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IRS Formally Announces 2014 ACA Relief

IRS Formally Announces 2014 ACA Relief

On July 9th, the Internal Revenue Service released Notice (2013-45) of the Affordable Care Act delay for applicable large employers.

The IRS Notice solidifies the implementation of the delay of IRS reporting requirements and key Employer Shared Responsibility provisions under the Affordable Care Act, first announced by the U.S. Treasury on July 2nd.  At that time there was a promise of more definitive information forthcoming by the Treasury, thus the Notice.

Notice 2013-45 is the formal, legal announcement of the ACA reporting requirements and employee mandates delay.

The Codes as Defined by the IRS

IRS Code Sections 6055 and 6056 and the assessment of penalties under Code Section 4980H—which outlines the Employer Shared Responsibility requirements or “Play or Pay” provisions–have all been delayed by one year. Just as employers were surrendering to the approaching ACA deadline of January 2014, the Treasury (and the White House, through a press release) announced the year delay to address issues that still need to be worked out, including reporting penalties and requirements.

According to the IRS—or at least the current spin on it–the intention for this stay is to simplify reporting and help employers transition to meet at least the minimal employee health coverage requirements.

Did Employers Dodge Penalties?

Did all employers dodge the assessment of penalties? The answer is “yes.” No penalties will be doled out nor will employers have to comply with the tedious reporting requirements until January 2015. But in the U.S. Treasury press release, the IRS encourages employers to voluntarily comply with reporting and coverage requirements now to ease the transition. Although this is merely speculation, a rush to voluntary compliance by employers is highly unlikely. Most employers, particularly small business owners whose companies just barely qualify as applicable large employers, have been very resistant to the ACA and its accompanying provisions and regulations.

According to an article by ADP, the IRS is quoted in the Notice as stating: 

…‘(r)eal-world testing of reporting systems and plan designs through voluntary compliance for 2014 will

contribute to a smoother transition to full implementation for 2015.’ 

It should be noted that this delay does not affect individual coverage under the ACA. And, the U.S. Treasury insists that employers must still comply with all other ACA requirements. This includes the mandated Form W-2 reporting and distributing required employee communications. Examples are the Summary of Benefits and Coverage materials and the Notice of Exchange Availability. 

There will likely be more information released by the IRS in the coming months as the ACA is still in flux even at this 11th hour.

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