As the year begins to wind down, employers should remember to have on their “to do” list a review of any benefits which need to be reported as imputed income. In general, the benefits that an employer provides to its employees are excluded from an employee’s taxable income. However, for employer-sponsored group term life insurance, there are some exceptions to this taxability exclusion. 
The Internal Revenue Code (IRC) details the tax implications for employer-sponsored group term life insurance, excluding the cost of the first $50,000 in employer provided coverage. The cost of any excess coverage is subject to federal income and FICA (Social Security and Medicare) taxes. “Cost” as referred to here does not mean the premium paid by the employer but the cost determined under the IRC’s Table I rates [at right]. The “cost” of the coverage added to an employee’s gross income is commonly referred to as “imputed income.” The “cost” is usually included in one of the employee’s last paychecks for the year. The employer withholds the employee’s portion of FICA taxes and pays its FICA share. This information is also reported on the employee’s W-2. There are several other instances, besides the employer provided coverage exceeding a benefit in the amount of $50,000, which would require additional taxable income to the employee. Employer-sponsored voluntary life coverage. If an employee is paying the entire cost of the life coverage on an after-tax basis, the coverage may still be considered partly-employer provided. This would occur if an employee’s post-tax contributions are less than the value of the excess coverage calculated using the IRS’ table of rates. Employer-sponsored voluntary life insurance paid for with pre-tax dollars under a Section 125 plan. If an employee pays for coverage using pre-tax dollars, the coverage is treated, for tax purposes, as if the employer paid those premiums. Thus, the costs for any amounts that exceed $50,000 must be included as income. Employers must include in their employees’ wages the cost of group-term life insurance beyond $50,000 worth of coverage, reduced by the amount the employee paid toward the insurance on an after-tax basis. The $50,000 includes any employer provided group term life benefit and any pre-tax life coverage for which the employee pays. Also, remember to review any dependent life insurance coverage offered. Many employers are under the assumption that life insurance provided for dependents is taxed in the same manner as employee life insurance. It is not. Employer-provided dependent life insurance is taxable unless the amount of the insurance is less than $2,000. For coverage exceeding $2,000 the full amount of the dependent life insurance is taxable, including the first $2,000. As employers begin to review information for its employees’ W-2s it should remember to consider imputed income for excess life insurance. An employer should address any concerns regarding group-term life insurance and imputed income with its tax advisor.
This is the second in a series of posts recognizing and thanking all of the valuable contributors that helped make the 2017 Chamber Holiday Open House a successful event once again. It is the continued support of these businesses, organizations and individuals that helps the Chamber fulfill its mission of offering programs, benefits and events to its members, giving them a stronger voice and advocacy and being involved in more activities and initiatives in our communities.
Thank you to the Angel Sponsors at this year’s event. Angel Sponsors are Chamber members in the food, beverage or catering businesses that serve samples of their own products at the Holiday Open House. Angel Sponsors always add a nice element to the event with their tasty food and drink, and we hope that all of the attendees that had a chance to sample their offerings and liked them will patronize these businesses over the next year. For those that may have enjoyed a particular food sample but can’t remember what it was or which Angel Sponsor it might have been from, each sponsor’s menu from the Holiday Open House is also listed.
Special thanks also goes out to the five first-time Angel Sponsors (noted below), including four of which that joined the Chamber over the last 12 months since last year’s Holiday Open House.
Freas Farm Winery (first-time Angel Sponsor)
1752 (Pinot Grigio), One Year In (Chardonnay), Vida’s New Blend (Vidal), Three Turns (Dry Red), Joy (Semi-Sweet Red), Queen of Tarts (Cranberry))
Frosty Valley Country Club
Buffalo chicken dip, pork carnitas with pita break for dipping, chicken scapula
(Note: these menu offerings will be served at Frosty Valley’s new restaurant, the Iron Fork, which will open in the spring)
The Farmhouse & Brewing Co. at Turkey Hill
Pumpkin ravioli with amaretto cream, buffalo chicken dip, samples of beer
Just a Drop Essential Oil (first-time Angel Sponsor and 2017 new member)
Pumpkin, lemon cream cheese, hot chocolate peppermint and spearmint chocolate chip cookies
Mountainside Coffee/Tulpehocken Mountain Spring Water (first-time Angel Sponsor and 2017 new member)
Samples of Mountainside coffee and tea K-cups and bottled Tulpehocken Mountain Spring Water
The Nickle Plate Bar & Grill at Knoebels Three Ponds Golf Course (first-time Angel Sponsor and 2017 new member)
Beef n’ cheddar sliders, pulled pork sliders, mini crab cakes, mini salmon cakes
Steph’s Subs
Assorted cold subs
T.K. Witch (first-time Angel Sponsor and 2017 new member)
Assorted dessert bites
This is the first in a series of posts recognizing and thanking all of the valuable contributors that helped make the 2017 Chamber Holiday Open House a successful event once again. It is the continued support of these businesses, organizations and individuals that helps the Chamber fulfill its mission of offering programs, benefits and events to its members, giving them a stronger voice and advocacy and being involved in more activities and initiatives in our communities.
