Good morning, Ladies and Gentlemen. Welcome to the People Processes podcast. I’m your host, Rhamy Alejeal, CEO of People Processes, and here we dive deep into the tools, laws and yes processes that you need to know in order to scale and grow your organization. We help organizations all across the United States streamline, optimize, implement, and revolutionize their HR operations. We’ve helped hundreds of companies and thousands of HR leaders across the world get their people processes right.
Today we’re going to talk about the SECURE Act. It changes a lot about 401k plans, so we’re going to go through it in depth, make sure you’re prepared, but before we go too deep, I want to ask you to please subscribe to our podcast. You can find us on iTunes, Google podcasts, Spotify, Stitcher, any pod catcher of your choice. You can also subscribe @peopleprocesses.com which will give you exclusive subscriber only content.
All right, let’s dive into the SECURE Act. The centerpiece of the new tax legislation is the Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019. The SECURE Act, it’s chock full of new rules for employers that sponsor qualified retirement plans and for the employees who participate. For example, the new law expands the opportunities for groups of employers to form multiple-employer plans (MEPs). On the employee side, the new law increases the age for required mandatory retirement plan distributions from 70 ½ to 72.
Now there are a lot of things going on with the SECURE act, especially around what happens after you die with a 401k. That’s an individual planning topic and it’s really beyond the scope of what we’re gonna talk about today. Instead, we’re going to talk about those that are of particular interest to employers. That’s what we’re focusing on.
So part-timer participation, under current rules, employer-sponsored 401(k) plans can exclude an employee from participation if he or she has not worked for the employer for at least 1,000 hours in a 12-month period. Effective for plans beginning after 2020, the new law requires employers to allow long-term part-timers to make elective deferrals to a 401(k) plan if they’ve worked at least 500 hours in three consecutive 12-month periods. It does not require you to make matching or other employment contributions for these long-term part-timers. Key points are just focusing on this. You won’t need to pour through your past payroll records to identify eligible part-timers. For purposes of counting hours under the 500-hour rule, only service performed after 2020 is required to be taken into account. Nevertheless, you need to update your payroll system to pinpoint eligible part-timers going forward. It’s a new test. You got to do not just the thousand hour test, but also 500 over three years starting in 2020. Okay. That’s a big change. It adds a big layer of compliance and regulation. Hopefully you have a good CPA that’ll take care of that for you, but make sure to poke them.
Alright. Automatic enrollment. Another big change. Employers that sponsor a 401(k) plan or a SIMPLE IRA for that matter can automatically enroll eligible employees in a plan unless the employee is locked out. The SECURE Act creates a new tax credit for employers that establish new 401(k) plans that include automatic enrollment or that convert an existing plan to an automatic enrollment design. The amount of the credit is $500 per year for each of the three tax years beginning with the first year that the employer adopts automatic enrollment feature.
New tax credit applies for tax years beginning after 2019, so employers can begin to cash in on the credit this year. For a new plan, the credit applies in addition to the small employer pension plan startup credit for small employers that adopt a new qualified retirement plan. Moreover, for tax years beginning after 2019, the maximum amount of that credit is increased from $500 to as much as $5,000 per year for three years. So there’s two big credits at play there. One, well, a small $500 bucks. But if you look at your cost of setting up an IRA, a retirement plan, and you put in an automatic deferral right where they can opt out, instead of doing the traditional way, you’re gonna get $500 bucks from the government. Pretty cool. If you’re a brand new plan, truly new, and you’re not just making a change and you’re a small business, you could actually get an additional tax credit on top of that. Talk to your CPA.
Okay. There’s also a little bit of a change with “safe harbor 401(k) plans” that include automatic enrollment in order to meet nondiscrimination requirements. These plans, safe harbor plans, must provide for automatic enrollment at a default percentage of compensation that increases each year (e.g., 3% for first year at least to 6% in the fourth year). A plan can provide for higher default rates. However, under prior law, the default rate could not exceed 10% for any year. The new law increases the default percentage cap to 15% for any year after the first year of automatic enrollment. So that’s basically not the first year, but if you want to continue to step up people’s investment by 1% a year, unless they opt out, you can now go up to 15%.
