PROTECTING SMALL BUSINESS, PROMOTING ENTREPRENEURSHIP

Coalition Letter to U.S. Treasury, HHS, IRS and CMS Regarding the Enforcement of the Employer Mandate Under the Affordable Care Act

By at 30 May, 2018, 5:05 pm

In a May 30, 2018 letter to Administration officials, SBE Council joined a coalition of business organizations to express its concerns regarding tax penalties being assessed under the “employer mandate” of the Affordable Care Act.  The letter, addressed to Treasury Secretary Steven Mnuchin, HHS Secretary Alex Azar, Acting IRS Commissioner and Assistant Secretary for Tax Policy David Kautter (U.S. Treasury), and CMS Administrator Seema Verma outlines the flawed process by which employers are being assessed, which violates the language and intent of the ACA.

The letter reads:

The undersigned organizations represent a broad coalition of employers, large and small, across the entire spectrum of American business. We are writing to express our deep concern regarding the unlawful and deeply flawed process by which the Administration has begun assessing tax penalties under the employer shared responsibility provisions of the Affordable Care Act (“ACA”), better known as the “employer mandate.”

The IRS’s issuance of so-called “226J” letters notifying employers of potential assessments for calendar year 2015 does not comply with the clear and comprehensive requirements the ACA laid out for employer mandate notification and enforcement. According to testimony before the House Oversight and Government Reform Committee April 17, 2018, the IRS has identified over 30,000 employers who are potentially liable for assessments totaling $4.3 billion—and at least 10,000 assessment letters had already been sent. The fact that most of the assessments issued have been reconciled according to the testimony makes clear that the IRS is operating on incomplete and incorrect information and assumptions—a disturbing result that could have been avoided if the law had been followed.

The groups urge the suspension of the assessments, as they represent an “unlawful denial of employers’ due process rights,” and the costs and complexity are especially burdensome to small businesses.

As noted in the letter:

Given the ongoing cost, complexity, and confusion surrounding compliance with the recordkeeping and reporting requirements of the employer mandate, especially for smaller businesses—and the denial of employers’ due process rights by failing to satisfy the mandated notice and appeals requirements under ACA section 1411—we respectfully urge that all further employer tax assessments be suspended, and that Executive Branch efforts be directed in support of full repeal of the employer mandate. Suspension of assessments is a necessary and appropriate step in furtherance of the Administration’s pledge to do everything lawfully possible to minimize the ACA’s economic and regulatory burdens.

Read the full letter here.

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