Thanks to the major sponsors of this year’s Holiday Open House.
Event Sponsor
Geisinger Bloomsburg Hospital
Hospitality Sponsors
M&T Bank
Gold Star Sponsors
Bodnar Sales & Service
Red Reindeer Sponsors
BIDA
Service 1st Federal Credit Union
Green Tree Sponsors
ChamberChoice/On Demand Energy
Derr, Pursel, Luschas & Naparsteck, LLP
The Chamber’s Board of Directors is recommending a slate of candidates to serve on the Board beginning April, 2018. Members will vote on nominations at the Annual Meeting, sponsored by PPL Electric Utilities, which is scheduled for Thursday, Feb. 8 at Rolling Pines Golf Course. Nominated to serve are:
Three-year term:
Dan Knorr, II, Bloomsburg University
Mary Radle, Key Partners Realty
Denise Stone, Geisinger
Jeff Whitenight, First Columbia Bank
One-year term:
Donna Coombs, GordnerCoombs Insurance
Sam Haulman, Service Electric
Chris Stamatedes, PPL Electric Utilities
Following the election of Board members, the Board will elect officers. Nominated to serve are:
Board Chair (two-year term) – Karen Wood, Service 1st Federal Credit Union
Vice Chair – Dan Knorr, II, Bloomsburg University
Treasurer – Denise Stone, Geisinger
Immediate Past Chair – Mark Gardner, M&T Bank
President – Fred Gaffney
The Board Chair also has three, one-year appointments. Being recommended are:
Jim Micklow, Press Enterprise
Holly Morrison, Central Susquehanna Community Foundation
Tom Neal, Berwick Hospital Center
In accordance with the By-Laws, any 15 members may nominate an alternate ticket, or tickets, by posting the same, over their signatures, at the Chamber office not later than five days prior to the Annual Meeting.
From PA Chamber of Business & Industry
Last week, the House failed to pass legislation that would have prevented public employers from using taxpayer-funded payroll systems to automatically deduct money for campaign contributions or other political activity from employees’ paychecks.
Senate Bill 166 – which was defeated in a 90-102 vote on final passage – earned the support of the PA Chamber as a ‘good government’ measure, especially in light of the arrests and convictions of elected officials in recent history which have shown that a clear line needs to exist to avoid any use of taxpayer resources for political activity. Under current law, state and local governments can collect political campaign funds from the paychecks of government employees on behalf of public sector unions, which blurs the line between official government business and political activity. By removing the government from serving as the official collector of money for political purposes, S.B. 166 would have helped brighten that line and brought clarity to the process. While the legislation faced headwinds from some organized labor groups that are intent on keeping the status quo, it passed the Senate earlier this year.
Following the failed vote, PA Chamber President Gene Barr issued a statement expressing disappointment that the General Assembly didn’t get the bill to the governor’s desk (although the Wolf administration had already said the bill would be vetoed if it reached that point). “For far too long, newspaper headlines across the Commonwealth have highlighted criminal corruption cases against state and local officials for misusing government resources for political gain,” Barr said. “It is disheartening that this sorely needed good government bill didn’t cross the finish line.”
A final tax reform package is expected to be on President Trump’s desk as early as Wednesday, Dec. 20. Following the passage of differing bills in the House and Senate, a conference committee with leaders from both chambers was formed to come to reach a compromise. A representative of the U.S. Chamber of Commerce told local chambers that the final legislation provides additional benefits to small businesses and middle class taxpayers.
The Tax Cuts and Jobs Act conference report was filed on Friday evening, Dec. 15. A few technical changes had to be made prior to the Senate vote, which then needed to be confirmed in the House. Here is an executive summary prepared by the House Ways and Means and Senate Finance Committees.
A group of engaged individuals from Chamber member organizations enjoyed a presentation from Tina Welch of Welch Performance Consulting on different generations in the workplace last Tuesday, Dec. 12, at Wesley United Methodist Church. Chamber Learn at Lunches are sponsored by PPL Electric Utilities and this specific Learn at Lunch was also co-sponsored by PA CareerLink Columbia/Montour Counties.
