WIPP Policy Briefing Week of November 17, 2014
Monday, November 24, 2014
Policy Briefing Week of Nov 17
Labor Department Issues Further Guidance on HRA/HSA Health Insurance Plans
Business owners using Health Reimbursement Arrangements (HRAs) or Health Flexible Spending Arrangements (FSAs) should take note of a recently issued FAQ by the Department of Labor on these types of company benefits.
This release makes clear that reimbursing health insurance premiums to employees purchasing individual insurance, a benefit option used by many small businesses, is not allowed on either a pre-tax or post-tax basis. While some vendors continue to offer this solution, business owners are strongly encouraged to reach out to a health insurance broker, CPA, and/or qualified attorney with any questions.
Penalties for violating this provision are steep. WIPP is working with Congress and the Administration on addressing this issue.
In Tax Negotiations, 1st Round Winners Picked
Drumroll please...Congressional negotiators agreed on their first four tax breaks to be extended. The winners are:
Permanent extension of the research and development tax credit
Deduction of sales tax for states with no income tax
Makes permanent bonus depreciation tax deduction, allowing business to deduct more investments immediately
Permanent extension of deducting college tuition costs
A larger agreement on “Tax Extenders” -- the 50+ tax breaks that expired in 2013 -- must be completed by the end of the year to allow businesses and individual to claim them for 2014. On the table are two questions: which tax breaks to keep and for how long?
The House favors fewer tax breaks while making them permanent, while the Senate would prefer to extend nearly all of the credits and deductions for a limited time period of two years. Democrats also want a permanent extension of the earned income tax credit. Any compromise must come soon for tax breaks to help business owners this year. Those retroactive 2014 extenders must be passed by Dec. 31.
President’s Executive Order on Immigration Includes Entrepreneurs
After weeks of speculation, President Obama issued executive action changing immigration enforcement, increasing border protection, and expanding deferred action for nearly five million undocumented individuals living in the country. Beyond the headlines and Congressional bickering, the new order contains provisions for immigrant entrepreneurs.
The executive action, laid out in a memo from Department of Homeland Security, will expand the Optional Practical Training (OPT) program, which allows foreign graduates of U.S. colleges and universities to remain and work for up to 29 months in their field of study upon graduation. The OPT program is intended for students pursuing STEM-related degrees, both at the undergraduate and graduate levels.
For immigrant entrepreneurs, the memo will require Citizen and Immigration Services (CIS) to clarify the steps immigrant entrepreneurs must take to obtain a national interest waiver, which allows immigrants to self-petition for green cards without an employer sponsor. It also includes a new program to allow CIS to review, on a case-by-case basis, applications for inventors, researchers and founders of startup companies who have been “awarded substantial U.S. investor financing or otherwise hold the promise of innovation and job creation through the development of new technologies or the pursuit of cutting-edge research.”
The wide-ranging action will begin taking effect on January 5, 2015 and will remain in force until Congress enacts comprehensive immigration reform or a future president rescinds the order.
Money Matters: Here We Go Again
Congressional leaders are still unsure how to move forward on FY2015 government funding, as time runs out ahead of the December 11 deadline. While most Members of Congress are home for Thanksgiving festivities, appropriators will be toiling away drafting spending bills for Congress to consider when they return next week.
There’s just one wrinkle: new plans and proposals seem to change daily. Up until the President’s immigration announcement last week, Congressional appropriators had been hoping to avoid another continuing resolution (CR) by moving an omnibus funding bill. One of the current plans would fund federal agencies for the remainder of FY2015, while agencies tasked with carrying out the President’s executive action on immigration would be funded only incrementally. This new plan follows the “rescission” proposal, which was the topic du jour last week. Under that method, appropriators would have provided FY2015 funding levels to all departments through an omnibus, then decreased funding for agencies involved in implementing immigration laws.