All right. Last big change. Retirement plan, distributions and loans. Distributions from quality qualified retirement plans, 401(k) are generally included in income for the year of the distribution before the plan participant has reached 59 and a half is generally subject to a 10% penalty tax.
There are a number of exemptions to the 10% penalty though, but there’s a new one created by the SECURE Act for distributions made on account of birth or adoption of child. Effective for distributions after 2019, the penalty tax does not apply to a distribution made during the one-year period beginning on the date that the participant’s child is born or that the legal adoption of an adoptee is finalized and shall put it either adoption date of birth date. You got one year around there.
Provided certain requirements or met, loans from qualified retirement plan are not treated as taxable distributions from the plan and are not subject to the 10% tax penalty. Assuming again that if you turn it into a distribution, the SECURE Act cracks down on arrangements that allow employees to access plan loans using credit cards or similar mechanisms. Effective for loans made after just December 20, 2019, plan loans distributed through credit cards or similar arrangements will not meet the requirements for plan loan treatment and will be treated as taxable distributions. It’s not a common thing, but a lot of weird companies were kind of doing some stuff like being able to access your 401(k) balance through a credit card and it matches up to a loan. They basically disallowed those. If you do it, it’s just a distribution now.
Okay. All right. That’s the key stuff. A general rule, taxable retirement plan distributions are subject to income tax withholding, right? We talked about that and that extra 10%. However, in most cases, plan participants can elect not to have withholding applied. Tell them that this role participants must be provided with a notice of the right to elect no withholding. Under prior law, the penalty for failure to provide that required notice was $10 bucks for each failure, up to a maximum of $5,000 effective for notices after December 31, 2019, the penalties increased for $100 for each failure up to a maximum of $50,000 for the calendar year. So that’s the one other kind of little compliancy change. Make sure that they’re getting their notice of the right to elect no withholding if they are doing a distribution.
Not most people don’t do distributions of course, unless they’re leaving your employment. Anyway, let’s recap real fast. The retirement plan changed the part-time participation rules to add long-term part-timers. It gave credit for automatic enrollment and for safe harbor plans. You can now by default, when you do a safe harbor plan with automatic enrollment, you actually increase by 1% per year automatically and you can now go up to 15% instead of 10, and they added a qualified distribution. You can take money out of your retirement plan without paying income tax, but you don’t pay the extra 10% penalty in the year that you have a child or adopt one. Finally, there’s a bunch of penalty increases, especially around not providing that notice of no withholding.
I hope that was helpful for you. Again, my name is Rhamy Alejeal. People Processes work on things like this all the time. We work on the systems and operations around keeping, attracting training, finding the best people in your industry, and I hope this sort of information is helpful to you. If it is, drop me a line, Twitter, Facebook, LinkedIn, we are available on all of them. Instagram, I’d love to hear from you. Feel free to ask questions there. In the meantime, my name is Rhamy Alejeal and I appreciate you tuning in. Time for you to go out there, get your work done, and have a great day.
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Good morning, Ladies and Gentlemen. This is Rhamy Alejeal, for the People Processes podcast. We dive deep into the tools, laws and yes processes that you need to know in order to scale and grow your organization.
This is going to be a super quick episode, consider it a quick update. I just want to throw this out there. Time to change. Don’t forget to change your payroll clocks. I know everyone knows about Daylight Savings Time, but a lot of people miss out on some key facts. If you are running a 24 hour operation, this can really really affect your business. So let’s think about this. Daylight Savings Time begins Sunday, March 8 2020, when our clocks are going to move forward one hour at 2:00 a.m. local time. On Sunday, November 1, the clocks are going to shift again, when the clock moves back one hour.
