June 30th is an important deadline for performing a number of time-sensitive tasks. These include amending cafeteria plans to conform with the Patient Protection and Affordable Care Act (PPACA) requirements; filing Forms TD F 90-22.1, Report of Foreign Bank and Financial Accounts (FBAR), by individuals with signature authority over but no financial interest in the accounts for 2010 and earlier years; and claiming the first-time homebuyer credit for certain service members. Additionally, June 30th is the date on which the 0.2% FUTA surtax is scheduled to expire.
Amendment to conform cafeteria plans. §9003 of the Patient Protection and Affordable Care Act (PPACA, P.L. 111-148) added Code Sec. 106(f), which revised the definition of “medical expenses” for employer-provided accident and health plans as they relate to over-the-counter drugs, effective after Dec. 31, 2010. Code Sec. 106(f) provides that, for purposes of Code Sec. 106 and Code Sec. 105, expenses incurred for a medicine or a drug shall be treated as a reimbursement for medical expenses only if such medicine or drug is a prescribed drug (determined without regard to whether such drug is available without a prescription) or is insulin.
Under Notice 2011-59, 2010-39 IRB 396, notwithstanding the rule against retroactive amendments to cafeteria plans, an amendment to conform a cafeteria plan to the PPACA requirements that is adopted no later than June 30, 2011 may be made effective retroactively for expenses incurred after Dec. 31, 2010, or after Jan. 15, 2011 for health FSA and HRA debit card purchases.
FBAR filing extension for persons with signature authority over foreign financial accounts. Each U.S. person who has a financial interest in or signature or other authority over any foreign financial accounts, including bank, securities, or other types of financial accounts, in a foreign country, if the aggregate value of these financial accounts exceeds $10,000 at any time during the calendar year, must report that relationship each calendar year by filing TD F 90-22.1 (Report of Foreign Bank and Financial Accounts, or FBAR), with the Department of the Treasury on or before June 30, of the succeeding year.
In Notice 2010-23, 2010-11 IRB 441, IRS deferred the deadline for persons with signature authority over, but no financial interest in, a foreign financial account for which a FBAR would otherwise have been due on June 30, 2010, until June 30, 2011. This new deadline applies to FBARs reporting foreign financial accounts for the 2010 and prior calendar years.
Extended first-time homebuyer tax credit for service members. The Code Sec. 36 first-time homebuyer credit, which underwent a series of revisions and extensions, generally equalled the lesser of $8,000 ($4,000 for a married individual filing separately) or 10% of the principal residence's purchase price. The credit applied to a principal residence bought after Dec. 31, 2008 and before May 1, 2010 (after Nov. 6, 2009 and before May 1, 2010, for certain “long-term residents” who were subject to a different credit cap), or after Apr. 30, 2010 and before Oct. 1, 2010 if a binding contract was entered before May 1, 2010 to purchase the property before July 1, 2010.
However, for an individual (and, if married, the individual's spouse) who served on qualified official extended duty service outside of the U.S. for at least 90 days during the period beginning after Dec. 31, 2008 and ending before May 1, 2010, the expiration date of the first-time homebuyer credit was extended by the “Worker, Homeownership, and Business Assistance Act of 2009” to June 30, 2011 for individuals who entered into a written binding contract before May 1, 2010 to close on the purchase of a principal residence before July 1, 2011. (Code Sec. 36(h)(3))
FUTA surtax to expire absent Congressional action. The FUTA surtax is part of the 6.2% gross unemployment tax rate that employers pay on the first $7,000 of wages paid annually to each employee. (Code Sec. 3301, Code Sec. 3306(b)) The tax is the sum of the 6% permanent tax rate plus the 0.2% surtax, which has been in effect on a “temporary” basis since '76.
The 0.2% surtax is currently scheduled to expire on June 30, 2011. The surtax extension hasn't surfaced yet in Congress, although a proposal in the President's fiscal year 2012 budget would keep the 0.2% FUTA surtax in effect on a permanent basis and raise the annual FUTA wage base from $7,000 to $15,000 per worker beginning in 2014.