Payroll News

More information on the COBRA reduction act can be found on the IRS web site.

http://www.irs.gov/newsroom/article/0,,id=204708,00.html

There are now four sections of questions covering:

• Administration and eligibility
• Form preparation
• Reporting and documentation
• Taxability and recapture

Much of the material here was updated on 3/19/09.

Important Highlight:

FP-17
Q. Does a COBRA premium assistance credit reduce an employer’s payroll tax liabilities when determining whether $100,000 in liabilities has accumulated for deposit purposes?

A. The credit is treated like a payment of payroll taxes and is applied as a deposit made on the first day of the quarter. It does not reduce an employer’s tax liabilities for purposes of determining the employer’s deposit schedule generally or applying the $100,000 deposit rule specifically. However, since the credit is applied as a deposit, a required deposit can be reduced by the amount of the credit. For example, if an employer accumulates $110,000 of liabilities and has a $20,000 subsidy credit, the employer must still deposit the next day under the $100,000 rule, but is only required to deposit $90,000. (03/19/09)

Filed under: Federal News, Payroll News