The IRS Issues Final Rules Requiring EIN Updates • Nine Tips for Deducting Charitable Contributions • Reminder that Self Insurance Plans are Subject to the New Excise Tax Due July, 31, 2013
Final Rules Requiring EIN Updates
Stephen D. Blake, CPA JD EA - Tax Manager
On Friday May 3, 2013, the IRS issued final regulations requiring every person and every entity with an Employer Identification Number ("EIN") to periodically update their information with the IRS. The filing requirements will begin January 1, 2014, to allow the IRS time to issue new forms and instructions for the new filing requirements. However, the regulations do not provide for how often such filings must be made or when they will be due. The regulations indicate that the dates and timing will be in the instructions to the new forms. So we do not know yet what the new form will require, how often it will have to be filed, or when it will be due but we know that everyone with an EIN will be required to file an updated information return periodically.
Nine Tips for Deducting Charitable Contributions
Stephen D. Blake, CPA JD EA - Tax Manager
The IRS recently issued Tax Tip 2013-45, its annual advice on ensuring your charitable contributions are properly documented in order to help lower your tax bill.
- If you want a tax deduction, you must donate to a qualified charitable organization. You cannot deduct contributions you make to either an individual, a political organization or a political candidate.
- You must file Form 1040 and itemize your deductions on Schedule A. If your total deduction for all noncash contributions for the year is more than $500, you must also file Form 8283, Noncash Charitable Contributions, with your tax return.
- If you receive a benefit of some kind in return for your contribution, you can only deduct the amount that exceeds the fair market value of the benefit you received. Examples of benefits you may receive in return for your contribution include merchandise, tickets to an event or other goods and services
- Donations of stock or other non-cash property are usually valued at fair market value. Used clothing and household items generally must be in good condition to be deductible. Special rules apply to vehicle donations.
- Fair market value is generally the price at which someone can sell the property.
- You must have a written record about your donation in order to deduct any cash gift, regardless of the amount. Cash contributions include those made by check or other monetary methods. That written record can be a written statement from the organization, a bank record or a payroll deduction record that substantiates your donation. That documentation should include the name of the organization, the date and amount of the contribution. A telephone bill meets this requirement for text donations if it shows this same information.
- To claim a deduction for gifts of cash or property worth $250 or more, you must have a written statement from the qualified organization. The statement must show the amount of the cash or a description of any property given. It must also state whether the organization provided any goods or services in exchange for the gift.
- You may use the same document to meet the requirement for a written statement for cash gifts and the requirement for a written acknowledgement for contributions of $250 or more.
- If you donate one item or a group of similar items that are valued at more than $5,000, you must also complete Section B of Form 8283. This section generally requires an appraisal by a qualified appraiser.
Reminder that Self Insurance Plans are Subject to the New Excise Tax Due July, 31, 2013
Bob Moreland, CPA - Tax Manager
On April 17, 2011 the Internal Revenue Service (IRS) issued proposed regulations regarding the patient-centered outcomes research fee created by the Patient Protection and Affordable Care Act (PPACA). The fee starts at $1 per covered life beginning in 2012 and is scheduled to phase out over six years. The proceeds from the fee will be used to fund the research of the Patient-Centered Outcomes Research Institute (PCORI) created by PPACA. The PCORI's publicly available research is intended to aid healthcare consumers, payors, and providers in making informed decisions regarding the most effective forms of healthcare and benefits coverage.
What is the fee?
To provide funding for the PCORI's research, PPACA created two new sections to the Internal Revenue Code (IRC) that would assess fees on health insurers and self-insured health plan sponsors. IRC §4376 applies to sponsors of "applicable self-insured health plans" and assesses an annual fee of $1 per covered life for plan years ending on or before October 30, 2013, and $2 per covered life each plan year thereafter. IRC §4375 assesses the same fee to issuers of "specified health insurance policies." Click here to read the full article.
If you have further questions or would like to
speak to one of our professionals regarding any of the tax issues discussed above, please
contact your Blue & Co. advisor or e-mail us at
or call us at 317-848-8920
Please visit our website at http://www.blueandco.com
for more information regarding the services we provide.
CIRCULAR 230 DISCLOSURE: To ensure compliance with recently-enacted U.S. Treasury Department Regulations, we are now required to advise you that, unless otherwise expressly indicated, any federal tax advice contained in this communication, including any attachments, is not intended or written by us to be used, and cannot be used, by anyone for the purpose of avoiding federal tax penalties that may be imposed by the federal government or for promoting, marketing or recommending to another party any tax-related matters addressed herein.