I.R.C. § 6432(a) In General —
The person to whom premiums are payable for continuation coverage under section 9501(a)(1)
of the American Rescue Plan Act of 2021 shall be allowed as a credit against the tax
imposed by section 3111(b), or so much of the taxes imposed under section 3221(a) as are attributable to the rate in effect under section 3111(b), for each calendar quarter an amount equal to the premiums not paid by assistance
eligible individuals for such coverage by reason of such section 9501(a)(1)
with respect to such calendar quarter.
I.R.C. § 6432(b) Person To Whom Premiums Are Payable —
For purposes of subsection (a), except as otherwise provided by the Secretary, the
person to whom premiums are payable under such continuation coverage shall be treated
as being—
I.R.C. § 6432(b)(1) —
in the case of any group health plan which is a multiemployer plan (as defined in
section 3(37) of the Employee Retirement Income Security Act of 1974), the plan,
I.R.C. § 6432(b)(2) —
in the case of any group health plan not described in paragraph (1)—
I.R.C. § 6432(b)(2)(A) —
which is subject to the COBRA continuation provisions contained in—
I.R.C. § 6432(b)(2)(A)(i) —
the Internal Revenue Code of 1986,
I.R.C. § 6432(b)(2)(A)(ii) —
the Employee Retirement Income Security Act of 1974, or
I.R.C. § 6432(b)(2)(A)(iii) —
the Public Health Service Act, or
I.R.C. § 6432(b)(2)(B) —
under which some or all of the coverage is not provided by insurance,
the employer maintaining the plan, and
I.R.C. § 6432(b)(3) —
in the case of any group health plan not described in paragraph (1) or (2), the insurer
providing the coverage under the group health plan.
I.R.C. § 6432(c) Limitations And Refundability
I.R.C. § 6432(c)(1) Credit Limited To Certain Employment Taxes —
The credit allowed by subsection (a) with respect to any calendar quarter shall not
exceed the tax imposed by section 3111(b), or so much of the taxes imposed under section 3221(a) as are attributable to the rate in effect under section 3111(b), for such calendar quarter (reduced by any credits allowed against such taxes under
sections 3131, 3132, and 3134) on the wages paid with respect to the employment of
all employees of the employer.
I.R.C. § 6432(c)(2) Refundability Of Excess Credit
I.R.C. § 6432(c)(2)(A) Credit Is Refundable —
If the amount of the credit under subsection (a) exceeds the limitation of paragraph
(1) for any calendar quarter, such excess shall be treated as an overpayment that
shall be refunded under sections 6402(a) and 6413(b).
I.R.C. § 6432(c)(2)(B) Credit May Be Advanced —
In anticipation of the credit, including the refundable portion under subparagraph
(A), the credit may be advanced, according to forms and instructions provided by the
Secretary, up to an amount calculated under subsection (a) through the end of the
most recent payroll period in the quarter.
I.R.C. § 6432(c)(2)(C) Treatment Of Deposits —
The Secretary shall waive any penalty under section 6656 for any failure to make a deposit of the tax imposed by section 3111(b), or so much of the taxes imposed under section 3221(a) as are attributable to the rate in effect under section 3111(b), if the Secretary determines that such failure was due to the anticipation of the
credit allowed under this section.
I.R.C. § 6432(c)(2)(D) Treatment Of Payments —
For purposes of section 1324 of title 31, United States Code, any amounts due to an employer under this paragraph
shall be treated in the same manner as a refund due from a credit provision referred
to in subsection (b)(2) of such section.
I.R.C. § 6432(c)(3) Overstatements —
Any overstatement of the credit to which a person is entitled under this section (and
any amount paid by the Secretary as a result of such overstatement) shall be treated
as an underpayment by such person of the taxes described in paragraph (1) and may
be assessed and collected by the Secretary in the same manner as such taxes.