These days, technology has changed, and has lessened the chore of changing clocks. I mean, when I first got into this business, people were walking around changing their punch clocks. It’s crazy. But, smartphones, appliances and many clocks are now programs to automatically adjust for the time change. However, adjusting your payroll timekeeping is not quite so automatic. Many employers simply ignore the clock changes, reasoning that an employee’s pay will even out over the course of the year, that’s not necessarily the case—and it’s not the law.
Hourly workers on duty when the clocks change on March 8 will put in one fewer hours than normal. If they worked, I don’t know, 10pm to 6am, that’s eight hours right? But wait, we’re moving forward an hour, they’re only going to work seven. For example, shift workers on an eight-hour shift are going to actually work one hour less. So I just went over, well, workers are not required to be paid for the hour that they don’t work, many employers choose to ante up for that hours pay anyway, because their system doesn’t track it and they don’t think about it. You can totally do that. However, if they treat it like a normal hour’s pay, you can run into problems and cheat yourself under the wage hour rules, an hour that is not worked does not have to be counted in determining hours worked for overtime purposes, even if the worker is paid for that hour. And the pay for the hour does not have to be included in computing the worker’s regular rate of pay for the pay period. On the other hand, since the pay for the extra hour is not compensation for an hour worked, the pay cannot be credited toward any overtime pay due to the employee. So if you pay it, totally can, but don’t adjust your overtime basis for that. Okay. It’s like a PTO hour, it doesn’t go towards their regular work hours. It’s a bigger deal in the fall.
I wanted to bring this up. Now on a quick episode. When the clocks change in November, shifter workers will actually put in an extra hour. That’s a lot harder. Employers that pay only the normal shift rate will be cheating their employees—and they’ll be breaking the law. The Department of Labor has ruled that workers must be paid for all hours worked during the time-changing shift. What’s more, for overtime purposes, the additional hour must be counted in determining the total number of hours during the work week. So come into the year or November.
Anyway, we got to be the other way around the long and short is check your settings, know what you’re going to do. Just have a plan. Don’t let this catch you off guard. If you have 24 hour shifts, your overnight shift is going to be working one hour less. It’s your call on whether you pay that hour or not. But if you do, don’t adjust your overtime for it. That’s it. Super quick update. Thank you for tuning in. Check us out on Twitter, LinkedIn, Facebook/peopleprocesses. Love to hear from you. Ask us any questions you have on there. In the meantime, check us out @peopleprocesses.com. Subscribe to get some subscriber only content. Go out there. Have a great day and get your work done.
Good morning, Ladies and Gentlemen. Welcome to the People Processes podcast, where we dive deep into the tools, laws, and yes processes that you need to know in order to scale and grow your organization. We help companies all across the United States streamline, optimize, implement, and revolutionize their HR operations. We’ve helped hundreds of companies and thousands of HR leaders across the world get their people processes right.
Today we’re going to talk about the strange case of the 27th paycheck here in 2020. Before we go too deep though, I want to ask you to please subscribe to our podcast. You can find us on iTunes, Google podcasts, Spotify, Stitcher, any podcatcher of your choice. You can also subscribe @peopleprocesses.com which will give you some exclusive subscriber only content.
All right, let’s dive in. It happens every 11 or 12 years —and 2020 possibly 2021 is one of those years. Depending on your payday, if you pay employees on a biweekly basis, you might be cutting an extra paycheck this year. The 27th paycheck of a 26 pay periods cycle with a biweekly payroll, you normally process 26 paychecks each year. That cycle assumes there are 364 days in the year (26 x 14 days = 364 days). However, as you know, there are actually 365 days in a year and 366 in Olympia. Those extra days eventually catch up with your pay cycle, resulting in an extra 27th pay day in a single year.
