On March 22, 2022, the IRS announced it will temporarily stop sending written notices to certain entities that fall behind on filing obligations related to Forms 5500, 990 and others. The IRS usually mails these notices to tax-exempt or governmental entities in case of a delinquent return. The suspension does not relieve entities of any filing deadlines or obligations.
The IRS is currently experiencing a backlog of several million unprocessed returns due to the COVID-19 pandemic. This backlog involves returns filed by both individuals and entities. According to the IRS, the suspension will help avoid confusion when a filing is still in process.
The IRS will continue to assess its inventory of pending returns to determine when to resume mailing the suspended notices.
Meanwhile, some taxpayers and tax professionals may still receive the notices over the next several weeks.
The suspension applies to these notices:
Entities affected by the suspension should ensure their procedures for timely filing returns do not rely on any of these notices.
On April 5, 2022, the IRS issued a proposed rule that would change existing rules for premium tax credit (PTC) eligibility. The PTC is available to eligible individuals who purchase health coverage through the Exchange. Individuals who have access to affordable, minimum value employer coverage are not eligible for the PTC.
Currently, the affordability of employer coverage for family members is determined based on the lowest-cost self-only coverage available to the employee. The cost of family coverage is not taken into account. These rules apply for determining eligibility for the PTC and for purposes of the employer shared responsibility rules.
The proposed rule would provide that an employer-sponsored plan is affordable for family members if the portion of the premium the employee must pay for family coverage does not exceed 9.5% (as adjusted) of their household income. Family coverage includes all employer plans that cover any individuals related to an employee. The proposal would also add a minimum value rule for family members.
If this rule is finalized, the change would likely mean more individuals will be newly eligible for the PTC for coverage purchased through the Exchange. The proposal would not affect affordability for employees. Thus, an employee’s family member may have an offer of unaffordable employer coverage, even if the employee has an affordable offer of self-only coverage.
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