I.R.C. § 6432(d) Governmental Entities —
For purposes of this section, the term ‘person’
includes the government of any State or political subdivision thereof, any Indian
tribal government (as defined in section 139E(c)(1)), any agency or instrumentality of any of the foregoing, and any agency or instrumentality
of the Government of the United States that is described in section 501(c)(1) and exempt from taxation under section 501(a).
I.R.C. § 6432(e) Denial Of Double Benefit —
For purposes of chapter 1, the gross income of any person allowed a credit under this
section shall be increased for the taxable year which includes the last day of any
calendar quarter with respect to which such credit is allowed by the amount of such
credit. No credit shall be allowed under this section with respect to any amount which
is taken into account as qualified wages under section 2301 of the CARES Act or section
3134 of this title or as qualified health plan expenses under section 7001(d) or 7003(d)
of the Families First Coronavirus Response Act or section 3131 or 3132 of this title.
I.R.C. § 6432(f) Extension Of Limitation On Assessment —
Notwithstanding section 6501, the limitation on the time period for the assessment of any amount attributable
to a credit claimed under this section shall not expire before the date that is 5
years after the later of—
I.R.C. § 6432(f)(1) —
the date on which the original return which includes the calendar quarter with respect
to which such credit is determined is filed, or
I.R.C. § 6432(f)(2) —
the date on which such return is treated as filed under section 6501(b)(2).
I.R.C. § 6432(g) Regulations —
The Secretary shall issue such regulations, or other guidance, forms, instructions,
and publications, as may be necessary or appropriate to carry out this section, including—
I.R.C. § 6432(g)(1) —
the requirement to report information or the establishment of other methods for verifying
the correct amounts of reimbursements under this section,
I.R.C. § 6432(g)(2) —
the application of this section to group health plans that are multiemployer plans
(as defined in section 3(37)
of the Employee Retirement Income Security Act of 1974),
I.R.C. § 6432(g)(3) —
to allow the advance payment of the credit determined under subsection (a), subject
to the limitations provided in this section, based on such information as the Secretary
shall require,
I.R.C. § 6432(g)(4) —
to provide for the reconciliation of such advance payment with the amount of the credit
at the time of filing the return of tax for the applicable quarter or taxable year,
and
I.R.C. § 6432(g)(5) —
allowing the credit to third party payors
(including professional employer organizations, certified professional employer organizations,
or agents under section 3504).
(Added by Pub. L. 117-2, title IX, Sec. 9501(b)(1)(A), Mar. 11, 2021, 135 Stat. 4.)
BACKGROUND NOTES
EFFECTIVE DATE
Pub. L. 117-2, Sec. 9501(b)(1)(C), provided that the following effective date: “effective for premiums
to which subsection
(a)(1)(A) applies and wages paid on or after April 1, 2021.”
Sec. 9501(b)(1)(D) of Pub. L. 117-2 provided:
“(D) SPECIAL RULE IN CASE OF EMPLOYEE PAYMENT THAT IS NOT REQUIRED UNDER THIS SECTION.—
“(i) IN GENERAL.—In the case of an assistance eligible individual who pays, with respect
any period of coverage to which subsection (a)(1)(A) applies, any amount of the premium
for such coverage that the individual would have (but for this Act) been required
to pay, the person to whom such payment is payable shall reimburse such individual
for the amount of such premium paid.
“(ii) CREDIT OF REIMBURSEMENT.—A person to which clause (i) applies shall be allowed
a credit in the manner provided under section 6432 of the Internal Revenue Code of 1986 for any payment made to the employee under such clause.
“(iii) PAYMENT OF CREDITS.—Any person to which clause (i) applies shall make the payment
required under such clause to the individual not later than 60 days after the date
on which such individual made the premium payment.”
PRIOR PROVISION
A prior provision was struck by Pub. L. 115-141, Div. U, Sec. 401(d)(7)(A), effective March 23, 2018.
