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PHILIP YAMALIS So I see it's the top of the hour so let's get started. Welcome to today's IRS presentation: "Tax Reform Basics for Employers." Ladies and gentlemen, we're glad you're joining us today. My name is Philip Yamalis. I am a Stakeholder Liaison at the Internal Revenue Service and it is my pleasure to be your moderator for today's webinar. Today's webinar will last approximately 60 minutes. Before we begin the presentation, I'd like to ask that if you are with the media, please send us an email message at the address provided on this slide. That address as you see it is: CL dot SL dot Web dot Conference dot Team @ IRS dot Gov. Now in your email, please include your contact information and the news publication that you're with. Our media relations or our Stakeholder Liaison staff will assist or answer any questions you may have. In case you experience a technology issue, this slide once again shows some very helpful tips and reminders. Folks, we posted a Technical Help document that you can download from the "Materials" button located on the left side of your screen. Of course it provides the minimum system requirements for viewing this broadcast along with some best practices and quick solutions to help you out. Now if you have technical issues, you can contact the Help Desk for assistance. As you can see on this slide, we have two numbers that you can call. The first number is 1-888-858-3240. Again that's 888-858-3240 or 954-935-7767. That is not a toll-free number, that second number. again, these numbers are available for you on this slide. Now, if you completed and passed the system check and you're STILL having problems, then please try one of the following: One option is to simply close the screen where you're viewing the webinar from and re-launch it. The second option is to click the gear icon on your viewing screen that you can find in the top right corner of the slide and photo boxes. Once you click on that gear icon, you'll be given two choices. Select the "Flash" choice instead of "HLS" from the available media box. Now if you do not have that gear icon and re-launching your viewing screen doesn't fix your problem, try using a different browser to launch and view the webinar. You might also want to close all the windows and apps that you might have open on your viewing device. And that definitely will help you out by eliminating some memory on your computer. You may have received today's materials in a reminder email. If not, you can download the power point in PDF format, as well as the technical help document that might assist you if you experience technology issues.

To download, click on the "Materials" button on the left side of your screen. As I indicated earlier, Closed Captioning is available for today's presentation. If you're having trouble hearing the audio through your computer speakers, please click the "CC" button on the left side of your screen. This feature will be available throughout the broadcast. If you have a topic-specific question for us today, please submit them by clicking on the "Ask Question" button; which is also on the left side of your screen. Enter your question in the text box and don't forget to click Submit. Very important. Please, I cannot emphasize this enough, please, please, please, DO NOT enter any sensitive or taxpayer specific information. We appreciate your questions. So please don't be shy. Send us your questions. And remember, click the submit button. During the presentation, we'll take a few breaks to share knowledge-based questions with you. At those times, a polling-style feature will pop up on your screen with a question and multiple choice answers. Select the response you believe is correct by clicking the radio button next to your selection and then click submit. Please note: you may need to turn off your pop-up blocker to receive these questions. If you do NOT get the pop up box for responding, please enter your response TIMELY in the Ask Question feature, so we can track your participation. Please note: you might need to turn off your pop-up blocker to receive these questions. Again, If you do NOT get the pop up box for responding, please enter your response timely in the ask question feature, and we will be able to track your participation with us. Remember, if you are experiencing technical difficulties during this program, I want to remind you that you can call us for assistance. I want to make sure I have the proper numbers for you here. The numbers that you can call for technical assistance today are (888)858-3240. That's a toll free number.

Or (954)935-7767. That is not a toll free number. Ladies and gentlemen, let me introduce our presenters for today's webinar. Our presenters today are John Tuzynski. John is a Director, Examination � Headquarters in the Small Business/Self Employed Division. Our other presenter is Richard Furlong he's a Senior Stakeholder Liaison as well in the Communications & Liaison Division. So folks, there's no time like the present to get things started! John, let me turn it over to you. JOHN TUZYNSKI Thank you, Philip. And thanks, everyone, for joining us today.

Payroll is critical to our tax system. In fact, 2.4 trillion of 3.4 trillion of Federal Government revenue is deposited by U.S. employers through payroll. And that's from the IRS data book in 2017. With that in mind, today we will be discussing a broad range of employer topics, including a new credit for paid Family and Medical Leave, employee achievement awards, changes to qualified transportation fringe benefits, bicycle commuting and moving expenses, a change in the rate for supplemental wages, qualified equity grants, and an Emerging Employment Tax issue.

