by Angela M. Bohmann
The IRS has issued final regulations on reporting and paying excise taxes for violations of various employee benefit requirements, including violations of federal health care continuation requirements (COBRA), health plan portability requirements (HIPAA), mental health parity, minimum hospital stays for newborns and mothers, genetic nondiscrimination requirements (GINA; see article in this issue), Michelle's Law, and health savings accounts contribution comparability requirements. Employers must pay excise taxes for violations of any of these statutes. Although the amounts and maximums vary, generally speaking, the excise tax is imposed for each violation of the statute until the violation is corrected.
The new regulations contain rules and requirements for filing the excise tax returns. The form to be filed is IRS Form 8928 and employers must pay the tax for most violations by the due date for filing their federal income tax returns (without extensions). Employers liable for excise taxes for noncomparable HSA contributions must file the Form 8928 by the April 15th following the calendar year in which the noncomparable contributions were made. These excise tax reporting provisions apply to any Form 8928 that is due on or after January 1, 2010, which would include excise tax returns due for violations that occurred in 2009.
The excise tax requirements have been in the tax code since the time that the provisions enforced through the excise taxes were added to the Internal Revenue Code. However, until now, absent regulations specifically imposing an obligation to file the excise tax returns, few employers would have reported the violations and paid the excise tax. Now that the IRS has imposed a formal obligation on an employer to file the excise tax return, employers face increased liability for failure to meet these numerous health plan benefit requirements. In addition to enforcement by the U.S. Department of Labor and aggrieved plan participants, an employer may also face excise taxes (including if the employer does not self-report), penalties and interest for failure to file the returns. Employers may wish to review their compliance with these many statutory provisions.
If you have questions about the new excise tax return obligation or the requirements of the various statutes, contact the Leonard, Street and Deinard benefits attorney with whom you regularly work. You can view a complete listing of our Compensation and Employee Benefits attorneys at www.leonard.com.