The Affordable Care Act (“ACA”) is complex legislation still being shaped by legal challenges and ongoing guidance from government agencies. Yet, because of its tax provisions, businesses must navigate the tax reporting and compliance aspects of the ACA. To what extent should CPA’s assist clients to navigate these tax reporting and compliance issues and when should they involve other professionals and perhaps even choose not to answer client questions about the ACA?

Legal issues and attorney-client privilege: Many small businesses are seeking advice on how to structure their workforces to navigate around the ACA so they are not required to provide coverage. Small businesses often have a mixture of independent contractors, and part-time and full-time employees. Advice on these matters implicates not only the ACA and tax issues, but also state employment laws. Changes to the workforce to avoid providing benefits, including health care, are potentially a violation of the law under ERISA and potentially discrimination laws. Accordingly, any planning needs to be done in concert with an attorney knowledgeable about state employment laws. 

Penalties under the ACA: The ACA provides for a host of penalties if employers fail to offer coverage or offer inadequate coverage. In addition, there are substantial excise taxes for certain violations of the ACA, fees in connection with self-insurance, penalties for incorrect reporting, and the looming “Cadillac tax.” CPA’s have an important role in helping clients figure out the potential impact of penalties, calculating penalties and mitigating penalties. Because of self-reporting rules and enhanced penalties for failure to self-report, however, an attorney needs to be involved in any discussions seeking to plan around penalties or situations where a violation may have occurred. Given the increasing financial motivation for whistleblowers, this is an important consideration.

Insurance issues: CPA’s are often asked to help clients decide what sort of fringe benefits to provide and design fringe benefit plans. Because insurance products are highly regulated, however, there are many issues that need the expertise (and licensing) of an insurance professional. CPA’s should ensure that the insurance professionals are involved in any of these discussions so that the CPA does not inadvertently step out of the CPA role and into the insurance agent or broker’s role.

Teaming up with other professionals: Putting together a team of professionals can help the CPA meet the client’s needs while protecting the client and the CPA. Often a CPA can be engaged by an attorney to shield planning discussions under the umbrella of the attorneyclient privilege. Involving other professionals often brings about a “network effect” where cross referrals flourish as each professional learns of the other’s valuable expertise.