The Internal Revenue Service recently issued additional guidance to further assist employers in determining their eligibility for the small employer tax credit provided by the federal healthcare reform law, as first discussed in the Compliance Alert dated April 19, 2010.  This guidance is available on the IRS Small Business Healthcare Tax Credit website in the form of Notice 2010-44 and Revenue Ruling 2010-13.  Employers who believe they may be eligible should consult with their CPA and/or payroll regarding this recent IRS guidance.
 
According to the guidance, an employer is eligible for the small employer tax credit if:

• Less than 25 full-time equivalent employees are employed;
• Average annual wages are below $50,000; and
• The employer contributes at least 50% of the cost of healthcare coverage for its employer-sponsored health plan based on the single or employee-only rate.

For further reference, HCW has compiled a brief fact sheet that provides an overview of the IRS guidance to assist small employers and their tax advisors in determining eligibility for the credit, calculating the amount of the credit, and claiming the credit.   

As additional guidance and regulations become available for healthcare reform law provisions, HCW will continue to keep you updated through our Compliance Alerts.  In the meantime, if you have any questions about healthcare reform or the small employer tax credit, please email us or contact our office at (919) 403-1986.