As the chief of employment tax from 2014 through-- from 2004, through 2014, payroll's really important to me. And the first topic that we have today is a business credit. But we're going to talk about it because it's linked to employees and employers. So let's get started. Our first topic is the employer credit for paid Family and Medical Leave. This is new IRC section, 45S. And it's found in act section 13403 for those that are keeping score with respect to the Tax Cuts and Jobs Act. So this is a brand new, nonrefundable general business credit that will be reported on form 3800. At the IRS we have created a new draft form and the form number is 8994, the Employer Credit for Paid Family and Medical Leave. And so information from that new draft form will be used to compute the credit which will flow to form 3800. And interestingly enough, we had enough space on the form 3800, to accommodate a new line. We had a reserve line that we were able to press in the service for this credit. Partnerships and S corporations will report the credit to their respective partners and shareholders on Schedule K. Instructions for the form are being drafted right now by my staff here in Washington. And the instructions will contain a computational worksheet which will assist employers in determining the amount of the credit. So in terms of the length of time, the credit applies for two years beginning for tax years after 12-31-2017 and expiring for taxable years beginning after 12-31, 2019. So there is the possibility that the credit could be extended. Really don't know about that. But as you can see at this point in time it is a two year credit. And the credit is based on wages paid to qualifying employees while they're on paid Family and Medical Leave. And like everything else, there's a number of criteria to qualify for the credit. And as you'll see on the next slide, employers must have a written policy, and that policy must meet certain requirements. So the policy needs to provide at least two weeks of annual paid Family and Medical Leave which may be prorated for employees who work part-time. And in addition it must pay out not less than 50% of the wages that are normally paid to the employee. And you know, my sister had an occasion to take advantage of this credit just recently. And um, and in her case, she was out for six weeks.

And she was paid at 66 and two-thirds percent of her pay. And I think that might be consistent with a lot of the plans that are out there. So at this point, you're probably wondering well what's the amount of the credit? Well, the credit is 2.5% of the amount of wages paid to a qualifying employee while they're on Family and Medical Leave, but it's only for up to 12 weeks per taxable year. And so this is really important. So this means that employers will need to have a mechanism in place that they can use to make sure that they're only claiming the credit for those 12 weeks. Now, the minimum percentage of the credit is 12.5%. And it's increased by .25 percent for each percentage point by which the amount paid to a qualifying employee exceeds 50% of the employee's wages. So if you take the 50% times .25%, you result in the maximum credit which is 25% of an individual's payments under the program. So in terms of additional qualifications, a qualifying employee is any employee under the Fair Labor Standards Act. And I think that dates back to 1938 who has been employed by employer for one year or more and who for the preceding year had compensation that is no more than a certain amount. So this amount is a yearly adjusted figure. And it's based on IRC section 414. And for an employer that's claiming the wages paid to an employee in 2018, the employee must not have earned more than $72,000 in 2017. So this is another step that employers will need to take is to look back to their payroll for 2017 and there is no credit available if the employee made more than $72,000 in 2017. So here at my implementation office, the number one question that we've been asked is, does an employer need to reduce its deduction for wages and salaries paid or incurred by the amount of the credit? And the answer to that is "yes." Another question that we've been getting in is, can the wages that you take for the credit also be used to compute like another general business credit such as the research and experimentation credit? And the answer to that is "no." So there really can really be no double dipping when it comes to the amount of wages. So some of you may have seen this. For those of you that haven't, the IRS recently on September 24, we issued notice 2018-71 that notice is in a question and answer format. It's a very, I think, very well arranged, you know, it's an easy to read notice. And it provided additional guidance with respect to when a written policy must be in place, how the Family and Medical Leave relates to the employer's medical leave and other various qualifications with respect to this credit.

So this is a real primer for you today. If you need additional information, I would ask that you go check out the notice. I think you'll find that the most common questions that we were hearing out there, we try to answer them with respect to the guidance. So with that I'm going to turn it back over to Philip. PHILIP YAMALIS John thank you. That notice 2018-71, awesome.

Thank you for mentioning that for us today. So you know, it's probably a great time for our first polling question. So having said that, let's look at the polling question before you. It says: "Which statement is true regarding the Employer Credit for Paid Family and Medical Leave?" Here are your choices: A) Non-refundable General Business Credit B) Based on wages paid in 2018 and 2019 C) Written policy must be in place D) Credit is limited to 12 weeks per taxable year E)

All of the above Take a minute, reflect back on what John just presented to us today. Click in the radio button that you believe most closely answers this question. Which statement is true regarding the employer credit for paid Family and Medical Leave? Statements are: A) New non-refundable General Business Credit B) Credits based on wages paid in 2018 and 2019 C)

Written policy must be in place D) The credit is limited to 12 weeks per taxable year or E)

