GBurns

Aren't the availability and conditions of the loan based on the terms and conditions of the particular 457 plan? What does your plan state?

mbozek, Why is it so difficult for you to understand the difference between interpreting codes whether building, zoning or tax and advising on legal action or filing a lawsuit or brief? Re the taxation section of some state bar exams. Even these are longer than that taken by a CPA. The fact that lawyers are "deemed" competent to represent before the IRS does not mean that most would even accept the assignment (they know their limitations and E&O) or that the IRS would accept that person as a representative anyhow. As I tried to state before giving opinions based on a casual or cursory reading of an issue can be dangerous.

I guess this means that absent language in your self-insured plan, the COBRA plan which covers this spouse directly would be primary, if I read Kirk's cite correctly.

Whether reasonable or not it is more important to be ordinary and necessary as per section 162. Reasonable is not even secondary in this issue. I will send you some cites etc on the subject of why you do need a QSPP but I do not have ready access to my archives for a few days. You might want to contact your local Unum office (not agent or broker), they used to have some excellent material addressing this issue. You do raise a good point as to whether or not the QSPP could or would be satisfied by being included in the employmant agreement. I do not see why not but then again I never had to research the issue. I do know that some formal agreement in writing is needed, but as I said let me get to my archives.

If they are fully insured, it would be something indicated in their master policy. If they are instead self-insured, it depends on what their PD says assuming that it does not conflict with their SPD. What does yours say about dependent coverage and situations at conflict? In any case, are you stating that this spouse has dual coverage? I usually see that COBRA is dropped when other coverage is secured. What happened in this case?

The US Supreme Court delared way back in the 1950s that the preparation of tax returns and the interpreting and advising on the IRC was not the practice of law. This case involved H&R Block and was the case that opened the door for non-lawyers to sign tax documents etc. I guess the rationale was that the tax laws were part of a "Code" wheras other things were "Statutes". I have not reread that decision in 40 years. I have never seen or heard of any Bar that has even bothered to think of attacking this since the 1950s decision. mbozek, These is NO state that licenses "CPAs to represent clients and render opinions on the tax law". Whether or not a CPA decides to practice in the area of taxation or any other area is of no concern to any state. Tax law is not inherently part of any CPAs expertise and in fact it is a minor enough part of the CPA examination that it is possible and reportedly quite frequent that the tax section is failed but the exam is passed. The CPA exam is only 15 1/2 hours long, on the second day 60% of the morning section is devoted to taxation. If you fail but not too badly it is possible that a good B on the remaining 40% can get you a passing grade on that morning section. You can check with Wiley, Micro Mash or any of the exam prep services for further info on this. The vast majority of CPAs do absolutely no tax work and make no claim to any such expertise. You can verify this with the AICPA and by reading the Vision 2000 Project along with the then Chairman's statement that CPAs do not do what the public thinks that they do. By contrast an LLM is a 32 hour exam and the EA is 28 hours, both on taxes ONLY. Total tax exam time for a CPA is less than 2 1/2 hours.

A casual and cursory reading of the IRC is very dangerous. I suggest that you read the rest of 6501 rather than just the very first paragraph and seek advice from someone who does IRS audit/examination work. As seems to be happening very frequently, your cites are very questionable and do not stand up to actual reading. 6501(a) General rule.- starts off by stating "Except as otherwise provided". These exceptions are partially in 6501 © just a very few lines later. 6501© Exceptions.- which is only a very few lines later gives a number of these stated exceptions including: (1) False Return.- "the tax may be assessed , ...at any time." (2) Willful attempt to evade tax.- "the tax may be assessed, ... at any time." (9)(e) Substantial omission of items.- "within 6 years after the return was filed". There are other sections of the IRC and Treas Regs that are applicable in this posted situation but since this is not a tax forum I think that the few items above will serve this purpose.

