On Tuesday, October 12, 2010, the Internal Revenue Service (“IRS”) released Notice 2010-69 that provides that employers will not be required to report the cost of employer-sponsored group health insurance on employee Form W-2 wage and tax statements issued for 2011. IRS Notice 2010-69 has made the reporting requirement voluntary for 2011. As a result, employers will not be treated as having failed to meet the new W-2 reporting requirements and will not be subject to any penalties merely because the employer did not report the cost of employer-sponsored group health insurance on employee W-2’s issued for 2011. The IRS has also posted a draft Form W-2, which has not been officially released yet.
By way of background, Section 9002 of the Patient Protection and Affordable Care Act (the “Affordable Care Act”), which was enacted on March 23, 2010, added new Code Section 6051(a)(14) to the Internal Revenue Code. This new Section generally provides that the aggregate cost of employer-sponsored coverage must be reported on an employee’s Form W-2 beginning with all tax years on or after January 1, 2011. However, having recognized that many employers still needed additional time to make the necessary changes to their payroll systems or procedures in order to comply with this new Form W-2 reporting requirement, the Treasury Department and the IRS have provided temporary relief. This should be welcome news for many employers still struggling to understand the various compliance requirements within the Affordable Care Act.