The Affordable Care Act (ACA) and tax reform and state & local taxes (SALT), are topics under constant public and governmental scrutiny. Multiple regulatory updates and changing political landscapes add to their ongoing and evolving complexities. As a CPA and a Trusted Business Advisor, take this opportunity to explore if and how this fits into client advisory services of today and learn many of the latest updates. During the webcast, we’ll cover some of the must-know regulatory changes and how you can translate the knowledge into strategies to discuss with your clients. You’ll gain: Deeper insights into the ACA and SALT Essential client advisory talking points Practitioner-focused resources

1. WELCOMETOTHEDIGITALCPA
WEBCASTSERIES!
We will begin at 2pm ET

2. DIGITALCPAWEBCASTSERIES:
TWOEMERGINGCATEGORIES
FORTHETRUSTEDBUSINESSADVISOR
July 16, 2015

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5. CPA.com an AICPA company
• Empowering CPAs and Businesses for the Digital
Age
Erik Asgeirsson, President and CEO, CPA.com
• Industry leader with over 20 years of experience
leading technology organizations
• Consistently recognized as one of Accounting
Today’s “Top 100 Most Influential People”
• BS Electrical Engineering, George Washington
University, and MBA in Finance, NYU Stern School
of Business

6. Webcast Panelists
Steve Parish
Principal, Tax Practice, McGladrey LLP
• Principal for state and local tax services in the Charlotte office and the
National Automation Lead for McGladrey’s state and local tax practice
• Experienced consultant on traditional sales and use tax
• More than 30 years of experience with sales and transaction tax matters
Eric Enser
Product Manager – Health Care Solutions, Paychex
• ACA regulatory expert; in constant communication with IRS
• Paychex for 14 years
• Graduate of St. Bonaventure University

7. Digital CPA Webcast Series –
Building a community of digital CPAs who embrace change
and the transformational effects of technology on today’s practice
• Leadership and Change Management
Strategies, Pat Williams, VP Orlando
Magic, additional guest speaker
September 22nd
• December 7-9, 2015
DCPA15
(onsite & virtual)

8. Agenda
Two Opportunities for Trusted Business Advisors:
1. Affordable Care Act (ACA) has Arrived
2. State and Local Taxes Service (SALT) Is Coming

9. OPPORTUNITIESFORTRUSTEDBUSINESS
ADVISORS
9

10. 10
BPO – Client Accounting
Services
Financial
Tracking
&
Reporting
Bill
Payment
Payroll
SALT
Compliance
Traditional
Tax
Services
Emerging Service Areas For Client Accounting
Existing Service Areas
HR
Reporting/
Mgt
Some Emerging Service Areas

11. Tactics for Trusted Business Advisors In Providing Services
Streamline current processes to enhance operational efficiencies while
increasing value
Identify technology solutions which are scalable to each client’s individual’s
needs – ‘One Size Doesn’t Fit All’
Support client with execution of strategy and identification of tools to ensure
future success
o BPO Model
o Education based programs and webinars
o Legislative Updates
11

12. Trusted Advisors Future Opportunity
‣ Transcend the routine
‣ Develop specialized knowledge
‣ Stay ahead of automation wave
‣ Be valued for expertise and insight
‣ Translate data into wisdom
Source: “The Big Switch & Beyond” – Nicholas Carr, author, 2014 Digital CPA Conference Keynote

13. ACAHASARRIVED
Affordable Care Act is Here

14. Refresher on Employer Shared Responsibility
14

15. Employer Shared Responsibility – IRC 4980H
Employer Shared Responsibility – a.k.a.
o Play-or-Pay
o Employer Mandate
o “ESR”
In general, employers with 50 or more full-time employees, including full-
time equivalents, may be subject to a fee if they:
o Do not offer health coverage to their full-time employees and
dependents,
OR
o Offer coverage that is considered unaffordable or does not meet
minimum actuarial value
15