Welch, a former HR executive who now runs her own consulting business, began the presentation by noting that she did not have any magic bullets that would automatically solve generational problems in the workplace. However, her presentation was done with the hope that making organizational leaders and others aware of the various differences in generations and what each is able to offer in terms of strengths can provide opportunities for HR and other leaders to implement strategies that can overcome generational barriers.
Why is this important for any organization that has multiple generations of individuals working for it? Take these statistics for instance.
– The proportion of working 65-69 year-olds in the U.S. has risen from nearly 18% in 1985 to 32% in 2011.
– During each quarter of 2016, over a quarter million Americans turned 65.
– Millennials will make up the majority of the workforce by 2025.
– Millennials have passed Baby Boomers as the largest generational group in the workplace.
– Fewer than 1 in 3 American workers are committed to the success of their organization and are engaged in their work
– 74% of Americans expect to work even after “retirement.”
– 68% of corporate recruiters say that it is difficult for their organizations to manage millennials
With those statistics in mind, and with turnover costing any employer, large or small, approximately 6-9 months of the lost employee’s salary, it is more critical than ever that organizational leaders understand the benefits, values and needs that each generation and individual brings to the workplace and be able to apply specific strategies to encourage communication and collaboration across the generations as well as to diffuse conflicts.
Attendees were given a handout that in general terms, defines the characteristics and stereotypes as well as the workplace needs of all four generations — Traditionalists (born 1922-45), Baby Boomers (born 1946-64), Generation X (born 1965-1979) and Millennials (born 1980-2010), as well as those of “cuspers,” which are those born near the end or beginning of a specific generation. This is especially important for Xennials, a micro generation born during the cusp years of Generation X and Millennials (1977-1983). This group often shows characteristics and stereotypes of and has similar workplace needs as those usually attributed to one or both of Generation X and Millennials.
At the end of the workshop, Welch asked the attendees to name one thing they could do immediately when they returned to their workplaces to help facilitate better inter-generational understanding and cooperation, while allowing for the fact that some workplace policies obviously can’t be changed immediately or at all. Some of the responses included taking a look at the standard employee orientation presentation, keeping notes on individuals such as board members and organizational volunteers in order to be able to best communicate and/or facilitate activities with them, as well as taking a look at a company cell phone policy.
From PA Chamber of Business & Industry
The House passed in a nearly unanimous (183-4) vote last week legislation that many lawmakers called a “necessary compromise” to help address the state Unemployment Compensation benefit system costs for operational and system upgrades.
House Bill 1915 was crafted with bipartisan support following the misappropriation of UC system funds over several years as it related to the Service and Infrastructure Improvement Fund, which resulted in the governor’s furlough last year of UC center call workers while debate continued over the future funding of SIIF and the UC system generally.
The bill, which now awaits consideration in the Senate, would provide $115.2 million in additional funding to the UC benefits system over the next four years. It would transfer to SIIF $30 million in 2018, $25 million in 2019, $20 million in 2020 and $10 million in 2021; with additional monies being transferred from SIIF to the UC benefit modernization project through 2020.
The legislation also stipulates expected outcomes from the modernization project, which are all focused on eventually ending the Department of Labor and Industry’s reliance on SIIF dollars for the operations of the UC benefits system. It is noteworthy that many involved in the creation of SIIF contend it was never intended to be a permanent program, and was established to temporarily supplement federal funding through 2016 to upgrade technology infrastructure for the UC system.
While most House Democrats voted for H.B. 1915, the four members of that caucus who voted against the bill did so on the grounds that it didn’t provide enough money. According to a story in Capitolwire¸ Rep. Pete Schweyer, D-Lehigh, argued that the funding supplied by the bill wouldn’t be enough to reopen the UC call center in Allentown, which the governor closed last December.
House Bill 1915 heads to the state Senate for consideration.
From ChamberChoice
Recently it was communicated that there were Internal Revenue Service (IRS) indications of intent to begin enforcement of the Affordable Care Act’s (ACA) “employer mandate.” However, as of Nov. 2, 2017, it’s official. On that date, the IRS issued its proposed assessment letter (Letter 226J) it will use when notifying employers of their potential liability for an employer shared responsibility payment (ESRP). The assessment letter relates to any potential liability for 2015.
