Question:
From:
Chief Financial Officer [mailto:CFO@dfs.state.fl.us]
Sent: Tuesday, June 15, 2004 12:49 PM
To: Cotton, Joel
Subject: RE: Florida Birth-Related Neurological Compensation Association
Importance: High
Dear CFO Gallagher,
During the 2002
Special Legislation Florida State Statue 766.302 was amended to allow for up to
10 hours per day of Parental reimbursement for families under the Florida
Birth-Related Neurological Injury Compensation Association. Although this seems
like a kind gesture there are several problems with this legislation. The amount
for reimbursement as outlined is not in line with what many families must go
thru. The reimbursement for the same amount as a Home Health Aid is inadequate.
For many of these families a Home Health Aid could not do the job required to
take care of these children. The minimum caretaker other than the parents would
be an LPN or better. A Home Health Aid cannot deliver medications, take care of
G-tube feedings or the G-tube site, routine suctioning of the mouth and nose, or
other more complex procedures. A Home Health Aid could do nothing more than
change diapers.
The second thing
and the most critical is NICA is treating these reimbursements as income and
thus issuing 1099 forms to the IRS. I myself this past tax year have had to pay
almost $60,000 to the IRS. Is this where you really want the money to go? It
really makes no since to take care of your own child and then be burdened with
tax implications. These monies should go to help these families who decide to be
responsible for their own child and not have it go thru their hands to the IRS.
Do you really want to make assessments on Physicians and Hospitals and have that
money go to the United States Government? Something needs to be done. Families
should not have to pay taxes on this money. What little relief these families
get is nothing compared to Medical Malpractice Lawsuit.
I’m sure the
intent of the Legislation was not for these families to pay Income Tax on this
compensation, and I’m sure there is nothing that can be done this session. My
only hope is that this Legislation is reviewed once again and that it clearly
states that these reimbursements are not considered income and are exempt for
Income Tax
Joel N Cotton
981 Lake-Aire Drive
Pensacola, Florida
Father,
Noah A.J. Cotton
July 24, 1999 - March 16, 2002
Answer:
From:
Chief Financial Officer [mailto:CFO@dfs.state.fl.us]
Sent: Friday, April 23, 2004 1:42 PM
To: Cotton, Joel
Cc: thomasma@fdhc.state.fl.us
Subject: RE: Florida Birth-Related Neurological Compensation Association
Importance: High
Dear Mr. Cotton:
Thank you for
your inquiry to the Chief Financial Officer of Florida, Tom Gallagher. CFO
Gallagher has asked me to respond. By copy of this email I am forwarding your
inquiry to the Agency for Health Care Administration, which may be able to
assist you in regards to s. 766.302, Florida Statutes.
Thank you again
for your inquiry. I hope you have a great weekend.
Sincerely,
Ann M. Fuller
Special Assistant to Tom Gallagher
Florida Department of Financial Services
Question:
From:
Cotton, Joel [mailto:Joel.Cotton@hatchmott.com]
Sent: Thursday, June 03, 2004 3:36 PM
To: Chief Financial Officer
Subject: RE: Florida Birth-Related Neurological Compensation Association
Mrs. Fuller,
As of this date
I have not heard from nor received any correspondences with AHCA concerning my
concerns. I have tried to contact Mr. Gallagher concerning this matter but it
seems the buck gets passed along to someone else. I am very serious about this
situation and want to know what the State of Florida intends to do if anything.
Joel N Cotton
981 Lake-Aire Drive
Pensacola, Florida 32506
850-456-8721
Father,
Noah A.J. Cotton
July 24, 1999 - March 16, 2002
Answer:
From:
Chief Financial Officer [mailto:CFO@dfs.state.fl.us]
Sent: Tuesday, June 15, 2004 12:49 PM
To: Cotton, Joel
Subject: RE: Florida Birth-Related Neurological Compensation Association
Importance: High
Dear Mr. Cotton:
I am sorry that you are
dissatisfied with having to pay income taxes on reimbursement for services that
you and other families have provided to their own children. Allowing families to
be reimbursed for services they provide to their own child that would otherwise
have been provided by a trained professional, was intended to help families,
especially single parent or one income families. It is a reimbursement for
medical services families choose to provide personally, most often in lieu of
other employment, and therefore required to be reported to IRS. How it is
treated by individual families in filing their income taxes, and how it
ultimately affects any tax liability is more affected by the individual family’s
financial situation. It is something that is between the family and the IRS, not
the State of Florida.
NICA is a financial
subdivision of the State of Florida, subject to review and audit by the Auditor
General, and is required to follow any IRS guidelines. Failure to file 1099
forms for payments made to individuals for professional services would result in
an audit criticism and could subject NICA to IRS penalties and compliance
action. From the research done on your behalf by NICA, we know that it would
take a specific exemption in the IRS code or a letter ruling from the IRS in
order for these payments to be exempt from IRS reporting requirements. NICA is
seeking a letter ruling, however both accountants and tax counsel who have
reviewed this believe it is unlikely that IRS will issue a letter that would
exempt this kind of payment from tax liability.
The reimbursement authorized
by the statute is the same as a professional trained attendant would receive for
caring for a child. Although it is assumed that families are able to provide the
care needed for their own child, in most cases the family member has no
professional training, even though the level of reimbursement assumes it.
Increasing the reimbursement would also increase the tax liability, and doesn’t
solve the problem you have complained of.
The IRS is governed at the
federal level. State statutes do not govern federal law. To accomplish the
change you are seeking to the IRS laws, you should communicate with your
Congressional delegation. It is beyond state control. I regret that I do not
have more favorable advice for you.
Sincerely,
Ann M. Fuller
Special Assistant to Tom Gallagher
Florida Department of Financial Services
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