EHR INCENTIVE PYMNT 1099.PDF

CHASE 0
June 01, 2012 hrough June 25, 2012
Account Number: 000000970439642
Deposits and Credits (continued)
Ledger Description Amount
Date
06/22 Ong CO Name:Ahcccs Programme Orig ID:1866004701 Desc 1,087.92
Date:120621 CO Entry Descr.0622 Lffs Sec:CCD Trace#:021000025650727
Eed:120622 Ind 10:95410 trici Nama:Healthcare For The Horn
7m- 1 6954101 866004791 -Ahcccs\ReND GT0015574802\
20120622 Lffs LchTrn: 1735650727Tc
06/25 Deposit 6,775.00
06/25 Cash Svcs Cash Dep, Depdate= 06/2212012, Bag= U7781728, ULID= , \Mid= 1,368_00
132
06/26 Cash Svcs Cash Cap, Depdate= 06/21/2012, Bag= U7781727, , \Mid= 982.00
132
06/25 Ong CO Name:Ahcccs Pm:gramma Orig ID:1886004701 Desc
Date120622 CO Entry De,scr:0625 Epep Sec:CCD
Trace#:021000023197924 Eed:120625 Ind ID:162544 Ind
Name:Healthcare For The Horn Tm*1 - 1626444 1866004791*Ahcocs1 Ref"
N00015574802\ 20120625 Epep ACH
1743197924Tc
06/25 Orig CO Narne:Link2Gov Corp Orig I0:1621868563 Desc Date: CO 3,685_00
Entry Descr:Nic10050556Sec:CCD Trace#:021000023197927 Eed:124625
Ind ID:Fisccsettl Ind Name:04Mar-Pubrif-Vital-00
/81d-0006089940 Tm: 1743197927Tc
06/25 Ong CO Name:Link2Gov Corp Ong I0:1621868563 Desc Date: CC 760.00
Entry Dascr:Nid0050555Sec:CCD Trace#021000023197921 Eed:120625
Ind ID:FIsccsattl Ind Name:Mar-Pubtil-Clnic-00
/M*0006089313 Tm: 1743197921Tc
06/26 Deposit 7,981.00
06/26 Deposit 1,550.00
06/26 Cash Svcs Cash Dap, Depdate= 06/25/2012, Bag= 1J7781729, ULID= , Vttid= 141000
132
06/26 Deposit 1,130.00
06/26 Deposit 1,070.00
06126 Orig CO Neme:Link2Gov Corp Olt ID:1621868563 Desc Date: CO 5,350.00
Entry Descr:Nid0050558Sec:CCD Trace#:021000020142106 Eed:120626
Ind ID:Fisccsettl Ind Name;04Mar-Pubhl-Vita:-00
1BId0006091436 Trn: 1770142106Tc
06/26 Ong CO Neme:Llnk2Gov Corp Orig 10:1621868563 Desc Data: CO 1,222.00
Entry Descr.N1d00505585ec:CCD Trar-e#:021000020142104 Eed:120626
Ind ID:Fisccsett Ind Name:Mar-Pubhl-Clnio-00
/Bie0006091720 Inn: 1770142104Tc
06/27 Remote Online Deposit 1001 308,451.83
06/27 Deposit 17,000.00
06/27 Deposit 2,030,00
06/27 Cash Svcs Cash Dep, Depdate= 06/25/2012, Bag= LI7781730, ULID= , VItid= 1,608.00
132
06127 Deposit 1,220.00
06/27 Orig CO Narne:Linic2Gov Corp Orig I0:1621868563 Desc Date: CO 1,319 00
Entry Descr.Nid0050562Sec:CCO Trace#:021000029669642 Eed:120627
Ind ID:Fisr-csetti Ind Name:Mar-Pubhl-Clnic-00
/Bid*0006092752 Tin: 1789669642Tc
06/28 Deposit 7,120.00
06/28 Deposit 1,040.00
06/28 Cash Svcs Cash Dap, Depdata= 05/27/2012, Bag= 23570589, ULID= , VItid= 990.00 .
