Monthly Archives: May 2015

Employers-how long to keep records?



General Guidelines.

The Social Security Administration and the IRS have issued a joint publication — the Spring 2015 issue of SSA/IRS Reporter — which offers valuable pointers for employers who want to clean up their old payroll files. In most (but not all) cases, that means following a four-year retention rule.

The Reporter cautions that failure to meet record retention requirements can result in sizable penalties and large settlement awards for employers that are unable to provide the required information when requested by the IRS or as part of an employment-related lawsuit. (Records could also be requested by state agencies.)

The Records-in-General Rule

As applied to employers that withhold and pay federal income, Social Security and Medicare taxes, the SSA/IRS Reporter says records relating to such taxes must be kept for at least four years after the due date of the employee’s personal income tax return (generally, April 15) for the year in which the payment was made.

According to the SSA/IRS Reporter, these records include:

  • The Employer Identification Number;
  • Employees’ names, addresses, occupations and Social Security numbers;
  • The total amounts and dates of payments of compensation and amounts withheld for taxes or otherwise, including reported tips and the fair market value of non-cash payments;
  • The compensation amounts subject to withholding for federal income, Social Security and Medicare taxes, and the corresponding amounts withheld for each tax (and the date withheld if withholding occurred on a different day than the payment date);
  • The pay period covered by each payment of compensation;
  • Where applicable, the reason(s) why total compensation and taxable amount for each tax rate are different;
  • The employee’s Form W-4, Employee’s Withholding Allowance Certificate;
  • Each employee’s beginning and ending dates of employment;
  • Statements provided by the employee reporting tips received;
  • Fringe benefits provided to employees and any required substantiation;
  • Adjustments or settlements of taxes; and
  • Amounts and dates of tax deposits.

Employers should also follow the four-year retention rule for records relating to wage continuation payments made to employees by the employer or third party under an accident or health plan. Such records should include the beginning and ending dates of the period of absence, and the amount and weekly rate of each payment (including payments made by third parties). Employers also should keep copies of the employee’s Form W-4S, Request for Federal Income Tax Withholding From Sick Pay, and, where applicable, copies of Form 8922, Third-Party Sick Pay Recap.

A different rule applies for records substantiating any information returns and employer statements to employees regarding tip allocations. Under the tax code, these records must be kept for at least three years after the due date of the return or statement to which they relate.

 Claims for Refund of Withheld Tax

The SSA/IRS Reporter says employers that file a claim for refund, credit or abatement of withheld income and employment taxes must retain records related to the claim for at least four years after the filing date of the claim.

Fringe Benefit Records

The tax code provides an explicit recordkeeping requirement for employers with enumerated fringe benefit plans, such as health insurance, cafeteria, educational assistance, adoption assistance or dependent care assistance plan. They are required to keep whatever records are needed to determine whether the plan meets the requirements for excluding the benefit amounts from income.

Note: Tax code provisions regarding fringe benefit records do not specify how long records pertaining to specified fringe benefits should be kept. Presumably, they are subject to the four-year rule under the records-in-general rule cited above, and thus should be kept at least four years after the due date of such tax for the return period to which the records relate or the date such tax is paid, whichever is later.

Caution: To the extent that any fringe benefit records must also comply with ERISA Title I, then a longer retention period of six years applies.

Unemployment Tax Records

The Federal Unemployment Tax Act (FUTA) requires employers to retain records relating to compensation earned and unemployment contributions made. Under the records-in-general rule, such records must be retained for four years after the due date of the Form 940, Employer’s Annual Federal Unemployment Tax Return or the date the required FUTA tax was paid, whichever is later.

Records should be retained substantiating:

  • The total amount of employee compensation paid during the calendar year;
  • The amount of compensation subject to FUTA tax;
  • State unemployment contributions made, with separate totals for amounts paid by the employer and amounts withheld from employees’ wages (currently, Alaska, New Jersey and Pennsylvania require employee contributions);
  • All information shown on Form 940 (with Schedule A and/or R as applicable); and
  • If applicable, the reason why total compensation and the taxable amounts are different.

