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One Week & Counting … Small Businesses Fined $700 Per Employee During First Week of Unfair IRS Rule

Thursday, July 09, 2015

NASE Calls on Treasury Department to Immediately Delay Rule Until the End of the Year to Allow for Bipartisan Legislative Solution


WASHINGTON, DC
– One week after the Internal Revenue Service (IRS) started enforcing a new, unfair policy on small businesses that offer traditional health reimbursement accounts (HRAs), America’s small businesses have already incurred a possible $700 in fines per employee over the last week.  

Only July 1st, the IRS started enforcing the new rule that fined small businesses $100 a day fine per employee on small businesses that offer traditional health reimbursement accounts (HRAs). The National Association for the Self-Employed (NASE), the nation’s leading advocate and resource for the self-employed and micro-business community, today once again called on the Treasury Department “to delay the rule until the end of the year to allow for a bipartisan legislative solution to be implemented.”

“Just one week after this unfair rule began being enforced by the IRS, America’s small business community, the engine of our national economy, face $700 in fines per employee --- an amount continuing to grow every day,” said Katie Vlietstra, NASE’s Vice President for Government Relations and Public Affairs.  “It is critical that the Treasury Department immediately do the right thing by announcing a delay to this devastating rule until the end of the year and let the legislative process work.”

In February, the U.S. Department of the Treasury’s announced a delay in the enforcement of the technical guidance issued in September 2013 regarding Health Reimbursement Arrangements (HRAs), a key health care tool for America’s smallest employers.  The February delay expires today and fines could begin to be imposed on businesses not meeting the requirement for group coverage plans that provide health care assistance for their employees through the use of traditional HRA accounts. 

The bipartisan Small Business Healthcare Relief Act introduced last week in Congress by Reps. Charles Boustany (R-La.) and Mike Thompson (D-Calif.) in the U.S. House and Sens. Charles Grassley (R-Iowa) and Heidi Heitkamp (D-N.D.) in the U.S. Senate would provide a remedy to this situation by enabling small businesses to continue to use Health Reimbursement Arrangements (HRAs), which allow employers to provide pre-tax dollars to employees to pay for medical care and services.

When the technical guidance was originally issued back in 2014, NASE provided comment on the guidance stating that, “the technical guidance misinterprets the intent of the ACA as it relates to these types of tools (HRAs) used to provide financial support to employers with less than 50 employees.” 

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The National Association for the Self-Employed (NASE) is the nation's leading resource for the self-employed and micro-businesses, bringing a broad range of benefits to help entrepreneurs succeed and to drive the continued growth of this vital segment of the American economy. The NASE Small Business Locator helps identify and connect our nation’s smallest businesses. In addition, NASE’s new health care portal helps small business owners navigate the nation’s health care marketplace. The NASE is a 501(c) (6) nonprofit organization and provides big-business advantages to hundreds of thousands of micro-businesses across the United States. For more information, visit the association's website at NASE.org

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