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IRS: relief for small employer health care tax credit

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Tax Hot Topics newsletterIn Notice 2018-27, the IRS issued guidance providing relief for certain small employers that wish to claim the Small Business Health Care Tax Credit for 2017 and later years.

The Small Business Health Care Tax Credit can benefit certain small employers who provide health coverage to their employees. Generally, small employers must provide employees with a qualified health plan from a Small Business Health Options Program (SHOP) Marketplace to qualify for the credit. Also, small employers may only claim the credit for two consecutive years.

In general, the relief provided helps employers who first claim the credit for all or part of 2016 or a later taxable year for coverage offered through a SHOP Marketplace, but who do not have SHOP Marketplace plans available to offer to employees for all or part of the remainder of the credit period because the county where the employer is located has no SHOP Marketplace plans.

The relief allows these employers to claim the credit for health insurance coverage provided outside of a SHOP Marketplace for the remainder of the credit period if that coverage would have qualified under the rules that applied before Jan. 1, 2014.

Notice 2018-27 gives guidance about calculating the credit under these circumstances. The notice does not affect previous transition relief for the credit that was separately provided for 2014, 2015 and 2016.

Information on whether a county had or has coverage available through a SHOP Marketplace is available here.

Contact
Eddie Adkins
Partner
Washington National Tax Office
T +1 202 521 1565

Jeffrey Martin
Partner
Washington National Tax Office
T +1 202 521 1526

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