Proposed rules providing guidance on the employer “shared responsibility” excise tax under the federal health care reform law have been issued by the U.S. Treasury Department and the Internal Revenue Service.
In addition, the IRS has published new Q&As providing guidance about the tax, which was added in Section 4980H of the Internal Revenue Code by the Patient Protection and Affordable Care Act and takes effect beginning in 2014. The proposed rules were posed in the Federal Register on January 2. 78 Fed. Reg. 217 (January 2, 2013)
The proposed rules are broad in scope and contain several new rules and clarifications. For example, the proposed rules:
- Expand upon earlier IRS safe harbor guidance for determining whether an employee is full-time and for determining whether coverage is affordable.
- Clarify that an employer will not be subject to tax for failure to offer coverage to spouses.
- Clarify that an employer that offers coverage to all but 5 percent of its full-time employees (or, if greater, five full-time employees) and their dependents will be considered to have offered coverage to “substantially all” full-time employees.
- Clarify that each single employer within a controlled group of employers will be separately liable for the tax.
- Provide that employers will be notified that an employee has received a premium tax credit or a cost-sharing reduction for coverage on an Exchange and will have an opportunity to respond before the IRS issues a notice and demand for payment.
Interested parties have an opportunity to submit comments, which are due on March 18, 2013. A public hearing is scheduled for April 23, 2013.