Insights

IRS Taxpayer Advocate Service Provides Self-Help Tools to Assist Employers


On Oct. 18, 2017, the IRS published a National Taxpayer Advocate (NTA) blog that describes tools developed by the Taxpayer Advocate Service (TAS) to assist individuals and employers with estimating credits and payments related to the ACA. The TAS is an independent organization within the IRS that advocates for taxpayers and ensures they understand their rights.

The two tools outlined for employers include the Employer Shared Responsibility Provision (ESRP) Estimator (originally released on June 1, 2016, and discussed in our June 14, 2016, edition of Compliance Corner) and the Small Business Health Care Tax Credit (SBHCTC) Estimator.

As background, the ESRP Estimator helps employers understand the employer mandate and how it may apply to them. Specifically, the ESRP Estimator can be used by employers to determine the number of full-time employees and full-time equivalents, whether an employer is an applicable large employer subject to the employer mandate, and the maximum amount of potential penalty an employer may face if they fail to offer coverage. Also provided are links to the actual regulations, real-life examples, detailed instructions and definitions of key terms.

Please note that the ESRP Estimator will only provide information in relation to 2016 and future tax years due to the numerous transition relief rules applicable in 2015. In addition, the ESRP Estimator is intended as a guide to help employers understand the employer mandate and is not to be used to determine ultimate employer mandate liability.

TAS has also developed the SBHCTC Estimator to help small businesses and their preparers navigate the complex rules to determine eligibility for the SBHCTC. The estimator will also estimate the credit a small business might receive. If the small employer is eligible, the SBHCTC can help the employer provide health insurance coverage to its employees.

However, this estimator does have limitations. The SBHCTC Estimator will only provide an estimate for 2014 and future tax years. Some figures used in determining the credit are indexed for inflation; so, for future years, the estimator cannot provide a detailed estimate. To calculate the actual credit, the employer must use Form 8941, Credit for Small Employer Health Insurance Premiums. Additionally, this estimator doesn’t determine whether the health insurance coverage offered by the employer is an eligible plan or which employees are considered employees for purposes of determining the credit.

Keep in mind that both estimators only provide estimates, rather than accurate calculations, to use as a guide in making decisions regarding the employer’s taxes.

NTA Blog: ACA Estimators »
Additional blogs from the NTA »