An HRA (in your case a medical expense reimbursement account) may be used in conjunction with a section 125 Plan. It is through a salary reduction under the section 125 cafeteria plan that you charge and deduct the premium from the employees NOT the HRA (medical expense reimbursement account). In addition the amount that you charge the employees does not go to the HRA in any case, it goes to the POP portion of your section 125 cafeteria plan. Look at your sales literature and all the documentation from Lumenus. It clearly states and explains that these are 2 separate and distinctly different items. Also read the explanatory Revenue Ruling and Notice.

If you do not have a plan, How do you set the rules and guidelines etc.? While the Treas Regs do not require that it be in writing, ERISa (if applicable) and state law requires it. But then again so does normal business sense and prudence. How would you argue and settle with an employee whose memory of the promise of benefits differs from yours? Section 162 requires MUCH more than just reasonable, it requires and places much more emphasis on being ordinary and necessary expenditures directly connected with or pertaining to the taxpayer's trade or business. That is why a single outlet local store would not survive an audit if they tried to deduct the cost of a twin engine Cessna. The plane is cheap and reasonably priced but it would be had to find it ordinary and necessary etc. The same for the Drywall guy trying to deduct a Mercedes as a company car.

"Sponsoring" a plan does not include the entity that drafts the documents, administering it or making it available to other entities. TIAA-CREF, Fidelity, Vanfguard etc are product providers who do just that but are not sponsors. Sponsors are the employers or organization that make the plan available to their employees. The plan then makes the product/providers available to the employees. The same applies to a 401(k), ADP and Principal are service and product providers not Plan Sponsors. Do some basic reaearch using Google etc and read IRS Pub 571 http://www.aspa.org/pdf_files/govpdffiles/.../2002_ncbar.pdf A 403(b) can only be set up for the employees of Public Schools and certain tax-exempt organizations. The IRC does not recognize co-employers and therefore does not recognize a PEO as an employer especially as the common-law employer.

That is the point, representation before a Government agency is not necessarily or even usually the practice of law and has nothing to do with the issue. As the courts have pointed out there are some things that are allowed and some that are not, and have pointed out which is which. Form 2848 is simply a Power of Attorney form, it does not grant the right to represent the taxpayer at all levels and does not even have to be accepted. Read the Form and the governing Circular 230. I certainly hope that you do not think that it allows representation in Tax Court or District Court etc. Filing a 5300 is an irrelevant issue. Even if Federal Law was expanded to allow representation of taxpayers before the IRS, that still has nothing to do with the practice of law. Explaining the IRC is not the practice of law. Explaining the taxation of a deceased property is not the practice of law it is the practice of taxation, however, explaining and expounding on the merits of a will, designing or drafting a will etc is the practice of law. Explaining the benefits of a section 125 plan is the practice of taxation, drafting the legal documents to implement one is what is being regarded as the practice of law.

mbozek, The Memo from ASPA is at it says, It is an amicus brief filed in support of one of the parties, stating the ASPA opinion. It is not law or even authority of any sort, You could also write an amicus brief, and it would serve the same purpose and have the same validity. ASPA makes vague references without explanation to "similar" cases in Florida and Virginia etc, however, its claim that as a result benefits professionals are allowed to perform certain functions is a misrepresentation of the court decisions and needs clarification. I suggest that you look up those and other more recent cases to see exactly what the courts actually said was permissable. The fact that some non-lawyers are allowed (subject to Dept approval) to represent clients in some areas (limited by each Agency) does not provide carte blanche the right of non-lawyers or even lawyers to represent any and every client in every any any issue with any and every federal agency. The Director of Practice of the IRS can deny (with reason, even minimal) a CPA the "right" to represent a client or even to prepare a tax return. If neede they will and have gone to Court to enforce the Director's right to do this. In any case a CPA, an EA and many lawyers can only represent a client up to certain levels in certain IRS dispute, for example if the CPA etc is not admitted to the Tax Court they cannot represent a client in Tax Court. Tax issues are handled in many different venues under different jurisdictions, some issues are Treasury issues, some are IRS issues, some go to IRS Appeals, some go to TAX Court, some to Federal District Court, some to the Federal Court of Claims, some become Appellate issues even to the US Supreme Court. I do not think that there are very many people even lawyers who can represent a client at many of these venues. The "right" to represent is conditional, selective and definitely not an absolute right.

