By Michael Baer
Employers would be able to use Form W-2, Wage and Tax Statement, to meet Affordable Care Act (Pub. L. 111-148) reporting requirements under tax code Section 6056 in place of separate employee statements, under proposed rules (REG-136630-12) published Sept. 9 in the Federal Register.
Various aspects of the proposed rules attempt to streamline reporting requirements for employers with 50 or more full-time equivalent employees and subject to the shared-responsibility provisions of Internal Revenue Code Section 4980H, also known as the employer mandate.
The proposed rules also would eliminate the need for employers to make full-time and part-time determinations for employees if adequate coverage is offered to all potentially full-time employees and would spare employers from reporting the cost of coverage to employees under certain circumstances.
Section 6056 requires employers to file returns with respect to each full-time employee and to furnish a statement to each full-time employee by Jan. 31 of the calendar year following the calendar year for which the return must be filed.
On July 10, the Internal Revenue Service said in Notice 2013-45 that it would delay by one year the application of penalties under Section 4980H to allow employers to address the complexities of implementing the reporting requirements (see PAG Newsletter, 7/17/13).
With the delayed application of the reporting requirements, employers must file 2015 returns by Jan. 31, 2016, or face penalties.
Under the proposed rules, employers would have the option to provide information about offers of minimum-value coverage on Form W-2 instead of furnishing a separate Section 6056 statement that would include offers of employer-sponsored coverage to employees, spouses and dependents to the employee and then report the offer information to the IRS.
Section 6056 requires employers to report information to the IRS about the entity offering coverage, including contact information, as well as “a list of full-time employees and information about the coverage offered to each, by month, including the cost of self-only coverage,” the Treasury Department said in a Sept. 5 news release, which accompanied the early issuance of the proposed regulations.
Form W-2 would be modified to allow more information about health-care coverage to be included through “an option to use a code on the Form W-2 in certain circumstances to provide information needed by both the employee and the IRS rather than through the use of the Section 6056 employee statement (with employer-level information being provided separately),” the proposed rules said.
“The reporting is envisioned as using an existing box on Form W-2 to provide the monthly dollar amount of the required employee contribution for the lowest-cost minimum value self-only coverage offered to the employee and using a letter code to describe the offer of coverage,” the proposed rules said.
Employers that choose to use the W-2 reporting method would not be required to file or furnish separate Section 6056 statements for affected employees. Instead, employers would indicate on a Section 6056 transmittal (still required) that the W-2 method was chosen, the proposed rules said.
The proposed rules attempt to limit the number of applicable large employers that need to run calculations to determine full-time equivalent employees under guidance issued in January 2013 (REG-138006-12).
Employers are to calculate full-time equivalent employees by adding up the service hours of part-time employees, said Stephen B. Tackney, deputy division counsel and deputy associate chief counsel in the IRS's Tax-Exempt and Government Entities Division.
If a worker's hours add up to at least 30, “that counts as another full-time employee just for purposes of figuring out whether you have 50” employees, he said in a March 1, 2013, Federal Bar Association Section on Taxation Conference.
Under the proposed rules, if adequate coverage already is provided to all potentially full-time employees, the employer would not need to determine whether particular employees are full-time.
“Nearly 95 percent of employers with more than 50 employees already offer coverage to their employees,” the Treasury release said.
A separate set of proposed rules (REG-132455-11), also published Sept. 9 in the Federal Register, addresses the requirements under Section 6055 for annual reporting on minimum essential coverage.
For more information or to read the proposed rules, go to https://federalregister.gov/a/2013-21791. Comments on the proposed rules must be received by IRS by Nov. 8. A public hearing is scheduled for Nov. 18.
To contact the editor responsible for this story: Mike Baer in Washington at mbaer@bna.com.