On Tuesday, April 23, 2013, the U.S. Department of the Treasury and Internal Revenue Service (IRS) held a public hearing at the main IRS building in Washington, DC. The hearing began at 10am and lasted nearly all day, with over 20 organizations listed on the agenda scheduled to present in front of a panel of Treasury and IRS attorneys. The attorneys present for the IRS were Stephen Tackney, Deputy Div. Counsel/Deputy Assoc. Chief Counsel (Tax Exempt and Government Entities) and Kathryn Johnson, General Attorney (Tax Exempt and Government Entities). The attorneys present for the Treasury were Alan Tawshunsky, Special Counsel, Office of Benefits Tax Counsel and Rachel Leiser Levy, Attorney-Advisor, Office of Benefits Tax Counsel. Two representatives from Hill, Chesson & Woody were present at the public hearing – W. Hunter Walton, J.D., Principal, Health & Welfare Consultant, and myself, Lindsey Surratt, J.D., Compliance Officer.
Individuals representing a wide range of industries, employer groups, and consumer advocacy organizations offered emphasis on particular items contained in the Employer Shared Responsibility proposed regulations issued on January 2, 2013. Among the presenters listed on the agenda were representatives from the ERISA Industry Committee, the Council of Insurance Agents and Brokers, the American Benefits Council, AFL-CIO, the American Federation of Teachers, the National Education Association, the National Faculty Majority, and the National Coordinating Committee for Multiemployer plans.
Testimony heard at the hearing highlighted a number of unanswered questions and areas of the proposed regulations that lack clarity. Presenters voiced concerns about wellness incentives and their impact on the affordability safe harbors for employee insurance premiums, fringe benefits provided to employees under the Service Contract Act, difficulties with the lookback measurement method for variable hour employees, the 95% substantially all rule for providing employer sponsored coverage, employers reducing hours to avoid penalties, and counting hours of service for education professionals, including teachers, adjunct professors, and non-teacher educational staff.
Employers and consumer advocacy groups are anxiously awaiting the publication of final regulations on Employer Shared Responsibility. Many are currently looking at the rules to determine what changes may be made to comply with PPACA and to protect the employer’s bottom line. Although the proposed rules provide much needed flexibility for many employer groups, the practical application of many provisions is hazy, and answers to a number of questions remain elusive.
The agenda provided to hearing attendees states that an unofficial transcript is prepared for most hearing. To obtain a copy of the transcript for this hearing, please call Tax Analyst at 1-800-955-2444. Wolters Kluwer Law & Business has also reported on this public hearing.