BizLawBuz …. The Power of Know

Of the numerous issues covered under the recently enacted federal stimulus package, employers and employees alike should take note of the provisions offering subsidies for COBRA benefits for eligible workers.

COBRA is an acronym for the Consolidated Omnibus Budget Reconciliation Act. It is a piece of federal legislation from the 1980s. Under COBRA, most terminated workers have been able to continue participation in employer provided health care plans for up to 18 months. However, the employee pays the entire cost of continued coverage.

Under the American Recovery and Reinvestment Act of 2009 passed last week, eligible workers can receive a 65% subsidy toward their COBRA premium for up to 9 months. The employers or plans who normally administer COBRA benefits can receive a credit against payroll taxes to offset the cost of the subsidy.

Who is eligible? Workers who lost their jobs involuntarily between September 1, 2008 and December 31, 2009. They must have annual incomes less than $125,000 for individuals or less than $250,000 for couples.

What must employers do? From now on, COBRA notices must specifically reference the subsidy, which is effective for premiums starting March 1. Also, a special sixty day election period – starting February 17 — must be offered to otherwise eligible individuals who previously declined COBRA coverage. Model notices are supposed to be available from the Department of Labor in thirty days.

Experts caution that all of the rules and implications surrounding this provision still are not clear. Employers need to be attentive and cautious. Employees should seek guidance before making election decisions.

Dirk A. Beamer

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Know Your Business. Grow Your Business. Protect Your Business

Scarcely a day (or, even an hour for that matter) goes by that we don’t hear of one new thing or another that is included in the recently passed stimulus package. Unfortunately, the law is so new, lengthy and complex, that it’s not all that easy to get a complete copy of it (insure that your printer has plenty of paper and toner), let alone read and figure it out. While we’re doing what we can to get a handle on this in order to assess the impact of its provisions on our clients, I can’t help but smile at some of the things I am seeing.

For example, I am the proud owner of a 2008 Harley-Davidson Electra Glide Ultra Classic. Last year I logged nearly 7,000 miles which included a trip with several friends from my home in southeastern lower Michigan to the Canadian Rockies and back. Imagine my surprise when I saw the above headline of a February 13, 2009 posting by the Milwaukee Wisconsin Journal Sentinel. I also found a similar posting on the Cycle News website.

Buried in section 1008 of the legislation is a provision allowing a deduction against 2009 federal income taxes for state sales and excise taxes for new vehicles purchased between November 12, 2008 and December 31, 2009. Although originally intended to apply only to the purchase of new cars and light-duty trucks, the definition of “qualified vehicles” was extended to include motorcycles. It is anticipated that this expansion will benefit yet another industry that has been so adversely impacted by the economic downturn.

So, in addition to the fact that you can have a great time and save a lot money on gas by riding a motorcycle, you can now help to stimulate the economy and save on your taxes to boot! What a country! Enjoy. And remember: “keep the shiny side up.”

Duane L. Reynolds

Know Your Business, Grow Your Business, Protect Your Business
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From a blog post by Rick Barrett of the Journal Sentinal:

Stimulus bill includes tax credit for motorcycle purchases

By Rick Barrett of the Journal Sentinel

Posted: Feb. 13, 2009

A provision in the economic stimulus package could help motorcycle manufacturers, including Harley-Davidson Inc.

It’s a tax credit for purchasers of new cars, light-duty trucks and motorcycles.

During Senate consideration of the stimulus package, an amendment was approved to provide purchasers of new cars and light-duty trucks a tax credit allowing a deduction of state sales or excise taxes for new vehicles purchased between Nov. 12, 2008, and Dec. 31, 2009.

The expansion of the tax credit to motorcycles could make it easier for consumers to purchase bikes at a time when reduced sales have forced layoffs at Harley-Davidson, one of the Milwaukee area’s largest employers, according to legislators.

“Like other struggling businesses, sluggish sales have led to job losses in the motorcycle industry and the dealerships that depend on it. We should do all we can to help Harley-Davidson weather this poor economy so they can boost sales and retain jobs,” Sen. Herb Kohl (D-Wis.) said in a statement issued Friday.

The recent layoffs at Harley were a painful sign of how the economic downturn has affected Wisconsin, added Sen. Russ Feingold (D-Wis.).

“This effort to make it easier for consumers to purchase motorcycles as well as cars should help lead to more Harley sales and more Wisconsin jobs,” he said in the statement.

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We welcome your comments about the 2009 Stimulus Package.