The SSA/IRS Reporter reminds employers that record retention requirements are also set by the federal Department of Labor and state wage-hour and unemployment insurance agencies.

If you have additional questions, contact your payroll or tax adviser for guidance.

Further information from: Eric Walters

Eric Walters Insurance Services,

Scottsdale AZ 85260.

CELL: 602-616-1660

WEB  Insurance Page: 


ACA explained- updated

ACA explained. 2014: A new system began

A set of rules that took effect Jan. 1, 2014, which makes shopping for health insurance a completely different experience for those who buy it on their own—or were uninsured!

These are the biggies:

 New health plans:

New Health plans are available on the new exchanges/marketplaces ( in Arizona- run by the federal government), BUT they have defined Open Enrollment Periods  (last one ended 3/31/2015) when you can get quotes and sign up for the new plans.

BUT outside of these Open Enrollment Periods you will only be able to get an  On Exchange quote ( with a tax credit ) or  Off  Exchange-( without a Tax Credit)-through a broker,  direct from  an insurance company, etc  – if you qualify for a Special Enrollment Period (e.g.- get married,divorced, move, have a child or adopt, start or leave a job,renew an existing health policy, etc,etc).

A new SPECIAL Enrollment Period started 03/15/2015 and ended April 30th 2015!!- BUT- we might still be able to help you though-call Eric!

Guaranteed issue.

Health plans must sell coverage to everyone, regardless of pre-existing conditions, and can’t charge more based on health or gender but can do so for tobacco use which can be penalised 1.5 x usual monthly premium.

Age can also be considered as older clients can pay up to 3 x the cost for a young person but that is reduced from the previous 5 x limit!


Every state must have an insurance exchange (Az-— an organized marketplace where individuals and small-business owners can view, compare, and purchase qualified private health plans. It’s expected that most consumers will shop on their state’s exchange online, but they can also shop by phone ,apply by mail or through brokers.

States had the option of setting up exchanges themselves or allowing the federal government to do the job. The federal government operate exchanges in as many as half the states. About 20 states operate their own exchanges while in other states, the federal government made a joint venture/partnership with the state.

Individual mandate.

Everyone will be required to have health insurance or pay a penalty through the IRS tax service Almost any sort of legitimate coverage will satisfy the mandate: private insurance obtained on your own or through a job, Medicare, Medicaid, CHIP, Veterans Affairs, or Tricare,etc.

If you don’t have health insurance, you’ll have to pay a tax penalty, starting at $95 per individual, $285 per family, or 1 percent of income, whichever is greater, for 2014. (That rises to $695 per individual, $2,085 per family, or 2.5 percent of income in 2016.)

Because the vast majority of people will already have qualifying health insurance, few will confront the choice of buying a plan or paying a penalty. Moreover, you won’t have to pay it if you make too little money to file a federal tax return or would have to spend more than 8 percent of your household income on the cheapest qualifying plan, even including subsidies. Americans living abroad, and those in prisons, are exempt from the mandate and associated fines.

Individual subsidies.

Afraid you won’t be able to afford insurance?

If you buy On an exchange as an individual/family, you may qualify for a subsidy in the form of an advance Tax Credit ( which will reduce the premium) if your household income is between 133 percent and 400 percent ( 1.3 x to 4 x) of the federal poverty level.

The Federal Poverty Level (FPL) was $11,490 for an individual and $23,550 for a family of four for 2013-(Income – from $15,281 for an Individual to $94,200 for a family of 4)

People with household incomes of less than 250 percent (2.5 x) of poverty will also get subsidies to reduce their out-of-pocket costs, such as deductibles and coinsurance.

We can show you if your eligible and what  the Tax Credit will be, plus any cash payments for costs incurred under your plan and we will send you a list of ALL the plans available to you on the exxhange/marketplace- or you can do it yourself at our web site (  and/or also you can learn whether you qualify for a subsidy if you shop on the exchange or use the calculator on this blog site.

