IRS Warns About Payroll Data Scam

March 28, 2017

Employers, employee benefit plans and their service providers beware!  The Internal Revenue Service is warning you to be on the watch for a dangerous email scam currently  circulating nationwid that targets  targeting employers, including tax exempt entities, universities and schools, government and private-sector businesses.

According to the IRS,  the scammer poses as an internal executive requesting employee Forms W-2 and Social Security Number information from company payroll or human resources departments. They may even send an initial “Hi, are you in today” message before the request.  

Employers and other businesses who might be targeted by these or other identity theft scams should take steps to ensure that their staff and vendors are appropriately trained to recognize and guard against these activities. 

Employers and other parties receiving tax or other sensitive information face legal obligations and liabilities and are a myriad of loss for failing to properly protect the privacy and security of that data.  

Additionally, employers, payroll, benefit plans and their service providers  that received a suspicious contact like the one reported in the alert should consider reporting the loss and other protective actions.  For possible breaches of tax information, the IRS has established a process that employers and payroll service providers can use to quickly report any data losses related to the W-2 scam. See details at Form W-2/SSN Data Theft: Information for Businesses and Payroll Service Providers. If notified in time, the IRS may be able take steps to prevent employees from being victimized by identity thieves filing fraudulent returns in their names. There also is information about how to report receiving the scam email even if you did not fall victim.

Tax professionals who experience a data breach also should quickly report the incident to the IRS by contacting their local stakeholder liaison. See details at Data Theft Information for Tax Professionals.

While employers or other businesses targeted for or victimized by the scams likely will want to report the activity as soon as possible to the IRS, businesses should keep in mind that their responsibilities and liability exposures may not and with making such a report. Federal law imposes specific obligations when personal financial information is breached under a wide range of circumstances.  Additionally, most states have identity theft or other laws that require businesses and employers to protect sensitive personal data including payroll information as well as specific reporting requirements when a breach happens.  Depending on the nature of the breach and the information compromised employers may have obligations to file reports and take other specific responsive actions.  Additionally employers may need to provide notification to liability insurance carriers and other vendors or business partners who may be impacted by the breach or attempted breach.

In order to ensure that all responsibilities are properly recognized and handled, employers are other businesses or plans that may be impacted by a scam or other data breach should contact qualified  legal counsel, experience in advising in representing businesses in preventing and responding to these activities, assistance in investigating and documenting their actions in response to the scam or breach,as well as about the advisability of any reporting to federal or state agencies, liability insurers, other business partners and even affected individuals.


Trump Administration Grants Fiduciary Rule Prohibited Transaction Relief

March 27, 2017

Employer and other employee benefit plan sponsors, fiduciaries and investment and financial service providers and other plan service providers should review their plans for possible transactions that may qualify for excise tax relief under new guidance issued today by the Internal Revenue Service and Department of Labor.

IRS Announcement 2017-04, scheduled for publication in the Federal Register as  IRB 2017-16 on April 17, 2017, provides relief from the excise taxes under section 4975 of the Internal Revenue Code and any related reporting requirements  to conform to the temporary enforcement policy described by the Department of Labor (DOL) in Field Assistance Bulletin (FAB) 2017-01 with respect to the final fiduciary duty rule published in the Federal Register on April 8, 2016 (81 F.R. 20946), entitled “Definition of the Term ‘Fiduciary’; Conflict of Interest Rule – Retirement Investment Advice” and related prohibited transaction exemptions, including the Best Interest Contract Exemption (BIC Exemption), the Class Exemption for Principal Transactions in Certain Assets Between Investment Advice Fiduciaries and Employee Benefit Plans and IRAs (Principal Transactions Exemption), and certain amended prohibited transaction exemptions (collectively, PTEs)

The relief parallels similar relief provided by the Department of Labor to these individuals in a recently released Field Assistance Bulletin.