16. Look-back Period Timeline
• When and how do I know I’m an ALE?
• Who are my full-time employees THIS year?
• Am I offering adequate and affordable coverage?
• How and when do I file the information?
• 12 month Measurement and Stability Periods
- Transition relief allows a shorter measurement period but not less than six
months, and beginning no later than July 1 for 2014
Measurement Period
(4/15/2014 – 10/14/2014)
Stability Period
(1/1/2015 – 12/31/2015)
Admin
Period
(10/15 –
12/31/14)
20152014
Measurement Period
(10/15/2014 – 10/14/2015)
Stability Period
(1/1/2016 – 12/31/2016)
Admin
Period
(10/15 –
12/31/15)
2016 2017
Tax Filing
(1/1/16-
3/31/16)
Tax Filing
(1/1/17-
3/31/17)
ALE Determination Period for Calendar Year 2015
(1/1/2014 – 12/31/2014)
ALE Determination Period for Calendar Year 2016
(1/1/2015 – 12/31/2015)
ALE Determination Period for Calendar Year 2017
(1/1/2016 – 12/31/2016)
16

17. Penalty Comparison
17
Potential Annual Penalty*
Employer Size (>100 FT + FTEs) 2015 2016 (and beyond)
ER with 50 full-time employees $0/year $40,000/year
ER with 100 full-time employees $40,000/year $140,000/year
ER with 200 full-time employees $240,000/year $340,000/year
ER with 500 full-time employees $840,000/year $940,000/year
2015  (Number of full-time employees – 80) x $2,000
2016  (Number of full-time employees – 30) x $2,000
* Note: all penalties are assessed on a per-month basis and will be adjusted for inflation beginning in 2015.

18. Recent Supreme Court Decision - King v Burwell
Lawsuit challenged the legality of premium tax credits in 37 states
o Exact wording in ACA states premium tax credits must be obtained
through exchanges established by the state.
o Only 14 states (including DC) currently fit that description
o Impacts to affordability, individual mandate, and employer mandate
Final Decision – premium tax credits ARE legal in all states
No change to compliance or IRS tax reporting requirements for 2015
18

19. Delay for Some Employers
ALEs with 50-99
o Employers with 50-99 full-time employees (including full-time equivalents)
may not be assessed ESR penalties for 2015
Non-calendar-year health plans
o The months in 2016 that are associated with the 2015 health plan may not
be assessed penalties
To Qualify - Must maintain workforce size and hours
o The employer must not reduce its workforce size or hours – between
February 9, 2014 and December 31, 2014 – in order to stay under the 100
full-time employee including FTE, threshold
To Qualify – Must maintain coverage through 2015
o The employer must not eliminate or materially reduce any health care
coverage offered as of February 9, 2014
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20. What Employers Need for Filing
20

21. Quick Comparison – Section 6056 vs 6055
IRC Section 6056
o ALE members must file a Form 1094-C and file/furnish Forms 1095-C
Single-Combined Form Reporting for ALE Members
o Part I & II – Section 6056 Information
o Part III – Section 6055 Information
Reporting by ALE Members
o Self-Insured ALE Members
> Parts I, II & III
o Fully-Insured ALE Members
> Part I & Part II
Non-ALE Members Reporting under IRC Section 6055 Only
o Use Forms 1094-B and 1095-B
21

22. 1094-C – Employer Reporting
22

23. What Needs to be Reported – Employees (1094-C)
Monthly ALE Member Information
Aggregated ALE Group Members
23

24. 1095-C - Employee Reporting
Self-Insured
Reporting Only
24

25. Important Filing Dates
Filing of 1094-C
o Must be filed by February 29, 2016
o March 31, 2016 if filing electronically
Filing of 1095-C
o Employees must receive copies of 1095-C by February 1, 2016
25

26. Filing Method
Paper Forms - Can be submitted to one of the following addresses,
depending on location:
Department of the Treasury
Internal Revenue Service Center
Austin, TX 73301
Or
Department of the Treasury
Internal Revenue Service Center
Kansas City, MO 64999
Electronic Filing - IRS E-File is available to any ALE
o Employers with 250+ 1095-Cs MUST file electronically
26

