CHA News Article

IRS Requests Comments on ‘Cadillac Tax’
Comments due Oct. 1

The Internal Revenue Service (IRS) has requested comments to aid in drafting proposed regulations on implementation of the Affordable Care Act’s (ACA) excise tax on high-cost, employer-sponsored health coverage. The tax will apply to taxable years after Dec. 31, 2017. Under this provision of the ACA, if the aggregate cost of employer-sponsored coverage provided to an employee exceeds a certain dollar amount (adjusted annually), the excess benefit is subject to a 40 percent excise tax.

In Notice 2015-52, the IRS requests comments by Oct. 1, 2015, on the following issues:

  • The identification of the taxpayers (employer or insurer) who may be liable for the excise tax;
  • Employer aggregation;
  • The allocation of the tax among the applicable taxpayers;
  • The payment of the applicable tax;
  • Whether insurers should be taxed on reimbursement they receive from employers for paying the excise tax;
  • Issues regarding the cost of applicable coverage; and
  • Any other issues related to this provision of law.

After considering any comments it receives, the IRS will issue a formal Notice of Proposed Rulemaking and provide further opportunity for comment.