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The Internal Revenue Service (IRS) and Department of Labor (DOL) issued guidance (DOL technical release 2013-03 and IRS Notice 2013-54) that may impact how your church funds medical coverage for some employees. The guidance states that, effective July 1, 2015, organizations may no longer directly pay premiums for an individual health insurance policy [a health insurance policy for an individual or family purchased directly from an insurance company (an “issuer”) or through the Affordable Care Act’s Marketplaces (also called exchanges)] for an employee, nor reimburse an employee who purchases an individual health insurance policy with dollars that are excluded from the employee’s taxable income. These arrangements are sometimes called “Employer Payment Plans” [EPPs] or stand-alone health reimbursement arrangements (HRAs).

Although non-taxed Employer Payments Plans and stand-alone HRAs are no longer permitted, an employer can create an Employer Payment Plan to directly pay the premium for an individual health insurance policy covering the employee—if the employer payments are considered taxable income (i.e., if the employee is taxed on the payments) and the arrangement satisfies a few other requirements:

1. No contributions are made by the employer, i.e., the payment is part of the employee’s taxable salary that is being forwarded by the employer to the insurance issuer.
2. Participation in the program is completely voluntary for employees.
3. The employer collects premiums through payroll deduction and remits them to the insurer without endorsing the program.
4. The employer receives no consideration (e.g., cash) other than reasonable compensation for administrative services rendered to collect the premiums.

Source:

Clergy Financial Resources

http://www.clergytaxnet.com

Clergy Financial Resources is a national accounting and finance organization serving churches and clergy since 1980. They have an unparalleled tax expertise on the complex issues associated with clergy tax law, clergy taxes, clergy compensation and church payroll. Clergy Financial Resources is a valuable resource for clergy, churches and denominations.

Question: One of our employees has asked for an accommodation. Her desk currently faces a wall, and she has asked to move, claiming that for medical reasons she needs to be able to see at a farther distance whenever she looks up. Is it appropriate to ask for medical documentation before considering her request?

HR Answer: If the employee has a disability (a physical or mental impairment that substantially limits a major life activity), you must consider an accommodation for the employee. At present, however, you do not have enough information to know whether her condition qualifies as a disability. So, yes, a request for medical documentation would be appropriate.

Explain to the employee that you are willing to consider the workplace accommodation if her treating physician completes and returns an ADA Medical Inquiry Form. This form, which we have available for you in the HR Support Center, substantiates an employee’s impairment and need for accommodation. Tell the employee that having her doctor complete the form is completely optional, but that the company needs a completed form in order to consider a workplace accommodation. We recommend giving the employee at least two weeks to return the form.

If the employee returns the form, the next step would be to discuss with her what reasonable accommodations (such as moving her desk) could be made without putting an undue burden on the company. If you get to this step, just let us know and we’d be happy to give you some tips and strategies for evaluating accommodations.

Learn more about our HR Services

Source:

Clergy Financial Resources

http://www.clergytaxnet.com

Clergy Financial Resources is a national accounting and finance organization serving churches and clergy since 1980. They have an unparalleled tax expertise on the complex issues associated with clergy tax law, clergy taxes, clergy compensation and church payroll. Clergy Financial Resources is a valuable resource for clergy, churches and denominations.

After tax season ends, we all breathe a sigh of relief. We’re done with the annual tedious task of filing our taxes. For some people, though, the relief is short-lived, and ends when they receive a notice from the IRS. If you are one of the millions of people that receives a notice, step one is to KEEP CALM! Then, follow these steps:

1. Don’t throw it away or otherwise ignore it. In most cases, you will be able to respond quickly and easily to the notice.

2. A notice usually deals with a specific issue about your tax return or account. It may ask you for more information, or notify you of a corrected error.

3. Read the notice carefully – it will have instructions about what you need to do.

4. If the notice is regarding a correction the IRS made, review the information that was corrected. If you agree, you don’t need to reply unless a payment is due. If you do not agree, you must respond to the IRS. You should write a letter that explains why you don’t agree, and include any documents you want the IRS to consider. You will also need to include the bottom tear-off portion of the notice with your letter. Then, mail your letter to the IRS at the address on the bottom of your notice. It usually takes about 30 days for a response from the IRS.

5. Most notices will not require calling or visiting the IRS. However, there is a phone number on the notice if you have questions. If you do call, be sure you have your tax return copy and notice with you.

6. Make and keep a copy of any notices you receive from the IRS.

7. Remember, the IRS will NEVER call or email you as a first contact. The IRS always contacts you first by mail. If you receive a phone call or email that you feel is a scam, contact the IRS immediately.

Clergy Financial Resources

http://www.clergytaxnet.com

Clergy Financial Resources is a national accounting and finance organization serving churches and clergy since 1980. They have an unparalleled tax expertise on the complex issues associated with clergy tax law, clergy taxes, clergy compensation and church payroll. Clergy Financial Resources is a valuable resource for clergy, churches and denominations

When hiring new employees, you might find the process of collecting new hire information time consuming and tedious. To ensure a pleasant experience by all parties, it’s a good idea to keep a template of forms—in either an electronic format or a hard copy packet.

