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Good for your trade

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Something quite unusual occurred on June 24. Anthropologists are already questioning the rare event and usually loquacious pundits are at a loss for words. Watchers, usually keen to find any outlier in the behavior of the rare species known as politicus bipartinsanus nearly missed it. On a sultry summer day in the Federal Territory known as Washington, District of Columbia, the “Trade Preferences Extension Act of 2015” (TPEA) passed with a bipartisan (albeit grudging) majority.

See also: Obama pushes trade partners to add drug rules he opposes in U.S.

The bill gives the President “fast-track trade authority,” which makes it easier for his team to negotiate trade deals. Perverse as it may seem, it is “easier” because it prevents future trade deals from being amended by Congress. Strange bedfellows were the rule of the day as Republicans supported and Democrats opposed something the White House wanted. Nancy Pelosi was a key force in passage, having opposed the initiative before she was for it, later complaining that the scope of the Act was too narrow.

At this point you’re probably wondering three things. First, what’s new about Mrs. Pelosi’s position? Second, what does this have to do with you and your trade? Third, why is a trade bill good for your trade? The simple answers are “nothing,” “everything” and “read on.”

As you already know, “Applicable Large Employers” (ALEs) are employers with at least 50 full-time employees and full-time employee equivalents. They must offer Minimum Essential Coverage (MEC) to full-time employees and their dependents. The first issue your clients face is how to determine the appropriate employee count. As you might imagine, the legislative and regulatory gremlins have turned this into much, much more than a simple head count.

See also: 27 PPACA reporting obligations employers need to know

The second issue is once that count is determined, ALEs have to comply with IRC section 6056 that — generally speaking — requires reporting of those numbers to your rich uncle in Washington so he and his minions can determine that everyone is compliant. Once again, the rules for reporting are many, confusing and accompanied by significant penalties (or are they taxes?) for noncompliance.

To help ALEs ease into their new reporting requirements, there is a one-year transition rule under which employers will not be subject to those penalties if it is determined that they made a good faith effort to comply, but filed incorrect or incomplete information. The rule does not, however, provide a safe harbor for “failure to timely file.”

A seemingly minor provision was tacked onto the Trade Preferences Extension Act. That provision increases — and in some cases doubles — the penalties for failures related to Information Reporting under PPACA. For example, the annual cap on penalties has gone from a paltry $1.5 million to $3 million. If penalties are assessed but corrected within 30 days of the required filing date, your ALE gets dinged for a cool half million dollars, an increase from the original $250,000.

Adding to the burden ALEs face is that those with 250 or more applicable employees must now use an entirely new electronic filing system. First, the 250-employee trigger is also nowhere near as simple as a basic head count. Second, the Affordable Care Act Information Return System (AIR) is still in the process of working out the kinks and certifying those who would transmit the information.

Early on, many advisors worried that PPACA would put them out of business, but that isn’t how it is shaping up. In fact, PPACA might stand for the “Productivity and Profitability Act for Consultative Advisors.” I am certain that readers of this column have been helping their clients with all of the regulatory complexity that is now beginning to land on their doorsteps.

Providing that advice and counsel to clients is an incredible value; a value that only licensed, educated advisors can provide. Thanks to PPACA, and seemingly minor provisions in trade pacts, your expert knowledge, guidance and understanding have now become even more critical to your clients. Thanks, Nancy.