All of the above Think back. Take a moment. Think back. And please click the radio button and the answer that you believe most closely answers or most closely is true. Okay. We'll stop the polling now. Let's share the correct answer on the next slide. And the correct answer is E, all of the above. Yeah, I thought that's what it was. Now, let's see how you did. I see that 92% of you responded correctly. Well, folks, thanks for paying attention. Appreciate you keeping up with us. Rich, how about if we turn it over to you, and perhaps you can speak to us on the employee achievement awards. RICHARD FURLONG Certainly, Philip. And good day, everyone. Now, I'm going to discuss the, some changes as a result of the Tax Cuts and Jobs Act to the Internal Revenue code or actually a codification of proposed regulations that we issued about three decades ago. And as John mentioned when he was discussing the new business credit for Family and Medical Leave, if you're keeping score, the TCJA Act provision I'm referring to on this slide is act section 13310. And this applies to amounts paid or incurred after December 31, 2017. Like so many of the TCJA provisions, it begins in 2018. Now, employers are allowed to exclude certain employee achievement awards from their employee wages if the awards are for tangible personal property given by the employer to the employee. Examples would be recognition for length of service by the employee from the employer or perhaps safety achievement. And they're normally presented as part of a meaningful presentation by the employer to the employee. And employers may deduct these awards subject to certain limitations. That's been true for many years. Um, and the deductibility of these awards is addressed in IRS publication 535 on business expenses.

However, what TCJA made explicit and what it did essentially in codifying these proposed regulations that you see in the third bullet that were issued back in 1989, it defined the types of awards that are not tangible personal property and therefore would not be excludable from employee's wages. So if we move ahead on the next slide, you will see the types of tangible, types of awards that would not be considered tangible personal property and hence they would be reportable on the employee's wages and subject to income tax withholding, social security and Medicare tax reporting. So these items such as cash and cash equivalents, gift cards, gift coupons or gift certificates, tickets to theater, to shows or to sporting events or vacations.

So meals, lodging, stocks, bonds, or similar items presented as part of an employee achievement award, these are not tangible personal property. They're cash or cash equivalents. And they will be subject to withholding by the employer and fully reportable as wages on the employee's W2. Um, all of these items are considered non-tangible personal property. So with that, while I think this topic is fresh in your mind, Phil why don't we go to our second polling question.

PHILIP YAMALIS Richard, that sounds great to me. So our second polling question is a true or false question as well. Under the new law, the following are not examples of tangible property: Cash or cash equivalents Gift cards, gift coupons or certificates Tickets to theaters or sporting events Vacations, meals, lodging, stocks, bonds or similar items So is this statement as you see it on the slide, is the correct response, A, true; or B, false. Take a minute. Click on the radio button that you believe most closely answers the question, true or false. Under the new law, the following a are not examples of tangible property. Cash or cash equivalent, gift cards, gift coupons, gift certificates, tickets to theaters, sporting events, vacations, meals, lodging, stocks, bonds, or similar items? Again, is this an A true answer or B is it a false statement? All right. Let's stop the polling now, folks. I hope I've given you enough time.

Let's share the correct answer on the next slide. And the correct answer is A, true. As we can see on the statement, all of the above on the slide are not considered tangible property under the new law. Let's see how you did. Our producer's telling me that 88% of you responded correctly. Awesome. Let's, uh then turn it over to you, John, to begin the topic Qualified Transportation Fringe Benefits. JOHN TUZYNSKI Yep. Thanks again, Phil. So the tax cuts and jobs act remove the deduction for qualified transportation fringe benefits incurred or paid after December 31, 2017. That's right. The deduction has been removed. However, these benefits are still excludable from the employee's income. And again, that's just if under a certain amount. So, for 2018, that amount is $260 per month. So if the employer pays an amount over $260, that would still be taxable as it, following the methodology that's been in place for many years. So if you want additional information on fringe benefits, including Qualified Transportation Fringe Benefits, I would ask that you go to publication 15-B, page six. So this rule now applies regardless of whether the benefits are provided in addition to an employee's pay or in lieu or in place of pay. So also employers can't deduct expenses they incur for an employee's commute except as necessary for ensuring an employee's safety. Now for tax exempt employers, amounts paid or incurred for the benefits that are not deductible, increase what's called unrelated business taxable income. And we received a little bit of commentary on this.

And this is acts-- this is section 15.12, a, 6, and 7. And it's provision 13703 under the act.

And just toward the end of July we posted some additional guidance with respect to tax exempt employers. So for those of you interested, you can get the latest off of In addition if you have other questions with regard to Qualified Transportation Fringe Benefits. They are defined in code section 132F. So the next benefit I'd like to talk about, it has to do with bicycle. And bicycle commuting reimbursements. The new tax law suspends the exclusion of qualified bicycle commuting reimbursements from an employee's income after December 31, 2017 and before January 1, 2026. So employers must now report the reimbursement in the employee's wages.

And of course then it will be subject to the full range of federal withholding FICA taxes and FUTA. Under new code section, 274, qualified bicycle commuting reimbursements are still deductible, will be deductible by the employer as a business expense for that period of time.

