Wisconsin Internal Revenue Code Conformity Does Not Include Health Care Reform

11 July 2011 Publication
Authors: Casey D. Knapp

Legal News Alert: Employee Benefits

The Patient Protection and Affordable Care Act (PPACA), which was signed into law on March 23, 2010, generally requires group health plans to extend dependent coverage to employees’ children until age 26. PPACA also made a corresponding amendment to the Internal Revenue Code (IRC) definition of tax dependent in order to allow such health care coverage to be provided to adult children on a non-taxable basis. Some states, such as Wisconsin, do not automatically adopt the IRC revisions for state tax purposes. Wisconsin employers had been anxiously waiting to hear whether the state will amend its tax code to provide similar favorable tax treatment for state purposes. Unfortunately, with the signing of the 2011-2013 Budget Bill, it has become clear that Wisconsin has decided it will not follow the federal tax laws in this respect.  

Wisconsin’s 2011-2013 Budget Bill, which was signed into law on June 26, 2011, updates the state’s conformity to the IRC, but excluded the majority of the provisions of PPACA in the update. Importantly, this means that employers with employees in Wisconsin will still be required to impute income and withhold applicable Wisconsin state taxes for employees who enroll adult children who do not otherwise qualify as tax dependents under the historic IRC definition.

Deadline for Filing Form 8955-SSA Extended Again

Form 5500s for ERISA-covered retirement plans have historically included a Schedule SSA, on which the plan administrator reports certain information relating to plan participants with deferred vested benefits. In connection with the recent rules requiring plan administrators to file the Form 5500 electronically, the IRS announced that the freestanding Form 8955-SSA will replace the Form 5500 Schedule SSA for plan years beginning on and after January 1, 2009.

The general deadline for filing the Form 8955-SSA is the last day of the seventh month following the end of the applicable plan year, plus extensions. However, in order to accommodate the change to the Form 8955-SSA, the IRS previously extended the filing deadline for the 2009 and 2010 plan year until August 1, 2011.

The IRS has announced that it will again extend the deadline for filing the new Form 8955-SSA for the 2009 and 2010 plan years. Employers who are required to file the new Form 8955-SSA will have until the later of January 12, 2012 or the due date that would generally apply for filing the Form 8955-SSA for 2010 (the last day of the seventh month following the end of the 2010 plan year, plus extensions). This means that Form 8955-SSA will be due for calendar year plans for the 2009 and 2010 plan years no later than January 12, 2012.

The 2009 Form 8955-SSA is now available at http://tinyurl.com/6alrulm.

Legal News Alert is part of our ongoing commitment to providing up-to-the-minute information about pressing concerns or industry issues affecting our clients and colleagues.

If you have any questions about this alert or would like to discuss the topic further, please contact your Foley attorney or:

Casey K. Fleming
Milwaukee, Wisconsin

Internal Revenue Service regulations generally require that, for purposes of avoiding United States federal tax penalties, a taxpayer may only rely on formal written opinions meeting specific requirements described in those regulations. This newsletter does not meet those requirements. To the extent this newsletter contains written information relating to United States federal tax issues, the written information is not intended or written to be used, and a taxpayer cannot use it, for the purpose of avoiding United States federal tax penalties, and it was not written to support the promotion or marketing of any transaction or matter discussed in the newsletter.