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January 11, 2013

IRS To Employers: Pay ObamaCare 'Shared Responsibility' Or Else

As if concerns about the fiscal cliff, debt ceiling, higher taxes and a potential recession weren’t enough to scare employers, the Obama administration has just handed them one more headache: an IRS warning that any efforts to avoid the ObamaCare mandate to provide coverage or pay a penalty (or is it a tax?) will not go unpunished.

Yes, the Infernal Revenue Service has just released its “proposed regulations providing guidance under section 4980H of the Internal Revenue Code (Code) with respect to the shared responsibility for employers regarding employee health coverage.”

Don’t you love that “shared responsibility” reference?  It’s as if President Obama’s campaign speeches have morphed into IRS regs.

Of course, there has been a lot of confusion among employers about implementing the coverage mandate and their responsibilities, just as there has been a lot of confusion among states about the rules and regulations associated with the health insurance exchanges.

Just so everyone is clear, what the IRS says is:

Section 4980H generally provides that an applicable large employer is subject to an assessable payment if either (1) the employer fails to offer to its full-time employees (and their dependents) the opportunity to enroll in minimum essential coverage (MEC) under an eligible employer-sponsored plan and any full-time employee is certified to the employer as having received an applicable premium tax credit or cost-sharing reduction (section 4980H(a) liability), or (2) the employer offers its full-time employees (and their dependents) the opportunity to enroll in MEC under an eligible employer-sponsored plan and one or more full-time employees is certified to the employer as having received an applicable premium tax credit or cost-sharing reduction (section 4980H(b) liability).  Generally, section 4980H(b) liability may arise because, with respect to a full-time employee who has been certified to the employer as having received an applicable premium tax credit or cost.

Everybody got that?

You will notice that “assessable payment” is what Chief Justice John Roberts considers a tax.

Essentially, employers with 50 or more employees must provide health coverage to their employees.  If they don’t they will have to pay an “assessable payment” of up to $2,000 per employee.  At least that’s what the law is supposed to require.  Who knows if that’s what the proposed regulations say.

The problem is that not all employer-worker relationships are that simple.

Some employees work part time, and some part-timers can put in full-time hours during peak times for the company.  Other companies often fill gaps with temporary employees.  And some companies have so many part-time workers that they equal 50 full-time workers.

Not to worry, the IRS has rules for all of them; and they are every bit as clear as the passage cited earlier.

Basically,  the IRS is skeptical that all employers will be as excited about these mandates as the Democrats implied they would be early on.  So the IRS is issuing these proposed regulations as a way to keep employers from avoiding their shared responsibility.

As the IRS warned on December 28, “The Treasury Department and the IRS are aware of various structures being considered under which employers might use temporary staffing agencies (or other staffing agencies)… to evade application of section 4980H [the employer insurance mandate].”

So Obama rams through a costly, onerous, time-consuming and job-killing health insurance bill, and employers will look for ways to limit or minimize its impact—just as rich liberals do with taxes.  And the IRS expects it, which is why it’s putting employers on notice.

And staffing up.  Centralized governments can’t work without lots of bureaucrats to make sure everyone is buckling under the rules.

So you will be glad to know that the Treasury’s inspector general for tax administration has released a report on September 30 claiming the IRS will need more than 2,000 employees to monitor compliance with Obama’s health care law.  And that’s just for 2013.

Well, Nancy Pelosi claimed when ObamaCare passed that it would create 400,000 new jobs almost immediately.  The public probably didn’t understand she was talking about IRS agents looking to make sure you accept your shared responsibility.


  • TaxBytes-New

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