So, moving onto another area that I think has received a lot of media attention, and that has to do with moving expenses. So there's been some really big changes here. So for 2018 through 2025, employers must now include moving expense reimbursements in the employee's wages. The new law suspends the former exclusion for qualified moving expense reimbursements. And for many, this can be very important. I know at the IRS often times we'll move executives and the cost of the move can be very significant. So now in those cases, the reimbursements are includable in income and includable in wages on the W2. Now there is an exception for that. And the exception has to do with members of the U.S. Armed Forces. Now, they can still exclude their moving expenses from their income if they're on active duty, they move because of a permanent change in their official duty station, and if the expense is otherwise would qualify as a deduction if they didn't get the reimbursement. And we did just issue guidance here, I believe it was about a week to ten days ago that has to do with moves that started in December and then weren't finished up and reimbursements made until January. So check for that information if you have a question. And now I'm going to turn it over to Richard to discuss our next topic which is supplemental wages. RICHARD FURLONG Thank you very much, John. So we're going to look at a change to an optional withholding rate for supplemental wages as a result of the Tax Cuts and Jobs Act. But first I think would be beneficial to define just what are supplemental wages. Now, these are wage payments to the employee that are not their regular wages. So what are they?

Well, they could include things such as bonuses, commissions, overtime pay, payments for accumulated sick leave, severance pay, certain awards subject to withholding, prizes, back pay, retroactive pay increases, and payments for nondeductible moving expenses. These are all examples of supplemental wages. Uh, and when an employer issues supplemental wages to the employee, they can be issued as part of the regular paycheck. And they could be subject to the normal withholding or they could be separately identified and that would permit the employer to have an optional withholding rate. Now, under prior law for supplemental wages paid prior to January 1, 2018, the optional withholding rate was 25%. But as a result of TCJA that has been reduced to 22%. Um, and we issued a notice back in, early in the year, I think it was the end of January, beginning of February. It's notice 2018-14. And like all of the IRS guidance relating to the Tax Cuts and Jobs Act, you can find that on the TCJA web page. And that notice 2018-14 instructed employers to begin using the new 22% optional flat rate for withholding on supplemental wages paid no later than February 15, 2018. In other words, for supplemental wages for which they're using the optional flat withholding rate, they should begin no later than February 15th of this year to lower that optional withholding rate to 22%. So some employers may in the first month or couple of months of the tax year withheld at the former rate of 25%. And those employers can, although they're not required, but they can make corrections via their 941.

So if the employer had not yet filed the first quarter of 941 and they discovered that they were withholding beginning after January 1, 2018 at the old rate, they could, when they file their 941 for the first quarter of 2018, the employer could repay or reimburse the impacted employee the excess withholding, and they report the correct amount of withholding on line 3 of the form 941.

But if the employer had already filed the 941, then the employer could, not required to, but could repay or reimburse the employee the excess tax withheld on or before December 31st of this year and then make the corrections using the form 941X which I'm sure many of you are familiar with. Now, under the new tax law, the mandatory withholding rate applicable to supplemental wages over $1 million was lowered to 37%. And that is the highest rate of income tax under the new law applicable for years 2018 through 2025. So if an employee's total supplemental wages from an employer in the calendar year exceed $1 million, then that employer must apply the mandatory withholding rate of 37%, not the new 22%. But 37% to the amount that is over $1 million. And Phil, I think with that, we're ready for our next polling question. PHILIP YAMALIS Richard, I think you're right. And that's, awesome. Let's do it. Audience, are you ready for our third polling question? I hope so because here it is. "Which of the following statements are true regarding the Transportation Fringe Benefits under the new law?" Is the answer� A) Bicycle commuting reimbursements are included in wages B) Moving expense reimbursements are included in wages C) Bicycle commuting reimbursements are not deductible by the employer D) A and B E) All of the above Take a minute, click on the radio button which you believe most closely answers this question. "Which of the following statements are true regarding the Transportation Fringe Benefits under the new law?" Again, possible responses are A) Bicycle commuting reimbursements are included in wages B) Moving expense reimbursements are included in wages C) Bicycle commuting reimbursements are not deductible by the employer D) A and B or E) All of the above I know John specifically mentions that. So this shouldn't be too difficult. Let's see what we have here. Okay. Let's stop the polling now, folks, and let's share the correct answer on the next slide. And the correct answer is D, both A and B, bicycle commuting and moving expenses are true. And let's see how you all did. Okay. So 77% of you responded correctly. Let's see.

John, let me have you just, um, clarify that just a bit to make sure that we're all clear that A and B would be the correct response there. JOHN TUZYNSKI Uh, yeah, Phil. So, um, you know, moving expense reimbursements are included in wages. And I actually failed to mention that they're also, you know, starting in 2018, not deductible by employees. So that's definitely true. Um, and you know, I just think C probably threw some people. So hopefully, after they've looked at the answer, it becomes a little clearer. So yeah, yeah, so hopefully next time around, just by looking at it, we'll get that. PHILIP YAMALIS Okay John, thanks so much. All right. Richard, it looks like you're going to continue for us. And, um, discuss the qualified equity grants next. RICHARD FURLONG Yes, I am, Phil. So the Tax Cuts and Jobs Act added a new section to Internal Revenue code 83. It's specifically, as you can see on the slide,83(i)

