Changes to Qualified Plan Determination Letter Program

The Internal Revenue Service (IRS) has made changes to the determination letter process for individually designed qualified retirement plans. For qualified plans currently in existence, several changes will occur beginning January 1, 2017. The 2017 changes will eliminate the 5 year remedial amendment cycle for individually designed plans and the accompanying determination letter process. Although the IRS will still accept determination letters for initial plan qualification and in other limited contexts, the 5-year amendment cycle and accompany determination letter process will largely be eliminated in 2017. The IRS has requested comments from practitioners on additional regulatory and other guidance needed to assist plan sponsors as a result of the changes announced by the IRS.

In addition, the availability of “off-cycle” determination letters has also been eliminated effective immediately. A plan’s determination letter application is filed off-cycle if it is submitted anytime other than during the last 12-month period of the plan’s remedial amendment cycle. Except for initial plan qualification determination letters, the IRS will no longer issue determination letters outside the parameters of the 5 year retroactive compliance cycle.

The IRS cites the need for more efficient use of resources in the eventual elimination of the 5 year retroactive amendment cycle determination letter process, and the immediate elimination of the off-cycle letters.

The IRS announcement may be found at the following link:

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IRS Issues Publications on Electronic Filing of Health Care Coverage Information Returns

The Patient Protection and Affordable Care Act (PPACA) implemented information reporting requirements for employers. Known as information returns, the employer supplied information allows the government to ascertain whether the employer is meeting their requirements under the PPACA. The type of information submitted pertains to the type of employer health-coverage offered, specific employee coverage, and other various requirements under the act.

In order to facilitate the information returns, the Internal Revenue Service (IRS) allows these filings to be submitted electronically. Known as the “AIR” system, the IRS issued publications to guide employers wishing to submit the PPACA information returns electronically. In order to submit the information returns, the employer must first create an account at least 28 days prior to submitting information. For some employers, such as those with over 250 of one type of information return, the returns must be submitted via the AIR system.

The AIR filings are subject to very specific instructions and requirements. To retrieve these publications, please visit the following website.

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Beginning Farmer Tax Credit Application Due Oct. 1

The deadline to apply for the Iowa Agricultural Asset Transfer Tax Credit, otherwise known as the Beginning Farmer Tax Credit, is October 1, 2015. For landowners leasing agricultural assets to a beginning farmer and wishing to take advantage of the tax credit,  an application must be submitted to the Iowa Agricultural Development Division by the deadline to be considered for the 2015 tax year.

The Beginning Farmer Tax Credit was passed by the Iowa legislature in 2006 and became operative for the 2007 tax year. The goal of the Iowa legislature was to ensure that agricultural land remained active and continued to produce agricultural products.  The tax credit has specific guidelines, including limitations and qualifications on the asset that can be leased. For example, a qualifying asset is agricultural land, buildings, and depreciable property located in Iowa and used for farming purposes. Depending upon the underlying asset and lease agreement, the specific value of the tax credit will vary. For those applying, the application fee and other requirements will vary based upon similar factors.

A joint application must be submitted by the beginning farmer and the asset owner. Additional financial information and other documents may be required. The application form can be download at the Iowa Finance Authority website:

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FBAR Deadline Moved to April 15 for 2017 Filings

The Reports of Financial Bank and Financial Accounts (FBAR) will be due April 15, starting for returns due in 2017, for taxable year 2016. The new due date is more than two months earlier than the previous June 30th due date, but will align with the due date for individual income tax returns. The new law, however, allows certain taxpayers the potential for an extension to the filing deadline, up to October 15. Under the previous rule, all FBARs were due on June 30th, without the possibility of extension. Americans living abroad receive the same automatic extension as received for income tax returns to June 15 for filing the FBAR.

Annual FBAR filings are required of an American taxpayers that own or have signature authority over foreign financial accounts, if the aggregate amount of all foreign accounts is greater than $10,000. Penalties for willful or fraudulent violations of this law can come as a substantial fine or even up to five years of prison time. Although these provisions, enforced by the Financial Crimes Enforcement Network (FinCEN), generally have not changed, one new addition has been added. Specifically, the Secretary now has the power to waive the penalty for failure to file or request an extensions for first time offenders.

The FBAR changes are a result of a small provision within the highway appropriations bill, the Surface Transportation and Veterans Health Care Choice Improvement Act of 2015, signed into law on July 31, 2015.

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Understanding and Preventing Unintentional Copyright Infringement on Websites

Federal copyright law protects a copyright owner from a wide range of intentional and unintentional infringement. For example, an entity that runs a blog or a website could be liable for copyright infringement if a third party posts copyrighted material onto the webpage. In fact, the federal copyright law is broad and states: “[a]nyone who violates any of the exclusive rights of the copyright owner . . .  is an infringer of the copyright or right of the author, as the case may be.” 17 U.S.C. § 501. In conjunction with the strict liability standard used in copyright infringement cases, violating federal copyright law becomes frequent and difficult to prevent in the digital age.