For example, if you pay your employees on Wednesday, your first payday of January 2020 fell on January 1 and your 26th pay date will fall on December 16 —with an extra 27th paycheck due on December 30, suppose. Similarly, if you pay on Thursday, that’s January 2 and the final 27th payroll will be December 31. And then for many, many, many of you you pay on Friday. For you, it’s going to be a normal 26 payday year —but that 27th paycheck is going to show up in 2021, with the first paycheck due January 1 and the 27th on December 31.
For hourly workers whose wages are calculated on a paycheck-by-paycheck basis. This is no problem. The 27th paycheck doesn’t mean anything for salaried workers whose annual pay is prorated over the number of paydays in a year, it’s a different story. According to numerous surveys, the majority of employers, something like 80% take a pay as usual approach to the set 27th paycheck. For example, if an employee’s annual salary is $52 grand, his or her gross income or gross pay comes to $2000 bucks per paycheck in that normal 26-paycheck year. So, with the pay-as-usual approach, the employee is going to get an extra 27th paycheck with an extra $2000 bucks of gross pay.
So that’s kind of cool. You’re gonna wind up paying $54,000 for that person. On the other hand, you (or your payroll software) may have already recalculated the employee’s per-paycheck amount to be based on 27 paydays for the rest of the year. So, for an example, an employee earning $52,000 will receive 27 paychecks based on $1,926 approximately of gross pay instead of $2000, kind of depends on what kind of system you’re using. Employers —especially those who have not planned ahead—may be tempted to simply skip the 27th paycheck per salaried employee. That’s not legal. It’s going to almost always run afoul of federal or at least state wage-hour laws—and it’s probably not going to make your employees too happy. We’ll have a four week gap between their paychecks right after Christmas, wouldn’t recommend that.
Whatever approach you take, that’s okay, but you need to communicate with your employees. If you choose a pay-as-usual approach, employees should be alerted that the extra paycheck is a one-shot deal and that their annual wages will revert to normal levels the following year. If paychecks are prorated over 27 weeks, the drop in their biweekly pay should be carefully explained to your salaried employees. Also, this is important too. Check the payroll deductions. The extra payday will also impact payroll deductions for benefits like health coverage, retirement plan contributions, and flexible spending accounts. If you pay as usual—and deduct as usual—for that 27th paycheck, you would be over withholding for the year for things like major medical. If you prorate annual compensation over 27 paychecks, you’re going to need to recalculate the per paycheck benefit deductions as well.
This gets way complicated guys. That’s why we strongly recommend for those of you on a biweekly payroll that you withhold 24 times a year, you always block that third payroll in a month. That’s how we do it. But there are many other people who don’t. That’s totally fine, but you’ve got to think about this stuff. You won’t get in trouble for paying too much. You will get in trouble. Real trouble for over withholding funds to pay for health insurance your employees don’t have. So you got to focus on this.
By the way, this is also a problem for weekly payrolls. It’s similar anyway. It shows up more frequently every five or six years—and 2020 is one of those years. For 2020, employees who pay weekly on Wednesdays or Thursdays are going to have 53 weekly paydays instead of the normal 52. For Friday payrolls, there will be 53 paydays next year, 2021. A 53rd weekly paycheck raises the same issues to the 27th paycheck for biweekly payrolls. But that extra paycheck is not as likely to catch the employers off guard since it’s not as uncommon. Still, weekly payroll is most typical in industries with hourly workers. So also if they’re hourly, no stress, but by weekly is the most common pay frequency for private employers, especially in industry with salaried employees.
So that’s the one we focused on here today. Your biweeklies, it’s a similar math though. You’ve got to think about the fact that if you do have people salaried paid weekly, you’re going to have some rough calculations you gotta figure out. You gotta decide whether you’re gonna prorate all year. You gotta decide whether you’re going to just pay extra and he got to look at your deductions. Again, weekly can be solved the same way. Block the fifth payroll of each month so that all of your deductions, there’s only 48 deductions a year versus 52, gives you a much more even set up for payroll deductions each month.