for qualified equity grants. Now, under this new section 83(i) of the code, qualified employees who are granted stock options or restricted stock units, they're also referred to as RSUs and who later receive stock upon exercise of the option or upon settlement of the RSU in the qualified stock, these employees under this new code Section 83(i) may elect to defer the recognition of income for up to as long as five years if the corporation stock was not readily tradeable on an established securities market during the prior calendar year. So this is primarily for closely held companies that are not traded on equity exchanges. Now, this election under code Section 83(i) applies only for federal income tax purposes. This is important. The election has no effect on the application of social security, Medicare, and unemployment taxes to that employee's compensation. And the law also added a new form W2 reporting requirement for these qualified equity grants. And in fact, the instructions for the 2018 W2 box 12, reflect the changes made under Internal Revenue code 83(i). So let's take a look on the next slide to what those new codes are on the W2 that you'll see because I know some of our audience today are involved in the payroll industry and prepare W2s for employees. So when you take a look at the general instructions for the 2018 form W2, and you can download those, of course, from the forms and publication page at The box 12 instructions has many codes.

But for our purposes today, you're going to see two sets of new codes. Uh, employers with employees who have qualified equity grants must report the amount includable in gross income for that year under Section 83(i) for an event that occurred during the calendar year. And for that they would use GG as you can see on your screen. But the employers also must report the aggregate amount of income which the employee elected to defer. Again under this new code Section 83(i)

as of the close of the calendar year. And for that purpose, the employer would use code HH. So with that, Philip, I think we have a polling question. I think it's our fourth and final polling question to reinforce this point. PHILIP YAMALIS Yes, we do, Richard. And, um, I think we're going to reinforce the code section that was added. Here's our fourth and final polling question. "The Tax Cuts and Jobs Act added which IRC code section for Qualified Equity Grants?" That's tough, man, that's tough. But here you go, folks. Here are your choices. Is the correct response-- A) IRC � 274(l)(2) B) IRC � 83(i) C) IRC � 414(1)(1)(B) or D) None of the above Take a minute. Click on the radio button which you believe most clearly answers the question. I know Rich mentioned it a couple of times and it was on the slide. Just checking to see if we're all paying attention here. The Tax Cuts and Jobs Act added which IRC section for qualified equity grants? Again, click on the box that you believe is the correct response. Okay. We'll stop the polling now. Let's share the correct answer on the next slide. All right. And the correct answer is B, IRC section 83(i). is the new section for qualified equity grants. See how many of you got that correct. 85% of you responded correctly. And you just got that code memorized.

I'm impressed. So John, let me turn it over to you to talk about an Emerging Employment Tax issue. JOHN TUZYNSKI Now, thanks again, Phil. So, um, you know, as the former chief of employment tax, I went to our compliance operation, and I asked them, you know, what would be an Emerging Employment Tax issue that you could talk to tax professionals about and employers? And I originally thought they might come up with an issue regarding independent contractor versus employee or some additional fringe benefit items. Well, they didn't. So what I heard from my compliance operation was an issue with regard to wellness benefits. So in order to obtain a reward, employees may need it take a health assessment questionnaire, and maybe you've participated in one of those or to participate in a biometric screening that's really designed to attain a health-status change. So rewards often include things like gift cards, gym memberships or similar benefits when an employee engages in healthy behaviors or makes healthy lifestyle choices. Employers providing wellness benefits to their employees, may not be taxing these benefits correctly as wages subject to the full range of taxes such as income tax, FICA and and FUTA. And again, that's coming from the compliance operation. So one of the things that, you know, we want to make sure is clear is that, if the benefit offered, for example, it's a gift card, if it's available to an employee in cash, the benefits are taxable as wages and those benefits would be subject to employment tax. So if the employer provides in-kind benefits, okay, if their in-kind benefits that do not qualify under section 213 as medical expenses, you know, they need to be included in income. And the thing that we're seeing upon audit really has to do with gym memberships. So a gift card as an example, you know going back to that, and what do most people want, right? They like gift cards. A gift card would generally be taxable whether available in cash, or not, unless the gift card can only be used for a section 213 medical expense. And so again, I would say, any of you out there, you know, that are thinking about using a gift card, you know, for a wellness benefit, I think really substantiation is the key.

Because, you know, you would almost have to have reporting by the employee to be able to sustain the deduction that they could only use it for medical expenses. Not that it can't happen, but I think you just want to make sure you have the right substantiation in place for that.

Note that regardless of whomever offers wellness benefits on behalf of an employer such as an employer's union plan, the health insurance provider, if the wellness benefit is taxable, the employer is actually liable for the payment and withholding of the applicable employment taxes.

So in addition to the most common wellness benefit programs previously discussed, some employers have actually gone now, and they're offering a wellness arrangement where they exclude from income both a before tax premium and a reimbursement within the same period. Under existing law, the reimbursement in this arrangement is still going to be wages subject to employment tax.