In light of modern technology, new copyright challenges have emerged, such as one found in Perfect 10, Inc. v., Inc., 508 F.3d 1146 (9th Cir. 2007), which involved two large technology companies, Google and Amazon. The issue, in essence, was Google and Amazon infringing upon copyrighted photographs because Google’s automated website indexing propagated the photographs in image searches, and subsequently on Amazon for other related services. Although this complex litigation involved a multitude of factors within copyright law, the issue in the case highlights the propensity for unintended copyright infringement with technology.

Fortunately, Congress recognized this issue in 1998 and passed the Digital Millennium Copyright Act, creating safe harbors for unintentional copyright infringement in specific situations. Although the safe harbors are somewhat limited, the law is intended to “balance the interests of copyright owners and online service providers by promoting cooperation, minimizing copyright infringement, and providing a higher degree of certainty to service providers on the question of copyright infringement.” Capitol Records, Inc. v. MP3tunes, LLC, 821 F.Supp.2d 627 (S.D.N.Y. 2011). Ultimately, this means every entity that has a website, blog, or online community of some sort, should take measures to ensure that their online presence fits within a safe harbor or does not violate copyright law.

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2015 Changes to Nebraska Sales and Use Tax

The Nebraska Legislature has made several changes to the sales and use tax. Starting in 2016, zoo admissions and memberships will be exempt from sales tax. The Nebraska Legislature enacted LB 419, a sales and use tax exemption primarily to support Nebraska’s nationally accredited zoos and aquariums. There are four nationally accredited zoos in Nebraska—Omaha’s Henry Doorly Zoo and Aquarium, Lincoln’s Children’s Zoo, Lee G. Simmons Conservation Park and Wildlife Safari, and Riverside Discovery Center. Zoo purchases and gross receipts from the sale of daily admission and memberships will no longer be subject to sales and use tax. Gross receipts derived from sales other than admissions or memberships, such as concessions, will still be subject to tax. The intent of the new law is to allow these zoos to reinvest the funds to further attract visitors and boost local tourism.

Also starting in 2016, purchases by sanitary drainage districts will be exempt from sales and use tax.

Lastly, the Legislature also passed a law which prepares Nebraska for the use of funds that would be generated if Congress expands the states’ authority to tax transactions with out-of-state retailers. If the federal government passes this type of legislation, LB 200 authorizes the funds to be credited to the Property Tax Credit Cash Fund—a fund for reducing property taxes. LB 200 was passed in anticipation of federal legislation such as the Marketplace Fairness Act, which would grant states the additional power for taxing transactions with out-of-state retailers. At this time, no federal legislation has made it through the House of Representatives. We will provide additional updates as this issue and pending federal legislation develops.

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IRS Prepares Forms and Instructions for Employer Mandate Reporting under Obamacare

Starting in 2016, all “Applicable Large Employers”–meaning those with 50 or more employees—will need to file reports with the IRS regarding whether minimum essential healthcare coverage has been made available to employees under the Patient Protection and Affordable Care Act, also known as Obamacare. The information reporting requirements will first be effective for coverage that was offered (or not offered) in 2015. The information reported will be used to determine whether an employer owes a payment under the employer mandate and for determining employee eligibility for the premium tax credit.

Employer reports will be made on IRS Forms 1094-C and 1095-C. On August 6, 2015, the Internal Revenue Service released substantially final instructions for reporting employee health coverage on those Forms. The instructions specify who must file, how to file, and what to file with the IRS.

For the first year, the IRS will not impose noncompliance penalties on employers that make good faith efforts to meet the reporting requirements. Specifically, relief from penalties for reporting incorrect or incomplete information may be provided for 2015 information included on returns and statements filed in 2016. However, penalties will still apply to employers that cannot show a good faith effort to comply or fail to timely file the required forms.

More detailed information on the Applicable Large Employer reporting requirements is available from the IRS at the following link:

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IRS Warns of Tax Scams

On August 7, 2015, the Internal Revenue Service (“IRS”) issued a warning to all taxpayers about recent tax scams. There are reports of nearly 4,000 victims and over $20 million in financial losses caused by the scams. Most of the scams involve individuals posing as representatives of the IRS and are targeting both personal and financial data. The IRS warned that tax scams continue to evolve and can occur through many mediums—phone, email, or by mail with the use of authentic looking IRS letterheads.

