October 21, 2010

IRS Announces Deferral of W-2 Health Coverage Reporting Requirem

IRS Announces Deferral of W-2 Health Coverage Reporting Requirem Tax & Business

Originally scheduled to become mandatory for tax years beginning in 2011, the IRS deferred the reporting requirement of health coverage by employers on Form W-2. The IRS has issued guidance within Notice 2010-69 which makes employer reporting of aggregate cost of health coverage to employees on Form W-2 in 2011 optional. Reporting requirements will be mandatory in 2012.

The reporting requirements were added pursuant to The Patient Protection and Affordable Care Act of 2010, which was passed in March. Under this law, the aggregate cost of employer-sponsored health care coverage is to be provided on Form W-2 for informational purposes only. The deferral of the new reporting requirement intends to provide relief for employers to make changes in payroll and compliance procedures in order to properly conform. Employers who do not comply in 2011 will not be subject to any penalty.

Despite the deferral, the IRS released a draft version of Form W-2, which now includes a new Code (DD) in Box 12, the cost of employer-sponsored health coverage, for informational purposes only. It is important to note that the amount reported with Code DD is not taxable income. The IRS intends to publish clear and accurate guidance for 2012 reporting requirements.

Contact your Marcum LLP Tax Professional today with any questions or concerns regarding how the reporting requirements may affect you today.

Related Service

Tax & Business