So I just think you were talking about some permeations here with these benefit programs. And I would just caution employers out there it make sure that you do some additional research and have again the reporting in place, you know, and understand this new, the change here. You know, frankly when I went to compliance, I wasn't sure that this issue was coming up frequently. And then I found out that there actually is a Chief Counsel Advice on this particular provision.

And that-- Chief Counsel Advice is 2016-22031. So it's-- that counsel advice dates back to 2016. And that's indicative of just how long right that this has been an issue out there for our examiners from the IRS working with employers. Um, I think you can also see that it's important to also note, if you want to do additional research that under existing law, and there are sections 105 and 106, you know, the amount of these reimbursements are going to fall under that in determining whether they're wages subject to employment taxes. So with that again, look to the chief counsel advice. There's also a revenue ruling in place, and it's 2002-3 and 2002-80. And again, those are available on And let me turn it back over to Richard. RICHARD FURLONG Well thank you, John. And before we get to our Q&A portion, I want to remind you of the terrific resources you can find at the web page whose URL you can see on the top of the screen. / tax reform. We put a lot of effort into the tax reform pages on to provide the latest information both the technical information and guidance provided by the Treasury Department. And our Chief Counsel's office. And also what we refer to as soft guidance. And those can be fact sheets, news releases, announcements, all of it is there. And all of it can be found very easily. As Philip mentioned in his opening remarks, as a result of the redesign of the tax reform pages earlier this summer, when you go to the page that you're seeing on the screen, uh, you can see columns for individuals, for businesses, and for tax exempt government entities. And if we go to our next slide, you can see bulleted items that you'll find on the landing page at tax reform on the left-hand side where you can click on links to news releases and fact sheets, tax reform tax tips. We have some terrific FAQs in various areas. We also have short YouTube videos. I know many many of you attending today subscribe to one or more of our subscription services. Of particular interest is the e-news for tax professionals and the e-News for payroll providers. And then as I mentioned there's also the legal guidance in form of regulations, proposed regulations and when issued final and temporary regulations, revenue rulings, notices, some of which John and I mentioned today. And then finally there are three publications specifically for employers. And many of you are familiar with one, if not all three of these. The Employer's Tax Guide also affectionately referred to as Circular E. The employer's supplemental tax guide, publication 15A. And then of particular interest for today's topic, the employer's guide to fringe benefits, publication 15B. All of these were updated early in the year for 2018 as a result of the Tax Cuts and Jobs Act. So I encourage you to check those out. Save those and look at those frequently. And with that, Philip, let me turn it back over to you to open up our Q&A period. PHILIP YAMALIS All right, Richard. Thanks again. Um, it's Philip. I'll be moderating the question and answer session today. John and Rich will be sticking along to answer some questions. We have several subject matter experts along to help us out today. from SBSE Employment Tax Policy, we've got Laird MacMillan who is with us today. From Counsel we have Dennis, Denise, I'm sorry Denise, Denise Trujillo. And Jason Levine from Counsel. Chuck Hall is also with us from SBSE Counsel. Thank you all for joining us today. Before we begin the Q&A session, I want to mention again that we might not have time to answer all the questions submitted during this webinar. Let me assure you that we're going to try to answer as many as we have time for. I also want to remind everybody before we start the Q&A that you can download a copy of this presentation by clicking on the materials button on the left side of your screen. So, um, don't forget. You can download those materials if you haven't already done so. Please note also, that if you are participating to earn a certificate and related continuing education credit, you'll qualify by participating for at least 50 minutes from the original starting time of this webinar. Unfortunately you can't include that first few minutes of chatting that we engaged in. Sorry about that. All right. Everyone, we've received a lot of questions. So let me get started so we can get to as many of these questions as possible. Let me start by throwing a couple of questions to you, Denise and Jason. Again, thanks for joining us today. It's regarding the paid Family and Medical Leave. Two questions. The one asks us to repeat the code section for paid Family and Medical Leave. And then someone asks us is paid Family and Medical Leave as described today available also to exempt organizations?