We have the calculators to give you an estimate of  your likely  tax credit and the cost sharing payments you are likely to get from the federal government.

Call me now- Cell: 602-616-1660.or go to my insurance web

Medicaid expansion

The health care law was intended to expand the government-run health program for low-income Americans to cover up to 16 million more people with household incomes up to 133 percent ( 1.3 x) of the poverty line ($14,856 for an individual and $30,657 for a family of four). That includes many at or below the poverty line who were not then eligible.

Arizona expanded its Medicaid ( AHCCS ) plan to include an approx 400,000 more people. See if you qualify or your children for CHIP – you can apply any time at enrollment periods!

Other details

Insurers must spend at least 80 percent of premiums on medical care and quality improvements for customers in their individual and small-group (under 50 employees) plans. The cut-off is 85 percent for large group plans.

The rule does not apply to self-insured plans offered by employers who pay employee health expenses on their own. The only way to know if you are self-insured is to ask your employer. You can’t tell just by looking at your insurance card.

Standard disclosure forms.

Beginning in September, 2012, all health plans have to use a standardized, consumer-friendly form  to provide a uniform summary of benefits and coverage, including information on co-payments, deductibles, and out-of-pocket limits. This will make it easier for you to compare plans. Insurers will also have to calculate and disclose a patient’s typical out-of-pocket costs for two medical scenarios: having a baby and treating type 2 diabetes.

Caps on Flexible Spending Accounts (FSAs).

Starting 2013, the most you can set aside tax-free for medical expenses not covered by insurance will be $2,500, with the cap increasing by the annual inflation rate in subsequent years.  Plus you can no longer use FSAs to pay for over-the-counter drugs unless you have a doctor’s prescription.

More young adults with insurance.

All health plans must allow young adults to remain as dependents on their parent’s health plan until they turn 26, whether or not they live at home or can be declared as dependents on the parent’s income tax return.

Cheaper drugs for people on Medicare.

Seniors who reach the “donut hole” – the point when they have to start paying prescription drug expenses themselves – now get a 50 percent discount when buying brand-name drugs and a 14 percent discount on generic drugs covered by Medicare Part D. More than 5 million older adults and people with disabilities have saved $3.5 billion in prescription costs since the law was passed. The donut hole will continue to shrink until it  disappears completely by 2020.

Free preventive care.

New private health plans must cover and eliminate cost-sharing (co-payment, co-insurance or deductible) for proven preventive measures such as immunizations, Pap smears, and screening colonoscopies. Beginning August 2012, private health plans had to provide additional preventive measures to women, including free well-woman visits, screening for gestational diabetes, domestic violence screening, breastfeeding supplies, and contraception.

Workplaces run by religious organizations that object to birth control  are to receive a special accommodation: their health plans must still offer the coverage, but the cost of it will be borne entirely by their insurance companies.

People on Medicare are also now entitled to the same free preventive coverage, and in addition get a free annual “wellness visit.”

More consumer protections.

Health insurers can’t set lifetime limits on your coverage or cancel if you get sick.



CELL: 602-616-1660

Eric Walters Insurance Services




You know all this discussion about PPCA would suppose that the program
worked really well-when in fact it worked (and is still working) quite badly which may perhaps explain the reduced signup numbers.

Last month when we tried to enroll a clients employees using the SHOP marketplace the program did not work while the “assisters were worse than useless!
We finally had to recruit Kevin Counihan, CMS CEO to help our clients out! Kudos to Mr Counihan -he even answered his own phone!! We are not afraid to go to the top!

Then on the 30th April -last month- last day of the “Special Enrollment Period” when we were enrolling a single client on a Healthnet plan,
the program on the AZ Federal marketplace could or would not download
the plan to allow the client to enroll, the assisters could not help ,
So again we had to ask Mr. Counihan to get someone to solve the problem
and the matter is happily now finally resolved!!

Think we are going to use PPACA/ again?

BUT  how can we help you?

Contact;-     ERIC WALTERS, CELL: 602-616-1660

Eric Walters Insurance Services