What Does the Delay in the Employer Mandate Really Mean?

Bottom line: Employers may owe ObamaCare fines next year, even if the reporting requirements have been suspended for 12 months. Here is John R. Graham:

[E]mployers need to be aware that they are offered only “transition relief” for next year. IRS Notice 2013-45 states that employers are “encouraged to voluntarily comply with the information reporting provisions for 2014.” Although political analysis suggests that the “relief” will roll over to future years, the Notice waives only reporting requirements. Treasury cannot waive the actual tax.

As a result, there may be little relief even from “red tape”. Will auditors grant relief from reporting a tax liability to businesses which owe the tax in 2014? This should be a topic of intense discussion within the accounting profession. If the profession sticks to the letter of the law, auditors will demand that businesses prepare good-faith calculations of taxes due to the employer mandate, and not to write them off until legislation really “fixes” the problem. This should concern not only small business, but large businesses with low-wage hourly workers or franchisees.

The delay of the employer mandate has caused more headache than relief.

Comments (13)

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  1. Ben says:

    It means nothing it is just pushing back the problem.

    • Dewaine says:

      Unfortunately, that isn’t the case. Pushing it back creates another year of uncertainty for businesses that will likely cause them to continue withholding investment and expansion causing unemployment in a stagnant economy. Businesses don’t want to make the necessary cuts unless they absolutely have to, pushing the mandate back gives them hope that it won’t ever be implemented and also keeps many of them afloat for one more year.

      • JD says:

        You’re right. Many businesses are going into this with fingers-crossed. They can’t get the numbers to work out, so hope is their only friend.

  2. Brenden says:

    I find it fascinating that people actually believe that this will have no real economic effects. It is nice though, to have temporary relief from the impending “doom” of obamacare.

  3. Bosh says:

    Suspending it till next year doesn’t do anything…it’s now more of the U.S.’s new ticking time bomb instead of the U.S. falling on it’s own sword. Everyone knows it’s going to happen, but how big the explosion will be…nobody knows.

  4. Linda Gorman says:

    Nice to have someone point out that employer requirements are not suspended. The Treasury simply indicated, in a blog post, no less, that it wouldn’t be enforcing employer reporting.

    Doesn’t mean it can’t decide to enforce everything else. Or that selective enforcement is beyond the pale.

    • Brian says:

      Truer words have not been spoken.

    • JD says:

      I think that that would end badly for them. Being forced to pay for something that you don’t get is easily understood as wrong by people.

  5. Crownswell says:

    “As a result, there may be little relief even from ‘red tape’. Will auditors grant relief from reporting a tax liability to businesses which owe the tax in 2014? This should be a topic of intense discussion within the accounting profession.”

    Exactly the conversation we need to be having.

  6. Bubba says:

    On paper, employers are an easy group to target. “Just force those stingy employers to provide coverage like any decent employer should…” goes the thinking. But, if the Obama Administration is giving them a pass for a year, it’s because Obama functionaries know it won’t work. I can only guess Obama’s HHS secretary is trying to disguise the fact that employers are going to drop coverage in droves until the exchanges are up and running.

  7. Chaz says:

    What is Mr. Graham taking about?

    From Notice 213-45 (NOT a blog post) (See (3) below):

    This notice provides transition relief for 2014 from (1) the information reporting requirements applicable to insurers, self-insuring employers, and certain other providers of minimum essential coverage under § 6055 of the Internal Revenue Code (Code) (§ 6055 Information Reporting), (2) the information reporting requirements applicable to applicable large employers under § 6056 (§ 6056 Information Reporting), and (3) the employer shared responsibility provisions under § 4980H (Employer Shared Responsibility Provisions).

  8. Linda Gorman says:

    Chaz, presumably you are aware that the original notice did in fact appear on a Treasury blog.

    In the past, statutory requirements–PPACA specifically says when the employer mandate is to take effect–were typically called “laws.” Regulatory actions have historically been unable to repeal laws. Repeal has historically required both an act of Congress and assent by the President.

    But if you do agree that enforcement of ObamaCare is indeed discretionary, then you also presumably agree that a future President can unilaterally repeal it.

  9. John R. Graham says:

    Chaz, my article does link to the IRS Notice 213-45, which was published one week after the blog post.

    IRS Notice 213-45 asserts that employers are exempted from the requirements in section 4980H of the US Code. The section states very clearly “……there is hereby imposed on the employer an assessable payment……”.

    This is the law, as upheld by SCOTUS. The IRS has no power to nullify this. How many presidents and governors get elected promising to cut or eliminate taxes? Once elected, do they unilaterally declare to their citizens that they can pay less tax? Or do they work with the legislature to lower the taxes?

    What is even scarier is that when the House passed a bill to legislate the delay by one year, the President threatened a veto before the Senate even picked it up.

    And most presidents and governors, when failing to enforce a law fully, at least do it to laws of which they disapprove. So, President Obama’s announcement of administrative amnesty for the “DREAMER”s makes political sense from his perspective.

    His attempt to nullify a law that was his own biggest priority in his first year, while preventing Congress from amending the law appropriately, is shocking.