There is still not a great deal of federal tax news to report given the extensive time spent by Congress during late September and much of October in addressing the funding of the government's current operations and also extending the nation's borrowing authority. The short term resolution of these two areas of concern is discussed in greater detail below.
Government Shutdown, Debt Ceiling Deal Includes One Tax Provision - On October 16, 2013, the Senate by a vote of 81-18 and the House of Representatives by a vote of 285-144 approved H.R. 2775. This bill represented a last minute agreement between the Republicans and the Democrats to fund the U.S. government through January 15, 2014, and to extend the government's borrowing authority through February 7, 2014.
Required Future Negotiations. A separate part of the agreement between the Republicans and the Democrats in the Senate, but not included in H.R. 2775, will create a framework for formal budget negotiations between the two parties in an effort to facilitate the vote on government funding now required to occur by January 15, 2014. Under the agreement, these negotiations are scheduled to conclude by December 13, 2013, with negotiators charged with making recommendations to the Congress for long-term budget and deficit reduction goals satisfactory to both parties.
The One Federal Tax Change. The one federal tax change included in H.R. 2775 involved the imposition of a new requirement on the ability of people to receive premium assistance tax credits under Section 1401 of the Patient Protection and Affordable Care Act (ACA). This change in ACA requires the Secretary of Health and Human Services (HHS) to develop procedures to ensure that the State Marketplace Exchanges created under ACA will effectively verify that individuals applying for these tax credits, as well as other available and cost-sharing benefits, are in fact eligible for them. The HHS Secretary is required to report to Congress by January 1, 2014 on the procedures to be used by the Exchanges in verifying this information. By July 1, 2014, the HHS Inspector General is required to submit a report to Congress regarding the effectiveness of these procedures for preventing the submission of inaccurate or fraudulent information by those individuals applying for these tax credits.
To be eligible for the tax credit, a taxpayer must (1) have household income between 100% and 400% of the federal poverty line amount for his or her family size, (2) not be claimed as a dependent by another taxpayer, (3) if married, file a joint return, and (4) not be eligible for "minimum essential coverage" under a health plan sponsored by the taxpayer's employer that is considered "affordable" and which provides "minimum value".
Tax Items Dropped From H.R. 2775. Not included in H.R. 2775 are the following provisions which had been proposed by several members of Congress:
For additional information regarding this topic, please contact your local UHY LLP professional.