Health Reform Questions – Form W-2s & Controlled Groups

November 20, 2012    My client owns three companies.  They are considered one controlled group. Each company has its own employer identification number and files its own Form W-2s for its employees.  As a group, there are over 600 employees, but separately each company filed less than 250 Form W-2s for 2011.  Is my client required to add information regarding employer sponsored health coverage to its employees’ Form W-2 for 2012? No.  An employer is not subject to the reporting requirement for any calendar year if the employer was required to file fewer than 250 Forms W-2 for the preceding calendar year, as provided under IRS Notice 2012-9, Q/A-3. Therefore, if an employer is required to file fewer than 250 Forms W-2 in 2011, the employer would not be subject to the reporting requirement for 2012 Forms W-2. For this purpose, whether an employer is required to file fewer than 250 Forms W-2 for a calendar year is determined based on the Forms W-2 that employer would be required to file if it filed Forms W-2 to report all wages paid by that employer and without regard to the use of an agent under Code Section 3504. The IRS has indicated that for purposes of this transition relief, the employer is determined without the application of any aggregation rules as provided in See Employer-Provided Health Coverage Informational Reporting Requirements: Questions and Answers, Q/A-4. Since the transition relief applies without the application of any aggregation rules, there is no requirement to use the controlled group rules under Code Section 414. In our situation, all three companies will be exempt from reporting in 2012 since each was required to file fewer than 250 Forms W-2 for the preceding calendar year-even though  all the companies may be part of the same controlled group under Code Section 414. See the link below for a copy of Employer-Provided Health Coverage Informational Reporting Requirements: Questions and Answers, Q/A-4: http://www.irs.gov/newsroom/article/0,,id=237894,00.html

For More Information: If you have any comments or questions regarding any of above information, please do not hesitate to call (708) 717-9638 or e-mail at  larry@larrygrudzien.com

Thank-You,

Larry Grudzien, JD

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