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• Tax

Month-End Benefits Reminders

Reminder of ISO/ESP Reporting Obligations

No later than January 31, 2008, every corporation that issued stock pursuant to the exercise of an incentive stock option (an "ISO") during 2007 must provide the optionee a statement containing certain information. The statement is required even if the optionee disposed of the stock in a "disqualifying disposition." However, if there was a disqualifying disposition, there are also additional reporting obligations. The tax law also requires corporations to provide certain information to an individual who transfers shares acquired pursuant to an employee stock purchase plan. A failure to satisfy either of these requirements, absent reasonable cause, can result in a $50 penalty with respect to each failure.  (Penalties are capped at $100,000 per calendar year.)

A change in the Internal Revenue Code now also requires reporting of this information to the Internal Revenue Service. The Service, however, recently announced that this reporting obligation will not apply to 2007 exercises or transfers.

If you would like a sample statement, please let us know.

Introducing a New Massachusetts Health Care Reform Reporting Requirement 

The Massachusetts Department of Revenue has issued an emergency regulation implementing a new reporting requirement related to Massachusetts Health Care Reform. Under the regulation, on or before January 31^st of each year (January 31, 2008 for the 2007 year) employers must issue a written statement on Form MA 1099-HC to each Massachusetts resident who participates in an employer-sponsored health plan, whether through an insured or self-insured arrangement. A filing with the Commonwealth is also required.

The statement identifies: the employer; the name, address and date of birth of the participant; the name(s) and date(s) of birth of covered dependent(s); the policy number (if applicable); and the date(s) of coverage. Employers may contract with a service provider or insurance carrier to issue the Form MA 1099-HC, a copy of which is available on the Department of Revenue’s website. Failure to issue the statement may result in a penalty of $50 for each failure. (Penalties are capped at $50,000 per calendar year.)

And While on the Topic of Massachusetts Health Care Reform. . . .

Remember also that Employee Health Insurance Responsibility Disclosure ("HIRD") Forms, required if an employee declines to participate in an employer’s health plan or declines to participate in an employer’s section 125 plan available, for example, to pay for Commonwealth Choice or Commonwealth Care benefits, are due 30 days after the end of open enrollment. So for employers subject to this requirement who maintain calendar year health plans, the forms must be collected by January 30, 2008.

If you have any questions about this, or other obligations, under the Massachusetts Health Care Reform law, please contact us.