Academic journal article Journal of Accountancy

Sec. 4980D Excise Tax Relief Is Available for Certain Small Employers: IRS Gives Limited Transition Relief for Employer Payment Plans and 2% S Corporation Shareholder Arrangements

Academic journal article Journal of Accountancy

Sec. 4980D Excise Tax Relief Is Available for Certain Small Employers: IRS Gives Limited Transition Relief for Employer Payment Plans and 2% S Corporation Shareholder Arrangements

Article excerpt

In Notice 2015-17, the IRS announced transition relief from the application of the Sec. 4980D excise tax, which applies to health plans that do not meet the market reform requirements of the Patient Protection and Affordable Care Act (PPACA), PL. 111-148.

The Sec. 4980D excise tax of $100 per day per affected participant applies to health insurance employer payment plans that do not comply with the market reforms imposed on group health plans by PPACA.

The AICPA had been pressing the government for months to provide answers on this issue and transition relief. Earlier IRS guidance (Notice 2013-54) caused great confusion among practitioners about how to treat reimbursements of medical insurance premiums through employer payment plans and S corporation health care arrangements for 2% S corporation shareholder-employees. The latest notice provides some clarification. It also announced that employers with employer payment plans as described in Notice 2013-54 that are not applicable large employers are eligible for temporary relief from assessment of the Sec. 4980D excise tax. An employer is not an applicable large employer (and therefore is not liable for the Sec. 4980H shared-responsibility payment) if it employs fewer than 50 full-time employees on business days during the preceding calendar year. This relief applied through 2014 and, for employers that are not applicable large employers in 2015, through June 30, 2015. …

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