March 1, 2011
On November 19, 2010, Burnham Benefits addressed the California taxation issue in an HCR Pathways document. As we sit here today, the issue still exists. However, California Assembly Bill 36 (AB36), which will bring state income taxes into line with federal changes under the PPACA, is currently pending and moving through the California legislature at a rapid pace.
If passed in its current form, the bill offers relief from imputed state income back to March 30, 2010, which is the date on which federal tax laws changed to waive dependency requirements for children up to age 26.
Currently, AB36 is up for Assembly vote and if passed in its current form, the Senate will entertain the bill which if passed would go to Governor Brown for signature. Political experts feel this may be completed by mid to late March 2011.
Employers, especially those that have not engaged in this imputed income process for their California employees, should contact their payroll vendor and/or tax advisor to determine the most appropriate course of action under the circumstances. Please note that if you introduce this process, you will most likely need to utilize the student certification process to determine who is affected. Your Burnham support team can discuss this further with you.
Employers who reported imputed income for 2010 will need to determine how to process refunds for the affected employees given that the taxable year has ended. This issue should be addressed by the California Franchise Tax Board if the bill passes.
Employers who have been reporting imputed income for 2011 should consult with their payroll vendor and/or tax advisor on the best way to process refunds.
For More Information
For more information about this ACA Pathways or about any other health care reform-related provisions, please contact your Burnham Benefits consultant or Burnham Benefits at:
This ACA Pathways is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel for legal advice.
The information contained in this ACA Pathways includes emerging health care news from a limited perspective and does not encompass all views. The information was selected from a wide range of sources selected on the basis of their potential impact on employers and/or their employee benefit plans. For more information, please contact Burnham Benefits.