The packet should contain all forms required to keep on file, along with those that contain benefit information and direct deposit information for each employee.

Here’s a list of forms that should be kept in employee files:
• W-4—Withholding Allowance Certificate
• I9—Employment Eligibility Verification
• State Specific Employee Withholding Form—Note that the form name will vary depending on the state
• Employee benefits forms—Health/dental insurance, 401(k), health savings account, etc
• Direct Deposit
• Basic employee information form—Including salary/hourly wage information

Source:

Clergy Financial Resources

http://www.clergytaxnet.com

Clergy Financial Resources is a national accounting and finance organization serving churches and clergy since 1980. They have an unparalleled tax expertise on the complex issues associated with clergy tax law, clergy taxes, clergy compensation and church payroll. Clergy Financial Resources is a valuable resource for clergy, churches and denominations

A well-written handbook provides employees with a clear understanding of their responsibilities. The handbook also serves as a compass for the organization’s policies and procedures. For example, it advises employees what the procedures are for requesting time off or a vacation. It advises employees whom they should contact when they have an unscheduled absence (and what the timing should be). It tells employees whom to go to if they have questions about any of the specific policies in the handbook. The handbook also communicates an employee’s general responsibilities regarding safety, timekeeping, reporting, and so on. By providing this clear, accessible information, handbooks ensure companies continue moving in the right direction.

Learn more about our HR Services

Source:

Clergy Financial Resources

http://www.clergytaxnet.com

Clergy Financial Resources is a national accounting and finance organization serving churches and clergy since 1980. They have an unparalleled tax expertise on the complex issues associated with clergy tax law, clergy taxes, clergy compensation and church payroll. Clergy Financial Resources is a valuable resource for clergy, churches and denominations.

A significant portion of clergy audits include Schedule C and Form 2016. The Schedule C is a one-page tax schedule used by self-employed to report their business income and expenses on their personal federal income tax return. Form 2016 would report ministry related expenses as an employee of the church.

The good news is that according to the IRS’ latest statistics, approximately 75 percent of all personal income tax returns selected for audit are conducted through “correspondence” with the taxpayer. For self-employed business owners, these correspondence audits are usually narrow in scope and limited to providing information on specified types of income or expenses.

IRS correspondence audit could include Schedule C and Form 2106. This audit would request business and ministry vehicle mileage logs, or perhaps supporting documents used to substantiate business travel and/or entertainment expenses and other ministry related expense. The key point to realize in a correspondence audit is that the IRS typically focuses on documentation types of requests and does not inquire into technical tax law authorities, which govern the treatment of income and expense events.

The bad news is that the remaining 25 percent of IRS personal income tax audits fall into the more extensive “field” audit category. Field audits involve situations where the IRS comes to the taxpayer’s home, place of business or other designated location for an extended period. The purpose of the audit will be much broader than a correspondence audit and likely require significantly more time, effort and tax expertise.

When clergy become subject to a correspondence or field audit, it is highly recommended that they contact Clergy Financial Resources. While it may not be necessary for the clergy tax professional to conduct all aspects of audit, engaging a tax professional offers numerous advantages, such as the following:

1. Gauging the scope of the audit or, if the scope is unclear, provide the initial contact with the IRS auditor to clarify and possibly influence the scope of the audit.
2. Assisting in quantifying areas of potential tax exposure and, where advisable, become proactive in disclosing errors to avoid the imposition of IRS penalties;
3. Actively asserting reasons why the business owner’s treatment of income and deductions is proper under the law.
4. Identifying areas of missed opportunities where deductions were inadvertently omitted or, in the alternative, capable of being accelerated.
5. Determining whether the IRS auditor’s requests are unreasonable and worthy of being curtailed.

Further, depending on the facts, the IRS may also impose discretionary penalties, the most frequent of which is the 20 percent “negligence” penalty. Although most penalties can be waived if the mistakes are attributable to reasonable causes, consideration should be given to the incremental costs to fight a penalty waiver battle, which could be in excess of the penalty amount itself.

IRS audits are never fun. But if you maintains reasonably accurate records and treats the auditor with professionalism, the pain and disruption can be minimized.

Source:

Clergy Financial Resources

http://www.clergytaxnet.com

Clergy Financial Resources is a national accounting and finance organization serving churches and clergy since 1980. They have an unparalleled tax expertise on the complex issues associated with clergy tax law, clergy taxes, clergy compensation and church payroll. Clergy Financial Resources is a valuable resource for clergy, churches and denominations.

1) Introduces Employees to the Organization’s Culture, Mission, and Values

2) Communicates to Employees What is Expected of Them

3) Educates Employees About What They Can Expect From Management and Leadership

4) Helps Ensure Key Church Policies are Clearly and Consistently Communicated

5) Showcases the Benefits the Organization Offers

6) Ensures Compliance with Federal and State Laws

7) Helps Defend Against Employee Claims

8) Lets Employees Know Where to Turn for Help

Enroll in the Church HR Support Center for a customized church employee handbook.

