In “IRS Drops a Bomb on Small Employers,” the Mississippi Business Journal reports about a situation that worries many small employers in the state.
An IRS regulation based on IRS Code Section 4980D deems companies with fewer than 50 workers in violation of the Affordable Care Act if the firms seek to assist employees with health care costs directly by reimbursing medical expenses, paying health insurance premiums or increasing salaries to cover the costs of family or individual health care policies.
These types of measures represent group health care plans subject to Affordable Care Act measures. Instead, the IRS expects employers to rely upon the state-operated exchange for small businesses called “One Mississippi.”
However, a problem exists for many businesses in Mississippi: One Mississippi may not continue without the state legislature voting to fund the exchange. It currently includes only two insurers, United Health Care and Humana. Speculation exists that if Aetna purchases Humana, the new entity will withdraw from Mississippi’s small business exchange pool.
Small businesses deemed in violation of the IRS provisions face an excise tax of $100 per day, per worker. They potentially risk an annual tax of $36,500 per worker unless Congress passes corrective legislation.
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Law Offices of Darrin T. Mish, P.A.: Tax Attorney