Contact us if you have any more questions. We’d love to help you explore how to better structure your payroll deductions to make this less of an issue. Then you don’t have to worry about your earnings. Okay, Ladies and Gentlemen, that is it for today. Just a quick deep dive into this weird calendar year, once a decade kind of occurrence. If you pay on Fridays, next year is your problem. Think about it before that, if you pay any other day of the week, Wednesday, Thursday, you’re going to wind up owing the money. You’re going to wind up with an extra payroll this year, biweekly or weekly. Thank you so much for tuning in. My name is Rhamy Alejeal, I’m the CEO of People Processes, and I appreciate your time now check us out at peopleprocesses.com. Go out there, get your work done and have a great day.
Good morning, Ladies and Gentlemen. Welcome to the People Processes podcast, where we dive deep into the tools, laws and yes processes that you need to know in order to scale and grow your organization. My name is Rhamy Alejeal, I’m the CEO of People Processes. We help organizations all across the USA streamline, optimize, implement, and revolutionize their HR operations. We’ve helped hundreds of companies across the U S ,thousands of HR leaders across the world get their people processes right.
Today, we’re going to be diving into the Tax-Free Mileage Reimbursement Stuff for 2020. It’s a little dry stick with me. It’s kind of interesting. We’re going to be covering the changes that came up here in 2020, make sure you’re all set to go forward. In the meantime though, before we dive to date, please subscribe to the podcast. You can find us on iTunes, Google podcasts, Spotify, Stitcher, any podcatcher you like. You can also subscribe at peopleprocesses.com, which will put you on our email list and send you subscriber only content. I look forward to seeing you on one of those.
Now let’s talk about this. The IRS has announced that the standard mileage rate for 2020 is 57.5 cents per mile. That’s down from 58 cents per mile for 2019. If your company reimburses employees for business use of employees’ own cars, the expenses are deemed substantial in 2020 as long as it does not exceed 57.5 cents per business mile, regardless of the employee’s actual cost. I said substantial. It’s substantiated. A reimbursement is free of employment taxes as long as the employee provides your company with a record of the time, place, business purpose, and number of miles traveled. The employee is not required to provide a record of actual expenses or receipts. Instead, they provide you a log and as long as you are paying at 57.5 cents, you’re good.
However, if you give more than this year, let’s say you didn’t update your payroll, now you’re paying 58 cents. You do not. You have to actually produce a supporting record of actual expenses. The excess under beyond that is treated as a “non-accountable plan” and it actually gets taxed as wages. On the other hand, you’re not required to pay the 57.5 cents. If you go the standard route, expenses are deemed substantiated as long as the employee reimbursement rate does not exceed 57.5 so you could do 50, you can do 45, but you can’t do more than 57.5 unless you’re actually accounting for every penny of the employees. Depreciation on their vehicle mileage, your share of their oil changes, it’s a very complex reminder. In the past, the business standard mileage rate could be used by an employees to claim a miscellaneous itemized deduction (subject to a 2% deduction floor) for unreimbursed business travel expenses. So if you didn’t reimburse them, they used to be able to write this off themselves.
However, the 2017 Tax Cut and Jobs Act (TCGA), suspended such miscellaneous itemized deductions for 2018 through 2025, that’s I.R.C. Section 67, link on our website at peopleprocesses.com if you want to read about it. Therefore, the business standard mileage rate cannot be used to claim a deduction for unreimbursed employee travel expenses.
Similarly, under prior law, an employee could claim a miscellaneous itemized deduction for the amount by which his or her actual expenses for driving exceeded the amount reimbursed by an employer, as well as for expenses such as parking and tolls that were not covered by an employer-provided mileage allowance. These deductions are also disallowed in any year during the suspension period 2018 to 2025. So if you don’t reimburse your employees for mileage used to be, they could write it off on their taxes. Now they can’t. Okay. So if you reimburse, it needs to be under 57.5. If you don’t reimburse, you’re kind of screwing your employees. This is a great way to send them some tax-free money.
