Tax Alerts - May 2013
May 2013 PDF
May 2013 Articles
- Heated Debate Ahead on Tax Reform Proposals
- Using Your 2012 Tax-year Return to Plan for the Future
- The New 3.8 Percent Net Investment Tax Continues to Challenge
- How Do I - Compute the Small Business Health Insurance Credit
- FAQ - What is "Cost of Goods Sold?"
- May 2013 Tax Compliance Calendar
- Medical Clinic's "Advances" to Newly Hired Physicians Were Compensation and Not Loans
- IRS Issues Final Rules on Broker Reporting of Debt Instruments and Options
- Shareholder Must Reduce Basis in S Corp in First Year Basis Adequate to Absorb Suspended Losses
- Report Describes Seasonal Workers, Variable Hour Employees Under Healthcare Reform's Employer Mandate
- Overall Individual Taxpayer Audit Rate Drops for Fiscal Year 2012, Along with IRS Budget
- PA - Philadelphia Amends Interest, Penalty, Other Provisions
Report Describes Seasonal Workers, Variable Hour Employees Under Healthcare Reform's Employer Mandate
The Patient Protection and Affordable Care Act (PPACA) requires certain “applicable large employers” that do not offer affordable, minimum essential health care coverage to their full-time employees to make an assessable payment on a per-employee basis. An “applicable large employer” generally is an employer with at least 50 full-time employees or a combination of full-time and part-time employees that is equivalent to at least 50 full-time employees. A full-time employee is an individual employed on average at least 30 hours per week.
In many cases, an employer will find it easy to identity which employees work an average of 30 hours per week. In other cases, it has been harder. For example, seasonal workers may work more than 30 hours a week, but only for a few weeks or months in a single year.
The Congressional Research Service (CRS), which is tasked with providing policy and legal analysis to members of Congress, recently issued a report describing seasonal workers and variable hour employees to help alleviate confusion regarding which employees would make an employer liable for a shared responsibility payment under Code Sec. 4980H.
Shared Responsibility Payment
The Code Sec. 4980H employer shared responsibility payment generally applies to months beginning after December 31, 2013. Employers are subject to the payment if:
- 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, or
- 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.
CRS explained that the definition of seasonal worker varies depending on whether it is used to determine if an employer is considered large or to determine how many employees are considered full-time for purposes of setting the dollar amount of the penalty. For the first question, if a seasonal employee works less than 120 days during a year, he or she is not included in the full-time equivalent (FTE) calculation, CRS explained. For the second question, Notice 2012-58 provides that, at least in 2014, employers are permitted to use instead a reasonable, good faith interpretation of the term seasonal employee, CRS explained.
Variable Hour Employees
CRS further explained that a new employee is a variable hour employee if, based on the facts and circumstances at the start date, it cannot be determined that the employee is reasonably expected to be employed on average at least 30 hours per week.
CRS, Potential Employer Penalties Under the PPACA, April 2013
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