As tips to avoid these scams, the IRS warns they will not:

  • Angrily demand immediate payment over the phone or call about taxes without first mailing a bill
  • Threaten arrest for lack of payment
  • Demand payment without the opportunity to question or appeal the amount
  • Require specific payment methods, such as prepaid debit cards
  • Ask for credit or debit card numbers over the phone

Additionally, the IRS wants taxpayers to remember that the official website of the IRS is Any other variation is likely fraudulent.

For more information, see IRS Warns Taxpayers to Guard Against New Tricks by Scam Artists; Losses Top $20 Million, available at

If would like to further educate yourself about the most common scams for 2015, the IRS provided a list of the 12 most common scams for 2015. See, IRS Completes the “Dirty Dozen” Tax Scams for 2015, available at

If you believe you have been contacted as part of one of these scams, you can report the incident to the Treasury Inspector General for Tax Administration at 1-800-366-4484 and the Federal Trade Commission at

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CMS Proposes New Exceptions to the Stark Law

The Centers for Medicare and Medicaid Services (“CMS”) has proposed revisions to the regulations governing enforcement of the physician self-referral law, commonly known as the Stark Law.   The changes are part of a 282-page proposed rulemaking that establishes the 2016 Medicare Physician Fee Schedule.  According to CMS, the proposed changes to the Stark regulations are intended to accommodate delivery and payment system reform, to reduce regulatory burdens, and to facilitate compliance.  Many aspects of the proposal appear to be in response to physician self-disclosures of highly technical violations that have been submitted under the Medicare self-referral disclosure protocol (“SRDP”) adopted as part of the Patient Protection and Affordable Care, also known as Obamacare.

The Stark law  generally prohibits a physician from making referrals for certain designated health services (“DHS”) that are payable by Medicare to an entity with which he or she (or an immediate family member) has a financial relationship (ownership or compensation), unless an exception applies.  Among other things, the proposal would add two new exceptions, primarily targeted at rural and underserved areas.  As with all things Stark-related, the proposed exceptions are highly technical.

The first new exception to Stark would permit a hospital, federal qualified health center, or rural health center to subsidize a physician’s payment of a nonphysician practitioner’s salary.  The proposed exception would apply only where the nonphysician practitioner is a bona fide employee of the physician or the physician’s practice and the purpose of the employment is to provide primary care services to the physician’s patients.  To qualify under this exception, a non-physician practitioner would have to be a physician assistant, nurse practitioner, clinical nurse specialist, or certified nurse midwife.  The subsidy would also be subject to a financial cap and two year time limitation.

The second new exception would expressly permit “timeshare arrangements,” and is intended to benefit communities where there is a need for certain specialty services but that need is not great enough to support a full-time physician specialist.   Under timeshare arrangements, a hospital or local physician practice may ask a specialist from a neighboring community to provide the services in space owned by the hospital or practice on a limited or as-needed basis. In such circumstances, the visiting physician may not have exclusive use of the premises and there may not be a one-year arrangement as required by the current exception for leased office space.

The proposed timeshare exception would provide relief from Stark where the visiting physician is a temporary licensee of the space rather than a lessor.  However, the proposed exception includes numerous technical requirements, including limitations on certain types of equipment that may be used in connection with the license.  In addition, the proposed exception would not protect a license of office space that is primarily used to furnish DHS to patients.

The proposed rule impacting the Stark Law can be found at the following link:

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IRS Issues Notice on PPACA “Cadillac” Tax

On July 30, 2015, the Internal Revenue Service (IRS) issued Notice 2015-52, addressing issues and seeking public comments on the implementation of the “Cadillac” tax on high-cost health insurance under the Patient Protection and Affordable Care Act (“PPACA”). The Cadillac tax is intended to discourage expensive health care plans by imposing a non-deductible 40 percent excise tax on the portion of health plan costs that exceed a predetermined dollar amount. The tax, which will go into effect in 2018, generally applies to healthcare benefit packages costing more than $10,200 for individuals and $27,500 for families, subject to certain proposed adjustments. Although the law was passed in 2010, many details of how the tax will be implemented still remain to be sorted out.

For example, one of the basic issues with the Cadillac tax is determining who has the responsibility to pay it. The law provides that the tax must be paid by the “coverage provider.” Depending on the circumstances, that may be the insurance company, the employer or “the person that administers the plan benefits.” However, some key terminology impacting these determinations have yet to be defined. Other unresolved complexities addressed the in IRS notice include: timing issues relating to calculation and payment of the tax, circumstances under which employers will be aggregated for purposes of the tax, and adjustments to the dollar limit based on age and gender.

The IRS has invited public comments on the issues raised in the Notice, as well as any other issues relating to the Cadillac Tax. Public comments are due no later than October 1, 2015. Comments received will be used in the preparation of forthcoming Treasury Regulations governing the Cadillac tax.

Notice 2015-52 is available at the following link:

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