IRS Warning on Sec 105 Plans

[John of PA]

FYI re: the tax only being one dollar, it is going to 2 dollars for 2014. Also there was a question as to whether family members are counted for the 1 dollar per person fee. I just read in PPC Tax Action Memo's that yes they are counted for 105 Med Reimb Plans and No they are not counted (only employee is counted) for HRA's (Health Reimbursement Arrangements). Have a good weekend all.

[John of PA]

Just to clarify that this fee of only one dollar "per covered life" goes to 63 dollars PER COVERED LIFE for 2014, for 105 Med Reimb Plans. The late filing penalty for the 720 is 100% of the tax due. (when did it become acceptable for the US Govt. to engage in "extortion").

[Bees Knees]

Just to clarify that this fee of only one dollar "per covered life" goes to 63 dollars PER COVERED LIFE for 2014, for 105 Med Reimb Plans. The late filing penalty for the 720 is 100% of the tax due. (when did it become acceptable for the US Govt. to engage in "extortion").

I don't know where you get the $63 for 2014. IRC §4376 says the tax for self-insured health plans (Section 105 Med Reimb Plans) is $2 per covered life starting in plan years that end in 2014, with an adjustment for increases in health care spending starting with fiscal plan years beginning after September 30, 2014.

Unless they have already calculated that health care spending is increasing by 3,150% for 2015 ($2 X 3,150% = $63).

[S T]

John
I am still trying to locate the $ 63 fee that you refer to for the Form 720 reporting for Sect 105 - so far I have not had any success.

Any links or information you could post would be most appreciated

Thanks

Sandy

[John of PA]

Perhap this is not correct but I quote "In view of the small amount of tax.....some small employers may be inclined to ignore the Form 720 filing. However, recognize that begining in 2014 there will be a second, more consequential fee, essentially computed in the same manner, at the rate of $ 63.00 per covered life in a medical reimbursement plan (ACA Sec. 1341, imposing the Transitional Reinsurance Fee)." (Thomson Reuters PPC Tax Action Memo # 1617 dated 7-16-13, page 3). I actually subscribe to the paper version so I am not able to provide a link.

[oceanlovin'ea]

REfund of $1.00

Interesting twist to the filing of the Form 720. I decided to include myself and sent in $2.00. I got a check in the mail on Tuesday for $1.00.

Explanation was F-720 REF.

It probably costs them more than $1 to send me the check.

Linda, EA

[John of PA]

Thank you for posting this. It also tells us that IRS is looking over these 105 plan 720's, very carelfully, line by line.