So You Think You Out-Foxed the IRS, Obamacare and The Employer Mandate? Think Again...

Reducing your Work force to avoid Obamacare's employer mandate? The internal Revenue Service may have a problem with that. 

That's according to regulations issued by the IRS in February, when the Obama administration announced that businesses with under 100 employees won't face penalties until 2016 for failing to provide health insurance to their workers. The Affordable Care Act called for this employer mandate to start in 2014 for businesses with more than 50 employees, but the Obama administration first moved that deadline back to 2015, and then temporarily expanded the threshold to 100 employees in its most recent delay.

But before you start trimming your staff to get under 100 employees, you may want to read the fine print. The National Federation of Independent Business did, and found a troubling provision: If you reduced the size of your work force to under 100 employees, you have to certify that you did so for "bona fide business reasons," not simply to become exempt from the employer mandate.

What does the IRS consider to be bona fide reasons to cut staff? "The sale of a division, changes in the economic marketplace in which the employer operates, terminations for poor performance, or other similar changes unrelated to eligibility for the transition relief provided" from the employer mandate, the regulations state.

To NFIB Dan Danner, this means the Obama administration has given "sweeping power" to the IRS "to judge employment decisions as part of an Obamacare enforcement scheme.”

NFIB has sent a letter to the IRS asking it to explain what law gives it the authority to require businesses to certify the reasons behind personnel changes.

"The president created an unworkable health care law that reduces hours and costs jobs," Danner said. "Now that those realities are happening – the answer is to tell employers they can’t adjust their payroll to meet the financial needs of their business. Between the pushed deadlines, unenforced laws, and now this employment certification – small businesses are afraid of how the administration will top itself next."

Kent Hoover

Washington Bureau Chief

http://www.bizjournals.com/seattle/news/news-wire/2014/03/06/get-ready-to-explain-your-personnel.html?ana=e_du_pub&s=article_du&ed=2014-03-06&page=all