IRS puts damper on prepaying 2018 property taxes,
Court rescinds EEOC wellness regs…for 2019,
Oregon may jump on “Let’s tax health insurance!” bandwagon
We have a mixed bag for you in this last blog post of 2017: A pair of tax issues (one federal, one state), and a return to the sad saga of the Equal Employment Opportunity Commission’s (EEOC) 2016 wellness regulations.
IRS says, “Not so fast” to prepaying 2018 property taxes
The IRS moved swiftly this week to put a damper on prepaying (in 2017) state and local property taxes for 2018. Many taxpayers sought to make the prepayments because for 2018 and beyond the new tax overhaul bill signed last week by President Trump limits the deductibility, for federal income tax purposes, of state and local income and property tax payments.
The new law allows a federal taxpayer to deduct only the first $10,000 in such payments (see our recent blog post on this topic). Current law permits taxpayers to deduct all of their state and local income and property taxes. Taxpayers hoped to take one last bite at the tax deductibility apple before Jan. 1 by prepaying their 2018 property taxes, so they could deduct all of that payment on their 2017 federal tax returns.
“Not so fast,” the IRS said this week. The IRS announced that prepaying 2018 taxes in 2017, and fully deducting the payment on your 2017 federal tax return, only works if the local taxing authority actually assessed the 2018 tax in 2017.
In short, sending your local taxing authority a check by Dec. 31, 2017, and saying, “Here, please apply this payment to my 2018 taxes when you get around to assessing them,” will not allow you to deduct the payment for the 2017 tax year.
Federal court loses patience with EEOC, rescinds wellness regulations after 2018
Earlier this year a federal trial court scolded the EEOC for violating federal procedural requirements when the commission issued its contested 2016 wellness program regulations. The court nevertheless allowed those regulations to stay in force (and allowed employers to rely on them) pending the commission’s effort to reconsider and reissue them.
The commission’s response – “That’s going to take a while…new regulations won’t be effective until 2021” – didn’t sit well with the court, which earlier this month vacated the 2016 regulations, effective Jan. 1, 2019.
The court’s action leaves employers offering workplace wellness programs in something of a potential bind after 2018. The EEOC regulations are complex and not entirely consistent with wellness program rules under the Affordable Care Act. But the regulations offer employers protection under the Americans with Disabilities Act (ADA) and Genetic Information Nondiscrimination Act (GINA) when offering incentives to employees in exchange for their (and their dependents’) submission to health screenings.
If employers cannot rely on those EEOC regulations for protection after 2018, the door re-opens for employees bent on alleging that employer-sponsored health screenings, in exchange for incentives, violate the ADA and GINA.
Lockton comment: We’re not convinced employers should be terribly concerned about that. The vacating of the EEOC rules for 2019 simply puts employers back in the position they were in before the EEOC issued those rules in 2016. Employers were not hounded by ADA and GINA lawsuits then (and tended to win the challenges that were brought). But employers should continue to ensure their workplace wellness programs are bona fide and not a subterfuge to discriminate on the basis of ADA-protected disabilities or genetic information.
Oregon lets voters decide fate of new tax on health insurance, hospitals
Voters in Oregon will go to the polls in late January to decide the fate of a tax on health insurers and some hospitals. An excellent summary of the initiative, and the views of proponents and opponents, is in this story by Allison Bell.
We mention the initiative because we are seeing more and more of this unhappy trend: cash-strapped states turning to new taxes, typically on health insurers, third-party healthcare claim administrators and healthcare providers, to prop up the states’ Medicaid programs.
Lockton comment: Of course, healthcare providers simply pass the cost of the new taxes on to the self-funded employers and the insurers who pay for healthcare under insurance plans. New taxes on insurers and claims administrators are passed on to employers and purchasers of individual insurance policies. All in all, not happy developments for employers already struggling to supply cost-effective health insurance to their employees.