 

IRS Clarifies Individual Health Plan Premium Reimbursements

The IRS recently issued a notice that provides transitional relief to churches who provide reimbursements for their employees to purchase individual health insurance.
Prior to this latest guidance, any reimbursed premiums and other medical reimbursement arrangements would be included as taxable income in 2014. As with all things IRS-related, the rules surrounding health care reform can get a little complicated. The Internal Revenue Service has now issued new guidance that provides ACA relief which is highlighted below. Churches will need to conduct a review as and stop any individual premium reimbursements by June 30, 2015.

·         Employers can reimburse premiums pre-tax through June 30, 2015.
·         By June 30, 2015, employers must stop paying for or reimbursing individual health insurance unless they have just one employee. After that date, ACA penalties will be incurred.
·         If employers have only one employee, they can continue reimbursing healthcare premiums on a pre-tax basis.
·         Employers who have more than one employee and are not in a bona fide group plan, but want to continue to help pay insurance costs, need to change the way this is done after June 30, 2015, to avoid penalties. The way to do this is to increase salaries to cover the health care premiums without stipulating the salary increase for that use.
·         Employers should consider amending their 2014 payroll reports and W-2s to treat the premiums as non-taxable. 

Source:

Clergy Financial Resources

http://www.clergytaxnet.com

Clergy Financial Resources is a national accounting and finance organization serving churches and clergy since 1980. They have an unparalleled tax expertise on the complex issues associated with clergy tax law, clergy taxes, clergy compensation and church payroll. Clergy Financial Resources is a valuable resource for clergy, churches and denominations.

Some, but not all, documents used for the I-9 will need to be reverified upon expiration. Specifically, employees with temporary work authorizations will need to have their eligibility to work in the United States reverified.

Employees with temporary work authorizations must indicate their employment authorization expiration date under Section 1 of the I-9 form, and employers will need to reverify employment eligibility on or before that expiration date by completing either Section 3 of the I-9 form or by completing a new I-9 form. If the employment authorization expiration date provided by your employee in Section 1 does not match the document expiration date recorded by you under List A or List C in Section 2, the earlier date should be used to determine when reverification is necessary.

If this process is not completed by the expiration date, the employee must not continue to work and should be put on leave of absence or terminated, in accordance with company policy. We recommend letting employees know at least 90 days ahead of time that they will need to provide documentation for reverification.

Some documents will not need reverification upon expiration. Employers should not reverify:
• U.S. citizens
• Lawful permanent residents (LPRs) who presented a Permanent Resident Card (Form I-551) for Section 2
• List B documents (e.g. driver’s license)

Note that you are not required to update Form I-9 when an employee changes his or her name (e.g. when getting married or divorced) and Form I-9 regulations do not require that an employee present you with documentation to show that the employee has changed his or her name. Nonetheless, USCIS recommends that you maintain correct information on Form I-9 and note any name changes in Section 3. Additionally, it is a best practice to require the employee to show documentation that they have legally changed their name and made the change with the Social Security Administration prior to making any name changes in your HR or Payroll systems. The safest way to do this is to ask the employee to present his or her new Social Security Card. This proactively avoids the potential for social security “no match” letters.

Federal contractors who are subject to the FAR E-Verify clause and who choose to verify existing employees by updating existing Forms I-9 must follow special rules pertaining to when they are required to complete new Forms I-9. Under this option, a new Form I-9 must be completed when an employee changes his or her name.

Enroll in the Church HR Support Center for more great HR resources.

Article Courtesy of HR Support Center.

Legal Disclaimer: The HR Support Center is not engaged in the practice of law. This response should not be relied upon or construed as legal advice, and does not create an attorney-client relationship. If you have legal questions concerning your situation or the information you have obtained, you should consult with a licensed attorney. The Company can in no way be held liable for any actions taken as a result of this correspondence.

According to the Department of Homeland Security, I-9 forms are only required for employees, not unpaid interns. When taking on an unpaid intern, however, we urge churches to take extra care. The US Department of Labor has clear guidelines as to what makes an unpaid intern, and if all conditions are not met, the intern must be considered an employee and paid at least minimum wage plus overtime as well as complete an I-9 form.

The conditions that must be met to properly classify a worker as an unpaid intern are as follows:
1. The training the intern receives is similar to what one learns in a vocational school or academic institution;
2. The training is for the benefit of the intern;
3. The intern does not displace regular employees, rather the intern works under their close supervision;
4. The employer derives no immediate advantage from the work of the intern and on occasion business operations may actually be impeded;
5. The intern is not promised a job at the end of the training; and
6. The employer and intern both understand the intern is not entitled to wages for the training period.

So long as all of these conditions are met, there is no need to complete the I-9 form for the unpaid intern.

Enroll in the Church HR Support Center for more great HR resources.

Article Courtesy of HR Support Center.

Legal Disclaimer: The HR Support Center is not engaged in the practice of law. This response should not be relied upon or construed as legal advice, and does not create an attorney-client relationship. If you have legal questions concerning your situation or the information you have obtained, you should consult with a licensed attorney. The Company can in no way be held liable for any actions taken as a result of this correspondence.