IRS to Employers: There’s No Escaping ObamaCare

By:  Michael Tennant
01/15/2013
       
IRS to Employers: There’s No Escaping ObamaCare

The IRS has fired a shot across the bow of employers hoping to remain free of ObamaCare’s employer mandate by adhering to the letter, but not the spirit, of the law. The agency’s message: Don’t even think about it.

The Internal Revenue Service (IRS) has fired a shot across the bow of employers hoping to remain free of ObamaCare’s employer mandate by adhering to the letter, but not the spirit, of the law. The agency’s message: Don’t even think about it.

The IRS recently issued a 144-page notice of “proposed regulations providing guidance under section 4980H of the Internal Revenue Code ... with respect to the shared responsibility for employers regarding employee health coverage.” That is, the agency is notifying the public that it will be promulgating rules as to how it interprets the employer mandate and how it intends to enforce it.

And as Merrill Matthews observes at Forbes: “Don’t you love that ‘shared responsibility’ reference? It’s as if President Obama’s campaign speeches have morphed into IRS reg[ulation]s.”

The employer mandate requires employers with 50 or more full-time employees to offer “affordable” health insurance coverage to those employees, with “affordable” defined as costing an employee no more than 9.5 percent of his total household income. For every full-time employee who opts out of “unaffordable” employer-sponsored coverage and obtains insurance on a state exchange, often with a taxpayer subsidy, the employer will be fined up to $2,000.

“The Treasury Department and the IRS are aware of various structures being considered under which employers might use temporary staffing agencies (or other staffing agencies) purporting to be the common law employer to evade application of section 4980H,” the IRS notice states.

The IRS anticipates two ways in which employers might try to circumvent the mandate through temporary agencies. First, an employer might hire an employee directly for, say, 20 hours a week, then hire the same person through a temporary agency for another 20 hours per week, thereby getting 40 hours’ worth of work out of that individual without either the employer or the agency having to classify him as a full-time employee. Second, an employer might not hire the individual directly at all but might hire him through more than one temporary agency, again obtaining 40 hours’ worth of work a week but keeping the individual from being considered a full-time employee of either the employer or any of the temporary agencies.

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