New Tax Guidelines Announced by the IRS Signal Good News for Small Business
Statement by David Chase, National Healthcare Policy Director for Small Business Majority, regarding IRS decision to provide temporary healthcare transition relief to qualifying small employers
We are encouraged the IRS has announced updated tax guidelines for small business owners looking to comply with and take advantage of the new healthcare law. These new guidelines protect qualifying small employers from hefty penalties and provide small business owners with clearer direction on how to find health insurance plans for their employees that comply with the new healthcare law.
Notice 2015-17, provides broad tax relief to small business owners with fewer than 50 employers by delaying penalties for non-compliant employee reimbursement plans until July 1, 2015. Specifically, the Notice provides small employers with fewer than 50 employees temporary relief from the assessment of an excise tax under Section 4980D of the tax code. This change shields many small business owners from being assessed a $36,500, per employee. The penalty, which many small business owners were unaware even existed, assess a tax on small employers for reimbursing or paying a premium for an individual health insurance policy for an employee, which is no longer allowed under the new healthcare law's market reform requirements.
The new guidelines also delay penalties on S corporations that reimburse insurance premiums for more-than 2 percent shareholders, and allow those same employees to continue to deduct any premiums reimbursed by the S corporation as self-employed health insurance premiums.
While these new guidelines provide small employers and entrepreneurs some relief, we look forward to seeing more smart rules being issued in the future to give small businesses the support they need.
About Small Business Majority
Small Business Majority is a national small business advocacy organization, founded and run by small business owners to focus on solving the biggest problems facing America's 28 million small businesses today. Since 2005, we have actively engaged small business owners and policymakers in support of public policy solutions, and have delivered information and resources to entrepreneurs that promote small business growth and drive a strong, sustainable economy. We are a team of more than 30 working from our 11 offices in Washington, D.C. and 9 states, with a network of more than 45,000 small business owners and more than 2,000 business organizations, along with a formal strategic partnership program of more than 125 business organizations, enabling us to reach more than 500,000 entrepreneurs. Our extensive scientific polling, focus groups and economic research help us educate and inform policymakers, the media and other stakeholders about issues including taxes, healthcare, access to capital, entrepreneurship, workforce development, clean energy and immigration. Learn more about us on our website and follow us on Twitter, Facebook and Instagram.