The new DOL and IRS guidance gives temporary relief to the DOL final regulation defining who is a “fiduciary” of an employee benefit plan under § 3(21)(A)(ii) of ERISA as a result of giving investment advice to a plan or its participants or beneficiaries published April 6, 2016.  That final rule, which also applies to the definition of a “fiduciary” of a plan under § 4975(e)(3)(B) of the Code, treats persons who provide investment advice or recommendations for a fee or other compensation with respect to assets of a plan as fiduciaries in a wider array of advice relationships than was true of the prior regulatory definition.   Concurrent with its publication of the final rule, the DOL published the PTEs, which provide two new administrative class exemptions from the prohibited transaction provisions of ERISA and the Code, as well as amendments to previously granted exemptions. 

The PTEs would allow, subject to appropriate safeguards, certain broker-dealers, insurance agents, and others that act as investment advice fiduciaries, as defined under the final rule, to continue to receive a variety of forms of compensation that would otherwise violate prohibited transaction rules, triggering excise taxes and civil liability.

The final fiduciary duty rule became effective on June 7, 2016, and has an applicability date of April 10, 2017. The PTEs also have an applicability date of April 10, 2017, with a phased implementation period ending on January 1, 2018, for the BIC Exemption and the Principal Transactions Exemption. 

President Trump, by Memorandum to the Secretary of Labor dated February 3, 2017, directed the DOL to examine whether the fiduciary duty rule may adversely affect the ability of Americans to gain access to retirement information and financial advice and to prepare an updated economic and legal analysis concerning the likely impact of the rule as part of that examination.

After requesting comments on the final rule on March 3, DOL on March 10, 2017,  announced a temporary enforcement policy related to its proposal to extend for 60 days the applicability date of the fiduciary duty rule and the related PTEs. The policy announced in FAB 2017-01 provides  that:

  • If DOL issues a final rule after April 10 implementing a delay in the applicability date of the fiduciary duty rule and related PTEs, the DOL will not initiate an enforcement action because an adviser or financial institution did not satisfy conditions of the rule or the PTEs during the “gap” period in which the rule becomes applicable before a delay is implemented, including a failure to provide retirement investors with disclosures or other documents intended to comply with provisions of the rule or the related PTEs. 
  • If DOL decides not to issue a delay in the fiduciary duty rule and related PTEs, the DOL will not initiate an enforcement action because an adviser or financial institution, as of the April 10 applicability date of the rule, failed to satisfy conditions of the rule or the PTEs, provided that the adviser or financial institution satisfies the applicable conditions of the rule or PTEs, including sending out required disclosures or other documents to retirement investors, within a reasonable period after the publication of a decision not to delay the April 10 applicability date.

Field Assistance Bulletin 2017-01 provides that, to the extent circumstances
surrounding its decision on the proposed delay of the April 10 applicability date give rise to the need for other temporary relief, including retroactive prohibited transaction relief, the DOL will consider taking such additional steps as necessary with respect to the arrangements and transactions covered by the DOL temporary enforcement policy and any subsequent related DOL enforcement guidance. Following the issuance of the FAB, stakeholders have raised concerns about the potential application of excise taxes under Code § 4975 and related reporting obligations in cases covered by the DOL’s temporary enforcement policy. 

Because the Code and ERISA contemplate consistency in the enforcement of the prohibited transaction rules by the IRS and the DOL, the Treasury Department and the IRS determined it appropriate to adopt a corresponding temporary excise tax non-applicability policy that conforms with the DOL’s temporary enforcement policy described in FAB 2017-01. Accordingly, ,Because the Code and ERISA contemplate consistency in the enforcement of the prohibited transaction rules by the IRS and the DOL, as further reflected in and facilitated by the statutory Reorganization Plan, the Treasury Department and the IRS have determined that it is appropriate to adopt a temporary excise tax non-applicability policy that conforms with the DOL’s temporary enforcement policy described in FAB 2017-01. Accordingly, Announcement 2017-04 provides that the IRS will not apply § 4975 and related reporting obligations with respect to any transaction or agreement to which the DOL’s temporary enforcement policy, or other subsequent related enforcement guidance, would apply. 

The new collective guidance provides a short reprieve from the obligation to comply with the otherwise applicable of the fiduciary rule pending the new administration to review and reconsideration of that rule. How many will welcome this relief, plan sponsors, fiduciaries and service providers need to keep in mind that it’s provisions are temporary in nature and do not preclude a participant or beneficiary from seeking to establish liability of an individual providing advice or assistance with respect to services under the facts and circumstances in an ERISA lawsuit.  Because of the risk of litigation even when the agencies are standing down from enforcement, plan sponsors and fiduciaries and the service providers that assist them with reviewing and making investmentat all times should take care to be able to defend their actions under the fiduciary rules. 