132
06/28 Orig CO Name:Link2Gov Corp Ong I0:1621868563 Desc Date: CO 5,380.00
Entry Descr.NicS0050568Sec:CCD Trace#:021000024945261 Eed:120628
Ind ID:Fisccsettl Ind Name:04Mar-Pabhl-Vital-00
fBid0006094610 Tm: 1794945261Tc
Po9e BOO

CORRECTED (if checked)
PAYER'S name, street address, city, state, ZIP code, and telephone no. 1 Rents OMB No. 1545-0115
STATE OF ARIZONA . 00
Miscellaneous
GENERAL ACCOUNTING OFFICE $ 2012
100 N 15TH AVENUE SUITE 302 2 Royalties Income
PHOENIX AZ 85007 .00
TEL: 1-602-542-5553 $ Form 1099-MISC
VENDORS@AZDOA. GOV 3 Other income 4 Federal income tax withheld Copy B
$ .00 $ .00 For Recipient
PAYER'S federal identification RECIPIENT'S identification 5 Fishing boat proceeds 6 Medical and health care payments
number number
86-6004791 474642848 . 00 21250 . 00
$ $
RECIPIENT'S name, address, city, and ZIP code 7 Nonernployee compensation 8 Substitute payments in lieu This is important tax
of dividends or interest information and is
ROSENWALD , RON
being furnished to
. 00 . 0 0 the Internal Revenue
HEALTH CARE FOR THE HOMEL $ $ Service. If you are
220 S. 12TH AVE 9 Payer made direct sales of 10 Crop insuranos proceeds required to file a
PHOENIX AZ 85007 $5,000 or more of consumer return, a negligence
products to a buyer penalty or other
(recipient) for resale p- • $ sanction may be
11 12 . imposed on you if
— . this income is
taxable and the IRS
Account number (see instructions) 13 Excess golden parachute 14 Gross proceeds paid to an determines that it
payments attorney has not been
AZ474642848 .00 .00
reported.
$ $
15a Section 409A deferrals 16b Section 409A income 16 State tax withheld 17 State/Payer's state no. 18 State income
$ $
$ $ $ $
Form 1099-MISC (keep for your records) Department of the Treasury - Internal Revenue Service
CORRECTED (if checked)
PAYER'S name, street address, city, state, ZIP code, and telephone no. 1 Rents OMB No. 1545-0115
STATE OF ARIZONA . 00 201 2 Miscellaneous
GENERAL ACCOUNTING OFFICE 2 Royalties Income
100 N 15TH AVENUE SUITE 302
PHOENIX AZ 85007 .00 Form 1099-MISC
$
TEL: 1-602-542-5553
3 Other income 4 Federal income tax withheki
VENDOR S@AZDOA . GOV
$ $
0
PAYER'S federal identification RECIPIENTS Identification 5 Fishing boat proceed; 6 Medical and health care pairrangs
number number Copy 2
To be filed
86-6004791 474642848 .00 $ 21250.00 with
RECIPIENTS name, address, city, and ZIP code 7 Nonempioyee compensation 8 Substitute payments in lieu recipient's
of dividends or interest state income
tax return,
ROSENWALD, RON
when
$ .00 $ .00 required.
HEALTH CARE FOR THE HOMEL
9 Payer made direct sales of 10 Crop insurance proceeds
220 S. 12T H AVE $5,000 or more of consumer
PHOENIX AZ 85007 products to a buyer
(recipient) for resale 1- 0 $
11 12
...
Account number (see instructions) 13 Excess golden parachute 14 Gross proceeds paid to an
payments attorney
AZ474642848 $ . 00 $ . 00
15a Section 409A deferrals 15b Section 409A income 16 State tax withheld 17 State/Payer's state no. 18 State income
$
$ $ $
Forrn 1099-MISC LMB2 Department of the Treasury - Internal Revenue Service

Linder the Centers for Medicare and Medicaid Services (CMS) guidelines, Electronic Health Record (EHR)
Incentive payments for an eligible provider may be assigned to a third party. AHCCCS originally reported
any assigned payments as a Form 1099 issued to the third party who received the funds. However,
payment, for purposes of IRS section 6041 can occur even though funds are never transferred directly to
the payee. Therefore, to comply with IRS regulations, AHCCCS is issuing corrected Form 1099s to the
third party entities that reduces the originally reported amounts by the assigned EHR payments and is
issuing Form 1099s to the eligible providers that assigned their payments. If you have any questions,
please contact Karen MacLean, AHCCCS Assistant Finance Administrator, at 602-417-4293.

Jane Cochrane - PHSX
From: MacLean, Karen [Karen.MacLean@azahcccs.gov ]
Sent: Tuesday, August 13, 2013 12:51 PM
To: Jane Cochrane - PHSX
Subject: EHR Incentive Payments IRS Guidance & EHR Incentive Pay Contact
Attachments: EHR Incentive Payments. IRS CCA 201307005.pdf
Jane,
The IRS has provided written guidance regarding 1099 reporting for EHR incentive payments. Please note that providers may
have EHR incentive payments reported to the IRS whether or not they assign the payment to another entity. Because tax issues
fall under IRS jurisdiction, AHCCCS cannot offer advice or assistance on this issue. Any questions pertaining to this matter should
be referred to your accountant and/or attorney.
