Questions on Section 4980d

[hamben]

Ok health experts, I have a question I hope you guys can answer on section 4980d. Although the president pushed back the employer mandate to offer ACA compliant plans and allowed ACA non compliant plans to remain in effect. He did not delay the $100 a day excise tax per employee regardless of the companies size.for a company that offers a non ACA compliant plan...so my question is are all of these companies both large and small that are still offering non compliant ACA plans potentially raking up $100 a day per employee fines? The law went into effect on 1/12014 and I can't find anything written that says it has been delayed along with the mandate. In theory a company with 10 employees on 1/1/2014 could already be facing $100 x10 x 160 days or about $160,000 excise tax.

This also brings up another question for a self employed person who has bought a non compliant short term policy or mini med policy and has chosen to pay the pay or play fine. Can there company then be hit with the $100 excise tax?



Here is a copy of the law and a nice article from a law firm that discuses..

26 U.S. Code § 4980D - Failure to meet certain group health plan requirements | LII / Legal Information Institute

Hinkle Law Firm LLC

 

[taterpeeler]

call barrack... he's the one with the pen and phone...I have no clue however my understanding is the entire group thingy was kicked back so they would not interfere in the mid terms..... I don't do group... I do like your comment about self employed...

 

[RayNY]

These penalties have not been delayed, hence the IRS guidance (2013-54 is very recent example) that clearly indicates that this fine applies and will be enforced.

What situations/violations they enforce is up for debate, but it should be apparent that this section was not delayed or repealed and therefore still applies. While businesses may not be mandated to provide coverage, they still may be facing these completely different penalties.

 

[hamben]

Tks for the responses .
It make since that HRA's would not be allowed as every company would go that route and the government would lose out on the $2,000 per employee fine.
However any plan that is currently being offered that does nor meet the ACA standards is therefore subject to the excise tax. Clients that have chosen to stay grandfathered on a non compliant group policy could be raking up these fine today..
Another concern is that the law says $100 per effected party. Does that mean dependents ? It could also be argued that employees and there dependents that chose not to participate in a non compliant ACA group plan could trigger the $100 a day fine per individual effected..ie the employee says well if it was a compliant plan I would have taken it..until guidance is issued all of these questions are anyone's guess. The sad part is it benefits the government to continue to keep quiet and continue to allow these companies to continue racking up excise taxes.
Last but not least what are the penalties the IRS could impose. I have seen clients get hit with a tax and an additional 100% IRS penalty for failure to pay the tax.

I have had agents tell me the only way the government can collect the obamacare tax is buy keeping refunds. Ok I'll buy that argument however what recourses do they have to collect any imposed IRS penalty? Example you own $1,000 tax for not buying An ACA compliant plan. You don't get a refund so you don't pay it. IRS then imposes 100% penalty for failure to comply you now owe an additional $1,000 that they can collect anyway they can...lean,suit,garnishment ...
Agents make sure your E and O is up to date. What a mess.....

 

[RayNY]

Hamben, you have a lot of questions (some rhetorical) in there, I'll answer what I can.
-Verbiage does not say "per effected party", it says "with respect to each individual to whom such failure relates", which we interpret to mean "per employee affected"
-The penalties are clearly illustrated by 4980D, that's the whole point. $100/day/employee, capped at $500,000, except for the exceptions listed in that section.
-The only way the gov't can collect clawbacks and "shared responsibility payments" is via refunds (specifically, on individuals). PENALTIES on businesses are totally different, and that's what this $100/day/person tax is.
-There is no prescription under law for additional penalties, I'd be shocked to see IRS attempt to collect anything other than the penalties defined by law.

 

[hamben]

Tks Ray,
I know a lot of this is rhetorical just kind of thinking about what ifs.
Like I said I have seen the IRS charge the tax and then a 100% additional for penalties and interest.
The $100 per individual is the Excise tax not the penalty or interest the irs can impose.
The IRS still has not issued guidance on a lot of this stuff but we do know the tax is running.
I found this on a law firms site.

http://www.jaffelaw.com/press-updat...-AND-PAY-EXCISE-TAXES-FOR-COBRA-AND-GROU.aspx

When is the excise tax paid?
For failures to comply with COBRA or the group health plan rules, the excise tax and Form 8928 are due on or before the due date for filing the employer's federal income tax return (without extension). A Form 8928 reflects the portion of the noncompliance period that falls within the employer's taxable year. Violations spanning multiple years require multiple filings. The reporting requirement for a COBRA violation may be the responsibility of the insurer or third-party administrator (rather than the employer) if the violation occurred because of its act or failure to act. The excise tax for a failure to make comparable contributions is also reported on Form 8928 but is due on or before April 15th of the calendar year following the calendar year in which the non-comparable contributions were made. An automatic extension to file Form 8928 is requested by filing Form 7004, Application for Automatic Extension of Time to File Certain Business Income Tax, Information, and Other Returns. Form 7004 does not, however, extend the time for paying the excise tax.
What if you fail to file on time or pay the excise tax when due?
If Form 8928 is filed after the due date (including extension) a penalty is charged, unless the filer can demonstrate that there is a reasonable cause for not filing on time. The penalty is 5% of the excise tax due for each month or part of a month the return is late, with a cap of 25% of the unpaid tax.
There is also a penalty for failing to pay the excise tax on time equal to .5% of the any tax not paid by the due date for each month or part of a month the tax remains unpaid, up to 25% of the unpaid tax. Like the penalty for late filing, the late payment penalty will be waived if there is a reasonable cause for not paying on time.
Here is a link to their guidelines.
Internal Revenue Manual

 

[RayNY]

Well, can't wait to see form 8929 whenever they get around to creating it...

And I guess there is an interest penalty on the unpaid portion of this tax (but, as far as I know, not the individual "shared responsibility payment" or the clawback). I've never seen it in writing before, and they didn't cite where the info came from, but I don't doubt it being true.

 

[hamben]

Tks again Ray,

Unfortunately agents are in a position that almost every question asked and answered creates several other questions. Ill keep posting what I find.

Here is the 8928 form.
http://www.irs.gov/pub/irs-pdf/f8928.pdf

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More info
Sadly penalties and interest will apply to individuals who do not pay the mandate tax and the IRS will be able to collect the penalties and interest through its normal procedures.
Here is the link and there publications.
Collection Procedural Questions