There are other ways of doing this. This also talks about, what’s called a fixed and variable rate (FAVR). This is a favour allowance. This includes a cents-per-mile rate to cover the variable costs (such as gasoline) and a flat amount to cover fixed operating expenses (such as depreciation and insurance). The amount of a FAVR allowance must be based on data that is reasonable in approximating the actual expenses for the purposes of computing the allowance under our fabric plan. The standard automobile cost may not exceed $50,400 for automobiles (including trucks and vans) for 2020, so if you go that route, you probably need a little bit of help figuring that stuff out a little more in depth than what we want to cover in this podcast.
There’s another thing to think about. In 2020 the standard mileage rate for medical and moving expenses is 17 cents per mile, which is down 3 cents from 2019. So when you were reimbursing employees for moving expenses, you probably used 20 cents. Now it’s down to 17 the standard mileage rate for trips connected with charitable activities is set by statute and remains at 14 cents per mile for 2020. So if you’re reimbursing employees for traveling to a charitable event, it’s 14 cents, same as last year.
Another reminder, the TCGA changed that too. Under the prior law, taxpayers could deduct moving expenses of a job-related move. In addition, an employer’s reimbursements or payments for job-related moves were tax-free to the employee and deductible by the employer. The Tax Cut and Jobs Act suspends deductions and income exclusions for moving expenses for tax years 2018 through 2025. The only exception is members of the armed forces. So you, instead, deductions or reimbursements for mileage in connection with such moves, you would use that standard mileage rate that we were talking about that 17 cents and it would be employer paid. If you don’t do it, the employee can’t write it off.
There’s a new IRS Revenue Procedure on this. It’s linked on our website for a complete discussion of the new guidance. It’s “IRS Updates Rules of the Road for Standard Mileage Rates Reimbursements.” Payroll Manager’s Letter came out December 21st of 2019. This is a lot of information. If you do mileage reimbursements, let’s recap. It’s gone down by a half a cent. If you move, it’s gone down by 3 cents. And if you don’t do either, unlike last year, well, unlike prior years, your employees are no longer able to claim those as deductions. So if you don’t reimburse it, they’re just out of luck.
Ladies and Gentlemen, that’s it for today. Just a quick compliance update. Hope you learned something. Hope you had a good time. Reach out to us on our social media, Twitter, Facebook, LinkedIn, Instagram, wherever you want to find us. Ask us questions. We’d love to help. Thank you for tuning in. Again, my name is Rhamy Alejeal, and I appreciate you coming out. Time for you to go out there, have a great day, and get your work done.
Good morning, Ladies and Gentlemen. Welcome to the People Processes podcast, where we dive deep into the tools, laws and yes processes that you need to know in order to scale and grow your organization. My name is Rhamy Alejeal, I’m the CEO of People Processes and I’m excited to have you here.
We help organizations all across the United States streamline, optimize, implement, and revolutionize their HR operations. We’ve helped hundreds of companies and thousands of HR leaders across the world get their people processes right. Today we’re doing a little update on what the heck is going on with the Affordable Care Act. Things are changing. Before we go, I want to take a quick second to ask you to please subscribe to our podcast. It makes a huge difference. You can find us on iTunes, Google podcasts, Spotify, Stitcher, any podcast or you like. You can also subscribe on peopleprocesses.com which gives you some subscriber-only content exclusive updates. We really appreciate that.
So let’s dive into this battle over the Affordable Care Act. The fate of the 2010 Affordable Care Act, also known as “Obamacare”, including the many provisions affecting employers, such as the employer Mandate to provide health coverage – remains in limbo. A three-judge panel of the Fifth Circuit Court of Appeals has upheld a 2018 district court decision that the law’s individual responsibility provision, the individual mandate, requiring individuals to maintain health coverage violates the U S Constitution. However, unlike the lower court, the Fifth Court did not automatically stripe down the remainder of the law.
