IRS Issues Proposed Rules For Employer “Shared Responsibility”


EmpBlog-6.21.2013-PPACAWith the Patient Protection and Affordable Care Act on the horizon, employers are focused on the costs associated with benefits plans and medical coverage.  In this regard, the 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 issued by the Internal Revenue Service highlight the role of new taxes in the healthcare reform law.

Many employers are wary of these new “shared responsibility” excise taxes that were issued by the IRS and the U.S. Treasury Department.  However, the rules proposed by the two government agencies regarding the newly issued tax will take effect in 2014, giving employers around the country time to make the needed adjustments.

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.  Employers will be allowed to look back up to 12 months to determine if variable hour employees meet the 30 hours per week average that is the definition of “full-time employee” under the regulations.  The rules also serve to clarify that an employer will not be subject to tax for failure to offer coverage to spouses.

The Obama Administration is hoping that the IRS proposed rules will drive home the point that employers will be hit with penalties if they avoid the mandates outlined in the landmark healthcare legislation.

While some have applauded the proposal, as it offers some guidance to employers as to what will be taxed, others have noted that the rules don’t take into account special relationships between employers and workers.  Part-time and contract employees have their own rules regarding the new law, but the wording of the IRS proposal prompted many business groups to ask for a more clearly defined framework.

As of the date of this entry, the IRS is still accepting public comments on the proposed regulations.

This blog is presented under protest by the law firm of Ervin Cohen & Jessup LLP.  It is essentially the random thoughts and opinions of someone who lives in the trenches of the war that often is employment law–he/she may well be a little shell-shocked.  So if you are thinking “woohoo, I just landed some free legal advice that will fix all my problems!”, think again.  This is commentary people, a sketchy overview of some current legal issue with a dose of humor, but commentary nonetheless; as if Dennis Miller were a lawyer…and still mildly amusing.  No legal advice here; you would have to pay real US currency for that (unless you are my mom, and even then there are limits).  But feel free to contact us with your questions and comments—who knows, we might even answer you.  And if you want to spread this stuff around, feel free to do so, but please keep it in its present form (‘cause you can’t mess with this kind of poetry).  Big news: Copyright 2013.  All rights reserved; yep, all of them.

If you have any questions about this article, contact the writer directly, assuming he or she was brave enough to attach their name to it.  If you have any questions regarding this blog or your life in general, contact Kelly O. Scott, Esq., commander in chief of this blog and Head Honcho (official legal title) of ECJ’s Employment Law Department, at (310) 281-6348 or

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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