{"id":8080,"date":"2017-05-25T08:00:19","date_gmt":"2017-05-25T13:00:19","guid":{"rendered":"http:\/\/taxprocenter.proconnect.intuit.com\/?p=8080"},"modified":"2019-06-18T10:12:06","modified_gmt":"2019-06-18T15:12:06","slug":"new-tax-developments-for-2017-and-beyond","status":"publish","type":"post","link":"https:\/\/accountants.intuit.com\/taxprocenter\/tax-law-and-news\/new-tax-developments-for-2017-and-beyond\/","title":{"rendered":"New Tax Developments for 2017 and Beyond"},"content":{"rendered":"

With a new Republican administration and Congress ensconced in Washington, it is unclear what the tax landscape will look like by the end of 2017. So, short of hauling out a crystal ball, let\u2019s take a look at some recent tax developments that you and your clients can plan for over the remainder of the year and beyond.<\/p>\n

Small Employer HRAs<\/strong><\/p>\n

Tax law changes were few and far between during the lame duck session of Congress. However, one law change is noteworthy for your small business clients and their employees. The law authorizes the creation of qualified small employer health reimbursement arrangements (QSEHRAs) to provide reimbursements for medical care for employees and their family members.<\/p>\n

Under a longstanding IRS ruling, an employer\u2019s payments or reimbursements for employees\u2019 substantiated premiums for non-employer-sponsored health insurance can be excluded from employees\u2019 incomes [IRC Sec. 106; Rev. Rul. 61-146<\/a>]. However, IRS guidance makes it clear that these seemingly simple plans have one big complication. The plans are considered employer-provided group health plans subject to the full panoply of group health plan requirements, such as the prohibition on annual limits and preventive coverage requirements. What\u2019s more, because such plans cannot meet those requirements, sponsoring employers face potential excise taxes of $100 per day per employee [Notice 2013-54<\/a>].<\/p>\n

Effective for plan years beginning after 2016, the new law creates an exception from the group health plan requirements for QSEHRAs [IRC Sec. 9831(d) as added by P.L. 114-255].<\/p>\n

An employer is generally eligible to set up a QSEHRA if it employed fewer than 50 employees in the prior year and does not offer group health plan coverage to its employees. The plan must be funded solely by the employer and, with some exceptions, must provide benefits on the same terms and conditions to all employees.<\/p>\n

Payments for reimbursements from a QSEHRA are generally excludable from employees\u2019 incomes as employer-provided medical coverage. However, payments or reimbursements cannot exceed $4,950 for an individual employee or $10,000 for an employee and family members. In addition, payments or reimbursements to or for an individual are not excludable from income unless the individual has minimum essential health coverage.<\/p>\n

An employee\u2019s QSEHRA benefit for a year must be separately reported on the employee\u2019s Form W-2. Code FF has been added for box 12 of the 2017 Form W-2 to report the QSEHRA benefits.<\/p>\n

Severance Paid to Combat Veterans<\/strong><\/p>\n

Another new law change made by the Combat-Injured Veterans Tax Fairness Act (P.L. 114-292) will allow combat-injured veterans to recover income taxes that were improperly collected by the Department of Defense (DOD) on certain disability payments. The DOD is directed to identify severance payments made after Jan. 17, 1991, from which income tax was improperly withheld and to notify affected veterans. The law extends the normal three-year period for filing a refund claim to the date that is one year after the DOD provides an affected veteran with notice of the improper withholding.<\/p>\n

Unextended Extenders<\/strong><\/p>\n

Also noteworthy is what the 114th Congress didn\u2019t do before adjourning for the last time in January. Lawmakers left without passing legislation to extend any of 35 provisions that expired at the end of 2016. For individual taxpayers, these unextended \u201cextenders\u201d include:<\/p>\n