In a 2012 decision, the U S Supreme Court held that the ACA’s individual mandate was a constitutional exercise of Congress’s power to levy and collect taxes. This was a big deal. It was huge news. It’s a National Foundation of Independent Businesses versus Sabellius. If you ever want to look up the case exactly.I have a link on our website, peopleprocesses.com.
However, the 2017 Tax Cuts and Jobs Act, the Trump Tax Plan from 2017, effectively eliminated the individual mandate. It reduced the penalty for failure to maintain health coverage to zero beginning in 2019. That made a huge difference because now based on that change, Texas district court concluded that the individual mandate is no longer part of a tax. It no longer represents an exercise of Congress’s taxing powers and is therefore unconstitutional. Remember, it was only approved under their ability to tax. The court held that the individual mandate is “essential to” and “inseverable” from the other provisions of the ACA rendering those provisions unconstitutional as well. The district court did not issue an injunction barring enforcement of the ACA. Instead, they stayed its ruling pending a decision by an appeal of the Fiscal Fifth Circuit Court.
So this is important to understand. The court found that the law is not going to work, but they didn’t issue an injunction. So that means that if you are an employer, it’s February, you need to do your 1095s, 1094s. The ACA mandate is still in effect. It went up to the Fifth Circuit Court and in their new decision, they agreed that the individual mandate is unconstitutional because “it can no longer be read as a tax and there is no other constitutional provision that justifies this exercise of congressional power.” However, the Appeals Court did not accept the district court’s decision. That the demise of that one part of the law of the individual mandate rendered the entire law invalid. Instead, the Appeals Court sent the case back to the district court to “explain with precision” how the remaining provisions of the ACA “rise or fall on the constitutionality of the individual mandate.”
“It may still be”, said the court, “that none of the ACA is severable from the individual mandate even after this inquiry is concluded. It may be that all of the ACA is severable from the individual mandate. It may also be that some of the ACAis severable from the mandate, and some is not. But this is no small thing for unelected life-tenured judges to declare duly enacted legislation passed by the elected representatives of American people unconstitutional. The rule of law demands a careful, precise explanation of whether the provisions of the ACA are affected by the unconstitutionality of the individual mandate as it exists today.” Moreover, finally, the district court is determined whether the final decision should apply across the board nationwide or only to the 18 Republican Line states that actually started the lawsuits. So as we go to press right now as we write about this, a group of 21 Democratic Led States and the U S House of Representatives have petitioned the Supreme Court for an expedited review of the Fifth Circuit decision citing the paralyzing uncertainty that now hangs over the ACA.
The links to those, that’s the U S House of Representatives versus the State of Texas, et al. There’s a couple of different lawsuits going on around that. Basically, the only courts that have ruled, have ruled that the individual mandate is gone and that’s good. It’s not part of the taxing power. If the individual mandate is gone, one court ruled that the whole law has to go. There Superior court said, “We don’t know that that’s the case. Please explain why.” And that’s where we’re at now. It’s going to go back down to that district court and they’re going to have to give a good explanation why. Then the Appeals Court will decide whether that’s correct and at any point along the way the Supreme Court could reach down and pull it up as they’ve been petitioned by the House of Representatives to do. That’s your update on the ACA.
Can you take away file your 1095s? You’ve got to do it this year. You’re still under the mandate. We don’t know, maybe mid year this will all get figured out and there won’t be the ACA anymore, in which case, those of you who are offering major medical just to comply with the law won’t have to anymore. But for those of you who are in that position, don’t stop right now. File your 1095s for 2019 because if the case goes the other way, penalties are outrageously huge. So keep your insurance, make sure you’re complying with the law, pay your people to file their returns. And we’ll see how this plays out over 2020. Thank you so much for listening. Again, my name is Rhamy Alejeal and I just love having you guys tune in. Reach out to us on social media, Twitter, Facebook, Instagram. We’re always there at People Processes. I’d love to hear from you. You can also reach me on LinkedIn at Rhamy Alejeal. Thank you for listening. It’s time for you to go out there, have a great day, and get your work done.