Read Latest Version of Republican Health Reform Bill

March 21, 2017

Republicans continue to push health reform on the fast track. Read the Manager’s Amendment to H.R. 1628 at https://rules.house.gov/bill/115/hr-1628, which is scheduled to go before the House Rules Committee before a planned House vote Thursday.


Teach Patients To Protect Against Healthcare Associated Illnesses

March 18, 2017

Staff infections are only one category of serious infection risks that patients and their families face when getting health care treatment. Patients can reduce these infection risks by sharing the following tips from the Center for Disease Control:

  • Speak up. Talk to your doctor about any questions or worries. Ask what they’re doing to protect you.
  • Keep hands clean. Make sure everyone, including friends and family, clean their hands before touching you. If you don’t see your healthcare providers clean their hands, ask them to do so.
  • Ask each day if your central line catheter or urinary catheter is necessary. Leaving a catheter in place too long increases the chances you’ll get an infection. Let your doctor or nurse know immediately if the area around the central line becomes sore or red, or if the bandage falls off or looks wet or dirty.
  • Prepare for surgery. Let your doctor know about any medical problems you have. Ask your doctor how he/she prevents surgical site infections.
  • Ask your healthcare provider, “Will there be a new needle, new syringe, and a new vial for this procedure or injection?” Insist that your healthcare providers never reuse a needle or syringe on more than one patient.
  • Get Smart about antibiotics. Antibiotics only treat bacterial infections – they don’t work for viruses like the ones that cause colds and flu. Ask your healthcare provider if there are steps you can take to feel better without using antibiotics. If you’re prescribed an antibiotic, make sure to take the prescribed antibiotic exactly as your healthcare provider tells you and do not skip doses.
  • Watch out for deadly diarrhea (aka Clostridium difficile). Tell your doctor if you have 3 or more diarrhea episode services in 24 hours, especially if you’ve been taking an antibiotic.
  • Know the signs and symptoms of infection. Some skin infections, such as MRSA, appear as redness, pain, or drainage at an IV catheter site or surgery site and come with a fever. Infections can also lead to sepsis, a complication caused by the body’s overwhelming and life-threatening response to an infection.
  • Get Vaccinated. Getting yourself, family, friends, and caregivers vaccinated against the flu and other infections prevents spread of disease.
  • Cover your mouth and nose. When you sneeze or cough, germs can travel 3 feet or more. Use a tissue to avoid spreading germs with your hands.

Healthcare-associated infections are not only a problem for healthcare facilities – they represent a public health issue. Learn more about how to be a safe patient. Read: Patient Safety: What You Can Do to Be a Safe Patient.

©2017 Cynthia Marcotte Stamer. Nonexclusive license to republish granted to Solutions Law Press, Inc.


Update CMS Bookmarks By April 3

March 17, 2017

The Centers for Medicare & Medicaid Services (CMS) has merged all up-to-date content from its Road to 10 website to its main ICD-10 site, cms.gov/ICD10.
It expects to finish its  phase out the Road to 10 site by April 3.

In preparation for the merge, health care providers and other interested parties  should update all bookmarks and links for Roadto10.org to point to cms.gov/ICD10 as soon as possible and no later than April 3.


Read American Health Care Act

March 6, 2017

Paul Ryan released the American Health Care Act (Act)-the Republican leaderships’ proposed bill to repeal or reform the Obamacare law, the Patient Protection and Affordable Care Act (ACA).  

When introducing the Act, Speaker Ryan touted the Act as rescuing the US health care system from the ACA driving down costs, encouraging competition, and giving every American access to quality, affordable health insurance. 

Read the Act here and share your specific ideas and thoughts about the Act and your other input on what our health care system should look like going forward, how these proposals relate and the other reforms you believe Congress should make to build a better healthcare system for today that can survive into the future by joining the discussion in the Solutions Law Press, Inc. Coalition for Responsible Health Care Policy LinkedIn Group


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