Vebaguru, Since an HRA must be solely employer funded, it therefore cannot have employee contributions. If there can be no employee contributions how can the employee pay or be charged?

The issue of the unauthorized practice of law is currently alive and well in many states including Florida. The areas that are being targeted most of the time involve Estate Planning and other Financial Planning and involve wills, trusts etc. However, there are still other areas that are also still under attack. Ask the Advanced Markets legal support dept of any major life insurance company and you will get an earful. If you also ask aany of the major TPAs or Actuaril firms you will find out that for years they have been using in house lawyers so as to avoid any action being taken against them. The use of "disclaimers" or labeling the documents "proof" or "sample" will probably not help any TPA etc . Here is a recent Press Release on the NC issue: http://www.401khelpcenter.com/press_pre200...spa_121702.html

I am still trying to figure out how a PEO could gain and keep 501 ©(3) status so as to be able to sponsor a plan.

I can see a case being "dropped" or abandoned because one of the parties realize that they could be opening a can of worms that might not be in their favor, BUT, there is no way that a case could be "rejected because of the anti trust issues it raised as well as first amendment issues. " Rejection is usually the perogative of an appellate level court. Lower level courts dismiss. Anti trust and first amendment issues would not be causes for rejection. R. Butler and any other lawyers, Please comment and clarify.

Thank you, I had not noticed that preamble, and figured you must have seen something otherwise you would not have worded your post in the manner that you did.

No rudeness was intended, and bluntness seems to be the way I write sometimes, I guess I write too many responses to client's legal advisors on technical issues.

Steve72, Where did you see or find that enrollment information is PHI if held by the Plan and not PHI if held by the employer?

Why do you think that this involves any year but 2002? Even if it was 2000, there is no statute of limitations for underreporting and misrepresentation of income, which is what this would be and not a collection of taxes issue.

I would say that we are not against HRAs we are just in favor of making informed choices based on factual research and a good understanding of the subject matter. If you charge a premium, where will it go?????? AND, it was your post that said in BIG BOLD PRINT "Can we charge employee's a monthly premium to participate in the HRA?" That is who said that it was going to the HRA. What is the logic or rationale for even thinking that any money deducted from the employees could ever "just belong to the company?"?? Your statements "the HRA method allows us to set up one plan and keep it" and "HRA's are flexible" and "without having to set up another plan and do all the documents etc" indicate that you need to research and learn much more about 105 plans including HRAs, your current knowledge level seems too low to be involved in making decisions of this nature. An HRA is a section 105 MERP with more restrictions than a standard or "straight" 105 plan. Therefore you would not have more flexibility. Any requirements that would cause the setting up of another plan because of changes in benefits etc would be the same for either type. Any changes in documents etc would be the same for either type. Again, from what you have posted there most likely is no need, basis or logic for an HRA.

There is nothing wrong with your Cafeteria Plan, so using an EPCRS type program would not be applicable anyhow. What you have is a payroll problem. The payroll provider can correct the W2s etc.

I do not see where there can be ANY employee contribution to an HRA. I did not understand your post. From the phrase "We are considering dropping ", it seems that your currently have insured plans. If you are dropping insured plans and "setting up an HRA instead" does that mean that you will be self-funded (self-insured) for these benefits? If you are shifting to self-insured, What is the advantage that you see over a section 105 MERP for the plan design that you set out, except for the possibility of rollover funds (which probably will be nothing)?

Alf, The original post says " A PEO is sponsoring". It did not say that it was just making documents etc available. Are you saying in your post that an ineligible organization can sponsor a plan for employees that are not its own?

I read the original post to be re "the cost of legal review and establishing an account" and "ongoing administration costs " rather than the eventual distribution etc. Even if "most non-qualified plans "dont' even go there."" there is still the issue of the costs to make that decision. Who pays?