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IRS Offers Relief on Employer Coverage Reimbursement

By Paul Jenks, CQ Roll Call

February 19, 2015 -- The Obama administration has quietly bowed to pressure from small businesses on taxing employers who offer cash reimbursement to employees to purchase health insurance.

The IRS and Department of Labor reminded taxpayers last year that premium reimbursement through health reimbursement accounts does not absolve the employer from the requirement to offer health coverage. The employer will still be subject to an excise tax for failure to provide coverage.

Last week, the IRS announced transition relief from the tax until June 30, 2015. The agency justified the delay due to the slow development of small business insurance exchanges and the fact that some employers may need more time to obtain group health coverage.

Iowa Republican Sen. Charles E. Grassley quickly welcomed the tax enforcement delay and Louisiana Republican Rep. Charles Boustany, Jr. urged a permanent delay of the tax.

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