Per our conversation, I have attached a copy of the EHR Incentive Payments IRS Guidance we received form CMS. In addition, if
you have any questions regarding the assignment of the payments and attestation process, please contact:
EHR INCENTIVE PROGRAM STAFF
EHRIncentivePayments@azahacs.gov
EHR Help Desk 602.417.4333
Regards,
Karen D. MacLean
Assistant Finance Administrator
AHCCCS
701 E Jefferson MD 5400
Phoenix, AZ 85034
602-417-4293
Karen.MacLeanazahcccs.00v
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1

Westlaw.
Page 1
IRS CCA 201307005, 2013 WL 582469 (IRS CCA)
Internal Revenue Service (I.R.S.)
IRS CCA
Chief Counsel Attorney Memorandum
Issue: February 15, 2013
January 14,2013
Section 6041 -- Information at Source6041.00-00 Information at Source
Section 61 Gross Income v. Not Gross Income61.00-00 Gross Income v. Not Gross Income
CC:ITA:B04:
POSTS-1 45204-12
to: Director, Indian Tribal Governments
Attn:
from: Michael J. Montemurro Branch Chief (Income Tax & Accounting)
subject: Electronic Health Records Incentive Payments, POSTS-145204-12
This Chief Counsel Advice responds to your request for assistance. This advice may not be used or cited as precedent.
ISSUES
(1) Whether recipients must include in gross income electronic health record incentive payments paid by the
Centers for Medicare and Medicaid Services (CMS) pursuant to the American Recovery and Reinvestment Act.
(2) Whether CMS has a reporting requirement with regard to payments made under the EHR Incentive Program.
(3) Whether the reporting requirement is altered if the payment is assigned to a third party.
CONCLUSIONS
(I) The recipients must include the incentive payments in gross income unless they receive the payments as a
conduit or an agent of another and are thus unable to keep the payments.
(2) CMS has a reporting requirement under section 6041 of the Internal Revenue Code with respect to the eligible
providers.
(3) In the event of an assignment by the eligible providers to a third party, CMS would be obligated to report a
payment to the eligible provider, even if the payment is assigned to a third party. The eligible provider would then
likely bear a reporting obligation with respect to the assignment to a third party. CMS would not have a reporting
obligation with respect to the third-party assignee unless CMS exercised managerial oversight with respect to, or
had a significant economic interest in, the assignment.
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FACTS
The American Recovery and Reinvestment Act of 2009 (ARRA) authorizes the Centers for Medicare and Medicaid
Services (CMS) to make incentive payments to eligible professionals and hospitals that are meaningful electronic
health record (EHR) users. An EHR allows health care providers to record patient information electronically instead of
using paper records. "Meaningful use" entails more than merely maintaining EHRs. To be eligible for incentive
payments, CMS requires that providers demonstrate that they are using their EHRs in ways that can positively affect
their patients' care. For example, providers must record patient data electronically and share that data either with the
patient or with other healthcare professionals. Providers may also employ the EHRs to issue prescriptions electron i-
cally or to update immunization records.
Under the Medicare EHR incentive program, CMS makes incentive payments to individual providers, not to prac-
tices or groups. According to the payor, CMS, the incentive payment is based on the provider's meaningful use of the
EHRs and does not constitute reimbursement for the expenses incurred in establishing EHRs. You also indicated that
prior to actual receipt of an incentive payment, a recipient may assign the payment to a third party, typically, the
practice group of which the recipient is a member.
LAW AND ANALYSIS
Issue 1
Except as otherwise provided in the Internal Revenue Code (Code), a taxpayer must include in gross income "all
income from whatever source derived."1.R.C. 61 (a). The Supreme Court has long recognized that the definition of
gross income sweeps broadly and reflects Congress' intent to exert the full measure of its taxing power and to bring
within the definition of income "all accessions to wealth." Commissioner v. Schleier, 515 U.S. 323. 327 (1995). Any
receipt of funds is presumed to be gross income unless the taxpayer can demonstrate that the accession fits into one of
the exclusions created by other sections of the Code. Commissioner v. Glenshaw Glass Co., 348 U.S. 426, 431 (1955).
Exclusions from gross income are construed narrowly to maximize the taxation of any accession to wealth. United
States v. Burke, 504 U.S. 229, 248 (1992) (Souter J., concurring).
As in the case of exclusions, a taxpayer generally is not required to include in gross income a payment that constitutes
a return of capital. Doyle v. Mitchell Brothers Co.. 247 U.S. 179, 187 (1918). Thus, a recipient must include an in-
centive payment in gross income unless the recipient can demonstrate that it fits within an exclusion provided by the
Code or constitutes a nontaxable return of capital. As discussed below, the CMS incentive payments neither come
within an exclusion provided by the Code nor constitute a return of capital to the recipients.
