalty, healthy individuals would be less likely to participate, thereby destroying risk pools and ultimately making costs unsustainable.
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And Happy New Year!
We'd like to thank all of you for your wonderful support this year. We appreciate your phone calls, emails, and your participation in our seminars and webinars. We look forward to continue offering you vital legal and tax information you can apply to your business in 2016 and beyond. As always, please let us know how we can serve you better. Here's to a great 2016!
The CALT Staff
IRS Further Clarifies ACA's Impact on Health Reimbursement Plans
IRS Notice 2015-87, issued December 17, 2015, provides the latest IRS guidance regarding the Affordable Care Act's impact on employer health reimbursement plans. Although IRS unveiled no new “bombshells” in the Notice, it does provide further clarification important to small employers offering health care reimbursement arrangements to their employees.For information about prior guidance on this subject, please reference this article.
HRAs Covering Fewer than Two Participants Who Are Current Employees
The Notice reiterates that HRAs offered to “fewer than two participants who are current employees” are not subject to ACA market reforms. As such, employers offering such plans will not be subject to penalties. These compliant HRAs include retiree-only plans, which provide benefits only to former employees, as well as plans that provide coverage to only one employee-participant (where there are no other eligible employees). According to the guidance, these HRAs can be used to purchase individual market coverage. It is important to note, however, that these plan are still employer-sponsored plans for any month during which funds are retained in the HRA. As such, the Notice restates that a participant “with available funds for any month will not be eligible for a premium tax credit under § 36B for that month.”
HRAs Used to Cover Family Medical Expenses
Notice 2013-54 provided that an HRA may be integrated with an employer group health plan under certain circumstances. A properly integrated HRA is compliant with ACA market reforms. The new guidance clarifies that everyone covered by an HRA must be enrolled in the plan to which the HRA is integrated. Specifically, a family HRA (one covering the expenses of an employee’s spouse and/or dependents) cannot be integrated with employee self-only coverage. In other words, if an employee’s family members are not enrolled in the employer-provided group health plan, they cannot be covered under the HRA.
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The Center for Agricultural Law and Taxation does not provide legal advice. Any information provided on this website is not intended to be a substitute for legal services from a competent professional. The Center's work is supported by fee-based seminars and generous private gifts. Any opinions, findings, conclusions or recommendations expressed in the material contained on this website do not necessarily reflect the views of Iowa State University.