EO Update April 29, 2010
Issue Number: 2010-10
Inside This Issue:
- Don't Throw Away Your Tax-Exempt Status 2010
- Tax-Free Employer Provided Health Insurance for Children Up to Age 27
- COBRA Subsidy Extended to May 31
- New Form 3115 Now Available
- Workshops for Small and Mid-Sized 501(c)(3) Organizations
- 2010 National Tax Forums
1. Don't Throw Away Your Tax-Exempt Status 2010
Most tax-exempt organizations, other than churches, must file an annual return or notice with the IRS. If an organization does not file as required for three consecutive years, the law provides that it automatically loses its tax-exempt status. The IRS has posted new FAQs and an audio interview discussing the automatic revocation of tax-exempt status for failure to file on IRS.gov.
2. Tax-Free Employer Provided Health Care for Children Up to Age 27
As a result of changes made by the recently enacted Affordable Care Act, health coverage provided for an employee's children under 27 years of age is now generally tax-free to the employee, effective March 30, 2010.
The Internal Revenue Service announced that these changes immediately allow employers with cafeteria plans –– plans that allow employees to choose from a menu of tax-free benefit options and cash or taxable benefits –– to permit employees to begin making pre-tax contributions to pay for this expanded benefit.
IRS Notice 2010-38 explains these changes and provides further guidance to employers, employees, health insurers and other interested taxpayers.
3. COBRA Subsidy Extended to May 31
The American Recovery and Reinvestment Act (ARRA) established a 65 percent subsidy on COBRA health insurance premiums to help workers who lost their jobs as a result of the recession maintain their employer sponsored health insurance.
The Continuing Extension Act of 2010, enacted April 15, reinstated the ARRA COBRA subsidy, which had expired on March 31. As a result, workers who are involuntarily terminated from employment between Sept. 1, 2008 and May 31, 2010, may be eligible for a 65-percent subsidy of their COBRA premiums for a period of up to 15 months.
Employers, including tax-exempt organizations, other than churches and some religious organizations, must provide COBRA coverage to eligible individuals who pay 35 percent of the COBRA premium. Employers are reimbursed for the other 65 percent by claiming a credit for the subsidy on their Form 941, Employers QUARTERLY Federal Tax Return, or Form 944, Employer’s ANNUAL Federal Tax Return. Tax-exempt employers are reminded to maintain supporting documentation for the claimed credit. Read more about the COBRA subsidy extension at IRS.gov.
4. Revised Form 3115 Now Available
Announcement 2010-32 informs exempt organizations and practitioners that the IRS has revised Form 3115, Application for Change in Accounting Method, and its instructions. The Form 3115 (Rev. December 2009) replaces the December 2003 version. This announcement also provides a transition period and transition guidance.
5. Workshops for Small and Mid-Sized 501(c)(3) Organizations
Register now to attend our popular workshop for small and mid-sized 501(c)(3) organizations. This introductory one-day workshop, designed for administrators or volunteers responsible for an organization's tax compliance, will be held in Seattle, WA (May 11-13) and in the Washington, DC area (May 25-27).
6. 2010 National Tax Forums
Register now for the 2010 National Tax Forums to be presented in six locations around the country this summer. Attend three full days of workshops and get the latest information from IRS leadership and experts in the fields of tax law, compliance and ethics. Enjoy networking opportunities, earn CPE credits, and hear about the latest products and services for tax professionals.
Exempt Organizations will present a new seminar, Charities and their Volunteers: Working Together to Help the Public. In addition, several sessions of the popular EO Form 990 workshop will be presented at each tax forum location. This year the focus of this workshop is: Top 10 Things You Need to Know about the Form 990.