JASON LEVINE Thanks, this is Jason. Um, I just want to say at the outset that Denise and I are both, as you mentioned coming from counsel. And while we're here talking about an area we know about which is is the Family and Medical Leave credit, the official position in the official guidance. this is another question that came in. Someone wanted us to repeat the notice that John had mentioned earlier. That's IRS notice 2018-71. And you can find that on or you can Google or use Bing and simply type in IRS notice 2018-71. In 2018-71 has 34 questions with lots of examples that cover many of the questions, if not almost all of the questions that were asked of us today. And they're very accessible through the means I just mentioned. But the code section, the question was what is the code section for the credit, the code section is section 45S, cap S. So it's not 45 with a parenthesis S. It's 45 with a big capital S. So that's-- yeah, okay. And then you had mentioned something about-- PHILIP YAMALIS Exempt organizations. JASON LEVINE Yeah, exempt organizations. One of the things we'll mention a little bit later and there's another question on that is in order to claim the credit you need to be an eligible employer. And in my answers I'm going to refer everyone to certain Q&As in that notice that I mentioned because it's all listed right there for you. And you can take your time in viewing those comprehensive answers. So eligible employers is defined in questions one through three of notice 2018-71. And as long as you meet the requirements for an eligible employer you have the ability to claim the credit. But I will say one more thing, and this is also covered in Q&A 24. This relates to tax exempts. You can only claim the credit if you pay wages under 3306 which is the unemployment tax section. So not all tax exempts are the same in that regard. Some do pay those wages, others don't. So I would encourage folks to talk with their tax advisors to see what kind of wages they pay. PHILIP YAMALIS Okay, so as long as they're meeting the criteria of the exempt organizations-- JASON LEVINE Yeah, there's no specific prohibition against any type of employer. It's just you need to meet the requirements of the credit. PHILIP YAMALIS Well then let's follow-up and ask you this. Can an employer get the FMLA-- credit�there we go with acronyms again, I'm sorry, the Family and Medical Leave available credit, the Family and Medical Leave credit if a third party paid the employee? Can that credit still be available? JASON LEVINE It can under certain circumstances. And we do have a question on that as well. Um, actually, I did not carve that one out. Um, that one,-- DENISE TRUJILLO That one, Jason, I can step in. That one is uh a Q&A 25. JASON LEVINE Q&A 25. Yes. The third party. PHILIP YAMALIS I'm impressed that you guys anticipated these questions in your Q&A. That's pretty impressive. JASON LEVINE We did. Well these are a lot of questions that we grappled with ourselves. So yes, you can. But, um, a third party can pay those wages. But the credit is only available to the common law employer of the employee.

PHILIP YAMALIS Once again, this emphasizes Rich's point that we have awesome frequently asked questions otherwise known as FAQs on the tax reform website. So we do urge our listeners today to go to that website to see these frequently asked questions because your question might be in there. All right. Let me throw one more at you two. Can an employer combine the benefit of paid time, paid time off with paid Family and Medical Leave and apply for the credit? DENISE TRUJILLO Uh, generally no. I mean, under Q&A 9 of the notice-- thank you, Jason. We actually deal with this question. So paid leave made available to an employee is considered Family and Medical Leave for purposes of this credit only if it's specifically designated for one or more family purposes. And it may not be used for any other reason and also cannot be paid by a state or local government or required by state or local law. PHILIP YAMALIS Awesome. Thank you, Denise. JASON LEVINE And I would note though, if people have questions about that because a lot of employers have a lot of different leave policies. To look at the Q&A in detail that Denise mentioned, Q&A 9. And we have a number of examples in that Q&A that may address your actual policy itself. DENISE TRUJILLO Right. And there's also questions relating to the documentation in Q&A 9 and Q&A 10. So again we do direct you to the notice. PHILIP YAMALIS Fantastic. Well then, let me turn it over to Laird. Laird, help us out here. We got questions on bicycle moving expenses. So are they considered earned income? LAIRD MACMILLAN they were now. Speakers Overlapping]. JASON LEVINE Go ahead. LAIRD MACMILLAN Reimbursement for moving expenses are includable in income now except for the carved out for the qualified military personnel. PHILIP YAMALIS Okay. Got you. So bicycle moving expenses-- they are considered earned income. LAIRD MACMILLAN Well, bicycle, of course, you can move by a bicycle.

But bicycle expenses are different than the moving expenses. And I want to clear something up about the polling question. There were two provisions in the recent tax law act. They kind of work at cross purposes, addressing qualified transportations benefits. But the summary is, this will be interesting-- that biking is now suspended as a nontax benefit. The only qualified transportation that is suspended as a nontax benefit. However, biking is deductible by the employer as an expense as oppose to all the other qualified transportation benefits have been excluded in the new tax law from being a deduction. However, all the other benefits other than biking remain tax free. So it's a four-part summary. PHILIP YAMALIS So the bicycle expenses are still deductible by the employer through 2025 then? LAIRD MACMILLAN Correct. PHILIP YAMALIS Okay. Even though they're suspended. Let me just make sure that you include you, Chuck. What about if it's not reimbursed to the employee but rather paid directly to the mover by the company. Is that moving expense taxable to the employee? CHUCK HALL Uh, yeah.