27. Filing Penalties
Regular return’s penalties apply to 6056
o Guidance noted that, when implementing new information reporting requirements, short-term
relief from penalties frequently is provided if a good-faith effort to comply with the regulation was
made
27
GeneralInformationReporting
ReturnPenalties Correctly filed within 30 days of
the due date
• $50 per form
• Maximum penalty is $500,000/year
($175,000 for small business)
Correctly filed more than 30 days
after the due date, but by
August 1
• $100 per form
• Maximum penalty is $1.5 million/year
($500,000 for small businesses)
Correctly filed after August 1, or
not filed
• $250 per form
• Maximum penalty is $3 million/year
($1 million for small businesses)

28. Further Discuss Firm Opportunities:
1. Trusted Business Advisor Role
2. Add Human Resource Information System (HRIS) Platform As Part
of BPO/Client Account Service
3. Other
28

29. SALT -SALES&USETAX:
THENEXT‘ACA’&FUTURECAVEATS
29

30. Current Nexus Standards
Thresholds for determining nexus differs for I/F and S&U tax (Exclusive of
other various gross receipts based taxes – OK BAT, OH CAT, TX MT, NM
Commerce Tax)
o I/F Tax – Governed by PL 86-272 (provides protected activities)
o S&U Tax – PL 86-272 does not apply to non income producing taxes
Physical presence necessary – (people, property-real or tangible
personal property, payroll, systematic representation)
30

31. The New NEXUS?
Attributional Nexus
Agency Nexus
Economic Presence Nexus
Click-Through Nexus (‘Amazon Tax’)
31

32. Legislative Update – Burning issues and Current Trends in S&U
Marketplace Fairness Act (3 renditions over past few years – “The Good, The Bad and The Ugly”)
Over past few years, 23 states have passed regulatory measures which address taxation of remote sellers and
or defining new definitions for determining nexus
Remote Transactions Parody Act (currently in front of Congress – H.R. 2775 – Mr. Chaffetz))
o Introduced two weeks ago
o Combination of previous House and Senate versions of the MFA – Bipartisan support
o Phases in collection responsibility for remote sellers – 3 year tiered reduction (10M, 5M, 1M) in qualifying
‘remote’ sales
o Places a greater burden on the States to fund technology necessary from CSP’s for compliance
requirements
o Doesn’t address how provider of technology and Trusted Advisors will be reimbursed and by whom (CSP or
State)
Direct Marketing Association vs. Brohl - (Taxpayer Victory or New Can of Worms?)
o Colorado passed legislation requiring remote sellers with sales over $100,000 to Colorado customers to
either: Collect and remit sales tax voluntarily, or Comply with notice and reporting requirements
o District court enjoined enforcement of notice and reporting requirements, but 10th Circuit reversed based on
Tax Injunction Act (TIA)
o Issue before the Court: Does the TIA bar a suit to enjoin the enforcement of the Colorado notice and
reporting law
32

33. Legislative Update Continued
10th Circuit Court of Appeals will consider the Comity issue as well as Commerce Clause
implications
o Comity doctrine—federal courts refrain from interfering with states when federal rights are preserved
o 10th Circuit’s request that parties revisit the Commerce Clause issue could mean the Appeals Court will
reconsider the holdings of the 1992 Quill decision per Justice Kennedy’s request.
Justice Kennedy writing in a concurring opinion indicated that the time has come for the
Court to reconsider their prior holdings on physical presence nexus based on the modern
economic realities at play (and potentially Congress’ inaction since Quill).
“The Internet has caused far-reaching systemic and structural changes in the economy, and, indeed, in many
other societal dimensions. Although online businesses may not have a physical presence in some States, the
Web has, in many ways, brought the average American closer to most major retailers. Today buyers have an
almost instant access to most retailers via cell phones, tablets, and laptops. As a result, a business may be
present in a State in a meaningful way without that presence being physical in the traditional sense of the term.”
o “The legal system should find an appropriate case for this Court suitable to address whether the
rationale in National Bellas Hess and Quill is still viable in the modern world.”
33

