The Wisconsin Department of Revenue has updated its notice concerning the impact of recent federal legislation on the personal income tax treatment of health care benefits for children under the age of 27. Until Wisconsin adopts the provisions of the federal Affordable Care Act, the state must follow federal law in effect previously.

Accordingly, for Wisconsin purposes, to qualify for the exclusion from gross income for employer-provided accident or health insurance benefits including coverage in a medical flexible spending account (FSA), the child under age 27 must qualify as a dependent for income tax purposes, as either a qualifying child or a qualifying relative. For purposes of health insurance coverage only, an adult child may meet the definition of a "qualifying relative" even though the adult child's gross income may equal or exceed the exemption amount. If the adult child does not qualify as a dependent, the fair market value of the adult child's health insurance coverage and reimbursements from a medical FSA are income and taxable wages to the employee.

The updated notice includes additional guidance on the following:

• determination of the fair market value of health insurance coverage;
• 2010 Form W-2 reporting requirements for the fair market value of health insurance coverage;
• 2010 Form W-2 reporting requirements for FSAs; and
• Wisconsin income tax return filing information.

The updated notice is available at http://www.dor.state.wi.us/taxpro/news/100727.html. (News for Tax Professionals, Wisconsin Department of Revenue, August 3, 2010.)

The Affordable Mail Alliance (AMA) has called on the Postal Regulatory Commission to dismiss the Postal Service's rate hike proposal filed on July 6, 2010. AMA's motion argues that the rate hike violates the cost controls Congress put into law to protect consumers and that the Postal Service needs to cut costs and modernize rather than raise rates an average of ten times the rate of inflation. Given the potential precedent-setting nature of the exigency rate case, Printing Industries of America has joined with the AMA to block this rate increase. 

"Allowing the Postal Service to raise prices above the Consumer Price Index in this case would nullify the single most important safeguard for mailers and the public in the Postal Accountability and Enhancement Act of 2006 (PAEA)," AMA argues in its motion. Senator Susan Collins (R-ME), an author of the 2006 law, has already said the proposed increases do not qualify for an exception under the standards established by Congress.