In enacting ARRA, Congress did not address the taxation of incentive payments. Accordingly, the taxability of an
incentive payment must be determined by applying well-established principles of taxation. According to the payor,
CMS, the incentive payment is based on the provider's meaningful use of EHRs and does not constitute reimbursement
for the expenses incurred in establishing EHRs. Thus, an incentive payment is a clear accession to wealth and not a
return of capital. Further, the payments do not fall within any exclusion provided by the Code. Consequently, a re-
cipient must include incentive payments in gross income under section 61 of the Code unless he or she receives the
payments as a conduit or an agent of the recipient's practice group, or someone else, and is thus not allowed to keep the
payments.
Under the anticipatory assignment of income doctrine, a taxpayer who earns or otherwise creates a right to receive
income cannot exclude the economic gain from gross income by assigning the gain to another party because gains
should be taxed to the person who earns it. Lucas v. Earl. 281 U.S. 11 1, 114 (1930); Commissioner v. Banks, 543 U.S.
426, 433-434 (2005). The power to dispose of income causing the income to be paid to another is equivalent of
ownership for tax purposes. Helvering v. Horsf.311 U.S. 112(1940).
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Under the claim of right doctrine, if a taxpayer receives money under a claim of right and without restriction as to its
disposition, then he has received income that he is required to report even though it may be claimed that he is not
entitled to retain the money and may be ordered to restore its equivalent. North American Oil Consolidated v. Burnet.
286 U.S. 417 (1932). Conversely, if a person receives funds as a conduit for another or as an agent of another, then he
does not have a claim of right to the funds, and the funds received are not income to him to the extent he passes them
on to the person for whom the funds were intended. Goodwin v. Commissioner. 73 T.C. 215, 232 (1979).
In the present case, if the provider is receiving incentive payments as an agent or conduit of the provider's practice or
group, or someone else, the provider is not required to include the payment in his/her gross income as long as he/she
turns the payment over to the other entity or person as required. See Rev. Rul. 76-479, 1976-2 C.B. 201Rev. Rul.
69-274, 1969-1 C.B. 36:Rev. Rul. 65-282, 1965-2 C.B. 21 and Rev. Rul. 58-220, 1958-1 C.B. 26. for instances in
which the IRS has held that a recipient was not taxed on receipt of a payment because he or she was an agent of an-
other.
Issues 2 & 3
Section 6041 requires information reporting of aggregate payments made in the course of a trade or business in excess
of $600 per year. CMS is engaged in a trade or business within the meaning of the statute because the regulations
specifically include nonprofits and exempt entities within the meaning of trade or business. Treas. Reg. § 1.6041 -1
(b). The EHR payment is a payment of a fixed and determinable gain, profit, or income, made in the course of a trade
or business, within the meaning of section 6041. Therefore, CMS has a reporting obligation with respect to the eligible
providers to the extent such payments exceed $600. Likewise, the assignment by an eligible provider of such payments
to a third party would also meet this definition and therefore the eligible practitioner would have a reportable payment
to the assignee under section 6041, unless an exception applies.
Payment, for the purposes of section 6041, can occur even though funds are never transferred directly to the payee. See
id § 1.6041 -1 (f). Here, CMS transfers control of the funds to the eligible provider which constitutes a payment. The
eligible provider may then transfer control of the funds, by assignment, to the third party, which is also a payment.
Where the eligible provider assigns the payment to a third party, CMS would be the payor with respect to the eligible
provider and the eligible provider would be the payee. Then, the eligible provider would be the payor with respect to
the third-party assignee, and the third-party assignee would be the payee. Under section 6041, the payor bears the
obligation to report a payment.
CMS is not obligated to determine who will ultimately include the payment as income. The existence of a conduit
relationship is irrelevant to CMS's reporting requirement. CMS is obligated to report the payment with respect to the
eligible provider only. CMS would not be a payor with respect to a third-party assignee unless CMS makes payment
directly to the third party and exercises managerial oversight with respect to, or had a significant economic interest in,
the assignment. See id § 1.6041-1(e)(1).
Therefore, CMS would bear the reporting obligation for the payment to the eligible provider, and the eligible provider
would bear the reporting obligation, if any, with respect to the assignment to a third party. See generally id. § 1.6041
-1.
CASE DEVELOPMENT, HAZARDS AND OTHER CONSIDERATIONS
This writing may contain privileged information. Any unauthorized disclosure of this writing may undermine our
ability to protect the privileged information. If disclosure is determined to be necessary, please contact this office for
our views.
Please call (202) 622-4920 if you have any further questions.
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Page 4
Section 6110(j)(3) of the Internal Revenue CodeThis document may not be used or cited as precedent..
IRS CCA 201307005, 2013 WL 582469 (IRS CCA)
END OF DOCUMENT
C 2013 Thomson Reuters. No Claim to Orig. US Gov. Works.