34. Federation of Tax Administrators (FTA) – TAX COMPACTS
SEATA – Southeastern Association of Tax Administrators
o Twelve member states (FL, GA, AL, MS, LA, AR, TN, KY, NC, SC, WV, VA)
o Most active of FTA tax compacts
o Information sharing program between member states as well as the Secretary of State
NESTOA – North Eastern States Tax Officials Association
o Twelve member states (CT, DE, DC, ME, MD, MA, NH, NJ, NY, PA, RI & VT)
o Information sharing program between member states as well as the Secretary of State
MSATA – Midwestern States Association of Tax Administrators
o Twelve member states (IL, IN, IA, KS, MI, MN, MO, NE, ND, OH, OK, SD & WI)
o Information sharing program between member states as well as the Secretary of State
WASATA - Western States Association of Tax Administrators
o Fourteen member states (AK, AZ, CA, CO, HI, ID, MT, NV, NM, OR, TX, UT, WA & WY)
o Information sharing program between member states as well as the Secretary of State
34

35. How Small Businesses Should Respond
Review all aspects of business/sales operations on regular and systematic basis
Assess future impact on operations – Develop case scenarios
Assess current ability and resource needs to effectively handle the added administrative
burden should any rendition of ‘MFA’ be enacted
Contact their local CPA Firm, Trusted Advisor or CPA.com to receive guidance on ‘best
practices’ approach to address increase in administrative burden and to explore tax
planning opportunities
Develop a plan for future compliance
Execute plan when applicable
35

36. WHATISYOURSTRATEGY?
Having this update, what should be your
next steps?

37. Potential BPO Opportunity for SALT
1. Advisory Opportunity:
o Perform Assessments of Clients To Determine:
> Sales/Use Tax Compliance Needs
> Nexus Filing Requirements
2. BPO Opportunity
o Determine right solution and process for ongoing tax compliance
> Support system set-up
> Support configuration of tax attributes
> Support tax research
> Support filing needs
37

38. Potential ACA Strategies for Firms
First, help the client make the right decision about benefits
o Estimate the client’s size – are they an Applicable Large Employer?
o Financials of offering coverage vs potential penalty
> How many employees might qualify and obtain a tax credit if no offer?
> Can they optimize contribution strategy for group plan?
> Defined contribution vs defined benefit?
Evaluate alternatives to offering a group plan
o Private exchange and/or consumer-driven health plan options such as HRA, HSA, FSA
packages
Integrate an HRIS platform
Outsource ACA service BPO
38

39. QUESTIONS?

41. Resources
Digital CPA Webcast Series
o Featuring Pat Williams, VP of Orlando Magic
o September 22, 2015, 2-3pm ET
CPA.com Blog
Follow @CPAcom on Twitter
o #DigitalCPA
41

42. 42
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43. 43
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#DigitalCPA

44. ADDENDUM
44

45. Resources and Tools for ACA
• IRS Guidance:
– IRS and Treasury Final Regulations:
http://www.gpo.gov/fdsys/pkg/FR-2014-02-12/pdf/2014-03082.pdf
– http://www.irs.gov/uac/Affordable-Care-Act-Tax-Provisions-for-Employers
– Draft 1094-C and 1095-C Forms:
http://www.irs.gov/pub/irs-pdf/f1094c.pdf
http://www.irs.gov/pub/irs-pdf/f1095c.pdf
– Filing Instructions:
http://www.irs.gov/pub/irs-pdf/i109495c.pdf
• Paychex Resources:
– Employer Shared Responsibility:
http://www.paychex.com/health-reform/esr/
– Employer Shared Responsibility Penalty Calculator :
http://www.paychex.com/health-reform/resources/esr-calculator.aspx
– Employer Shared Responsibility Services:
http://www.paychex.com/health-reform/esr/services.aspx

46. Resources for SALT
DMA case
McGladrey Tax Alerts – WYNN, DMA, NV nexus
o Maryland updates Wynne FAQ
o US Supreme Court issues Wynne ruling
o US Supreme Court issues Wynne ruling
o U.S. Supreme Court issues DMA ruling
Draft of Remote Transactions Parity Act of 2015
46

47. Keep the Discussion Going
Twitter follow
o #ACA
o #SalesandUseTax
o #DigitalCPA
LinkedIn Groups
o AICPA Trusted Business Advisor Solutions
http://www.linkedin.com/groups?about=&gid=2820791&trk=groups%2Fhome-h-share
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