Background
Under the ACA’s employer mandate, an Applicable Large Employer (ALE) is required to offer its full-time employees and dependents minimum essential coverage. That coverage must also provide minimum value and be affordable for the full-time employee. If the employer does not meet this responsibility, and a full-time employee receives a premium tax credit for health insurance coverage purchased on the Marketplace, then the employer may be assessed a penalty. Employers have an obligation to report offers of coverage using Forms 1095-C and 1094-C. The IRS uses information from these forms, in conjunction with information from an employee’s tax return, in determining whether an employer has an ESRP liability.
What Employers Need to Know
The employer mandate was effective as of Jan. 1, 2015. However, prior to that date, there were notices and guidelines issued by the regulatory agencies providing delays, clarifications and “transitional relief.” Needless to say, there was considerable confusion for many employers. Below are some issues an employer should consider when it comes to an IRS penalty assessment letter.
• An employer has 30 days to respond. Advise any mail-room employees to be on the lookout for any correspondence from the Department of Treasury, Internal Revenue Service and ensure it is delivered to the appropriate person. Discussions should be held with any affiliated companies or subsidiaries as to how the correspondence will be handled.
• Gather copies of 2015 Forms 1095-C and 1094-C. Initial assessment letters relate to 2015. In order to properly respond, an employer will need to review and compare information in the letter against what the employer filed. Employers should be aware of, and have documentation to support, any application of transition relief (such as non-calendar year plans) or safe harbors. Documentation can include payroll records, waiver forms, enrollment information, variable hour employee designations, and measurement/stability period information. Remember, the assessments may not be correct.
• Assessments are on a month-by-month basis. The responsibility payments are calculated monthly and based on whether the employer failed to offer minimum coverage or the coverage was not affordable. The IRS will include a summary table (Form 14765) with the assessment letter. The summary will list the employees who received a premium tax credit triggering the penalty as well as a monthly break-down of the penalty.
• Response form. Included with the assessment letter will be a response form (Form 14764) an employer uses to respond to the IRS. The form provides an opportunity for the employer to agree or disagree with the assessment. If disagreeing, an employer must also provide a statement, in addition to the response form, outlining its reasons. An employer can also provide additional information supporting its disagreement. However, it is of the utmost importance that the employer respond within the time frame provided by the IRS. Failure to respond results in an automatic penalty assessment.
Conclusion
The IRS has started to enforce the ACA’s employer mandate and is issuing notices to employers who may owe a penalty for 2015. Employers should read the notice carefully as it contains detailed instructions on how to respond and make any required payment. The assessment may not be correct due to multiple reasons, such as an employee receiving an unqualified premium tax credit. An employer disagreeing with the assessment should have documentation supporting its offers of coverage and affordability as well as its reporting information.
From PA Chamber of Business & Industry
The PA Chamber recently sent two communications to lawmakers urging support for S.B. 936, which would establish a prescription drug formulary for injured workers in the Commonwealth.
A group memo was sent to House lawmakers from a broad coalition including hospitals, pharmacists, addiction treatment professionals, healthcare providers, local governments, school districts and other business advocacy groups, among others. The memo explained that a prescription drug formulary would help streamline medication prescriptions, which would help patients avoid overuse; while also helping to ensure the quality of outside entities tasked with evaluating treatment decisions. This reform is especially critical in light of the state’s prescription drug and opioid abuse epidemic – it would offer a legislative remedy to help mitigate the crisis as it relates to injured workers.
A letter signed by the PA Chamber and the leaders of dozens of local chambers of commerce statewide was also sent to the General Assembly in recent weeks. It stresses in part that S.B. 936 (and H.B. 18, similar legislation introduced in the House) is critically important, particularly in light of a recent study which ranked Pennsylvania third among 25 states for opioid abuse among injured workers, at a level 78 percent higher than the median state. The letter also noted that other states with formularies have experienced success in reducing the number of opioid-dependent WC patients – specifically mentioning Ohio, which was able to cut the number of opioid-dependent patients in half just three years after adopting its formulary in 2011.
“Formularies are standard in regular and publicly-funded health insurance to help ensure appropriate patient care, address over-prescribing of medication and premature or inappropriate prescribing of opioids,” the chambers of commerce letter stated. “Both of these reforms would improve outcomes for injured workers and continue the critical work of lawmakers and the Wolf Administration to combat the prescription drug and opioid epidemic.”
Senate Bill 936 awaits consideration in the House Labor and Industry Committee.
The Columbia Montour Chamber has taken an official position of being in favor of this legislation, and was one of the many chambers of commerce included in the aforementioned group memo sent to House lawmakers.