Whether the payment, whether it's payment to a moving company directly or reimbursed to the employee, the new law suspends for 2018 through 2015-- it suspends the inclusion. So that money has to be included in the employee's income. There's an exception for members of the Armed Forces and there's the exception in notice 2018-75 which is for moving expenses that were incurred in 2017 but not reimbursed or paid until 2018. Those can still be excluded. PHILIP YAMALIS Chuck, thank you so much. Laird, you as well. Denise, Jason, thank you for joining us. My producers are really getting at me and telling me that all the time we have right now that we have for questions. I really want to thank our presenters, John Tuzynski and Richard Furlong for their presentation today and for our subject matter experts for answering your questions. We really appreciate them sharing their knowledge with all of us today. Um, John, and Rich, before we close the question and answer session, what are the most important points that you want the attendees to remember from today's webinar. John, let me start with you. Will you please share your key points with us, please. JOHN TUZYNSKI Yeah, we started off the day talking about the employer credit for paid Family and Medical Leave. This is a new business credit. And it's available to many employers out there. So see if the credit works for you.

Um, I think Rich talked about how, um, that employee achievement awards, you know, some of the nuances regarding what constitutes tangible personal property and payments like gift cards and payments such as cash do not qualify for employee achievement awards. And then if you have a wellness benefit program out there, you may want to do-- refer to this presentation or for additional information. Ask to how to set it up that will result in you being able to deduct it or not. So take a look at that information we have through that chief counsel advice and some of the sites we gave today. PHILIP YAMALIS Awesome. And again, that Chief Counsel Advice was 2016-22031. I want to repeat that one more time. John thank you so much. Richard, would you please take the time to share your most important points with us today. RICHARD FURLONG Certainly, Phil. And I think the overarching point I'd like to make is that, as you're all aware the tax acts and jobs act has made significant changes in many aspects of the law and specifically as was discussed today by John for the employer Qualified Transportation Fringe Benefits, those bicycle commuting expenses and the employer moving expense reimbursement. They have all been impacted by TCJA. Additionally the optional withholding rate for supplemental wages is now lowered from 25% to 22% beginning with supplemental wages paid in 2018. And then of course there are new codes in the form W2 for reporting qualified equity grants. And all of this information and much more can be found again at reform. And with that Philip, let me toss it back to you. PHILIP YAMALIS Thank you, Richard. Thanks, John. What an excellent presentation. I'm sure our audience will agree that you guys did a phenomenal job today. We really, really appreciate your time and efforts and time with us today. Ladies and gentlemen, for those of you that attended today for at least 50 minutes after the official start time of the webinar, you will receive a certificate of completion that you can use with your credentialing organization for possible CPE credit. If you're eligible for continuing education from the Internal Revenue Service and you registered today with your valid PTIN, your credit will be posted to your PTIN account. And if you're eligible for continuing education from the California Tax Education Council, your credit will be posted to your CTEC account as well. If you do qualify and you have not received your certificate and/or credit by November 8, again, that's November 8, please give us an email at That email address is shown on this slide. If you know someone that would benefit from the information shared today, please let them know that they will be available, that they will be able to view the webinar on IRS in approximately four weeks. As a reminder, we're not able to grant CE-- for webinars viewed on IRS but they are archived for us and they serve as an excellent tool for you to view these webinars if you didn't get to view them live. If you want to know who your local stakeholder liaison is, you can send us an email using the address shown on this slide. And we'll send you that information or you can find a contact for your state by simply visiting, typing in the keyword search, stakeholder liaison. I know that you already know that I and Rich serve the state of Pennsylvania as well as some other states. So we're there to help you, and hope that you'll contact us. As part of the Services efforts to provide you with timely topics and interesting speakers, we really would appreciate if you take a few minutes to complete a short evaluation before you exit today's webinar. If you have any requests for future webinar topics or pertinent information that you'd like to see in an IRS fact sheet, tax tip, or frequently asked questions on, please include your suggestions for us in the comment section of the survey or in the ask question feature on your viewing screen. Click the survey button on the left side of your screen to begin our survey.

Again, let me remind you that if it doesn't come up, check to make sure that you've disabled your pop-up blocker. Ladies and gentlemen, we hope that you'll be able to join us for some webinars that we'll be offering throughout the year. As you can see on l on this slide we have several webinars planned for the upcoming weeks. We hope that you'll be able to attend one or more of these webinars. We're excited to present them to you. To register for these and other upcoming IRS webinars, visit type in the keyword "webinars" and select webinars for tax practitioners or select webinars for small businesses. And we hope that you'll look to your local stakeholder liaison for information about policy, practices, procedures that the IRS uses to ensure compliance with the tax laws. We also elevate issues that affect tax administration by using the issue management resolution system. So if there's an issue out there that's bugging you, please contact your local stakeholder liaison so that we can help elevate that issue for you. Ladies and gentlemen, again, it's been a pleasure to be here with you today. And on behalf of the Internal Revenue Service, our background crew here, I'd like to thank you for attending today's webinar. It's really important for the Internal Revenue Service to maintain strong partnerships with the tax professional community, with industry associations as well as other federal, state, and local government organizations. Folks, you really make our job a lot easier by sharing the information that allows for proper tax reporting and compliance. Again, thanks again for your time and attendance today. Much success to all of you in your business or practice. Feel free to exit this webinar at this time. Good day.