“Sec. 6432. COBRA Premium Assistance
“(a) In General.—The person to whom premiums are payable under COBRA continuation
coverage shall be reimbursed as provided in subsection (c) for the amount of premiums
not paid by assistance eligible individuals by reason of section 3001(a) of title
III of division B of the American Recovery and Reinvestment Act of 2009.
“(b) Person Entitled To Reimbursement.—For purposes of subsection (a), except as otherwise
provided by the Secretary, the person to whom premiums are payable under COBRA continuation
coverage shall be treated as being—
“(1) in the case of any group health plan which is a multiemployer plan (as defined
in section 3(37) of the Employee Retirement Income Security Act of 1974), the plan,
“(2) in the case of any group health plan not described in paragraph (1)—
“(A) which is subject to the COBRA continuation provisions contained in—
“(i) the Internal Revenue Code of 1986,
“(ii) the Employee Retirement Income Security Act of 1974,
“(iii) the Public Health Service Act, or
“(iv) title 5, United States Code, or
“(B) under which some or all of the coverage is not provided by insurance, the employer
maintaining the plan, and
“(c) Method Of Reimbursement.—Except as otherwise provided by the Secretary—
“(1) Treatment As Payment Of Payroll Taxes.—Each person entitled to reimbursement
under subsection (a) (and filing a claim for such reimbursement at such time and in
such manner as the Secretary may require) shall be treated for purposes of this title
and section 1324(b)(2) of title 31, United States Code, as having paid to the Secretary,
on the date that the assistance eligible individual's premium payment is received,
payroll taxes in an amount equal to the portion of such reimbursement which relates
to such premium. To the extent that the amount treated as paid under the preceding
sentence exceeds the amount of such person's liability for such taxes, the Secretary
shall credit or refund such excess in the same manner as if it were an overpayment
of such taxes.
“(2) Overstatements.—Any overstatement of the reimbursement to which a person is entitled
under this section
(and any amount paid by the Secretary as a result of such overstatement)
shall be treated as an underpayment of payroll taxes by such person and may be assessed
and collected by the Secretary in the same manner as payroll taxes.
“(3) Reimbursement Contingent On Payment Of Remaining Premium.—No reimbursement may
be made under this section to a person with respect to any assistance eligible individual
until after the reduced premium required under section 3001(a)(1)(A)
of title III of division B of the American Recovery and Reinvestment Act of 2009 with
respect to such individual has been received.
“(d) Definitions.—For purpose of this section—
“(1) Payroll Taxes.—The term “payroll taxes” mean—
“(A) amounts required to be deducted and withheld for the payroll period under section
3402 (relating to wage withholding),
“(B) amounts required to be deducted for the payroll period under section 3102 (relating
to FICA employee taxes), and
“(C) amounts of the taxes imposed for the payroll period under section 3111 (relating
to FICA employer taxes).
“(2) Person.—The term “person”
includes any governmental entity.
“(e) Employer Determination Of Qualifying Event As Involuntary Termination.—For purposes
of this section, in any case in which—
“(1) based on a reasonable interpretation of section 3001(a)(3)(C) of division B of
the American Recovery and Reinvestment Act of 2009 and administrative guidance thereunder,
an employer determines that the qualifying event with respect to COBRA continuation
coverage for an individual was involuntary termination of a covered employee's employment,
and
“(2) the employer maintains supporting documentation of the determination, including
an attestation by the employer of involuntary termination with respect to the covered
employee,
“the qualifying event for the individual shall be deemed to be involuntary termination
of the covered employee's employment.
“(f) Reporting.—Each person entitled to reimbursement under subsection (a) for any
period shall submit such reports (at such time and in such manner) as the Secretary
may require, including—
“(1) an attestation of involuntary termination of employment for each covered employee
on the basis of whose termination entitlement to reimbursement is claimed under subsection
(a),
“(2) a report of the amount of payroll taxes offset under subsection (a) for the reporting
period and the estimated offsets of such taxes for the subsequent reporting period
in connection with reimbursements under subsection (a), and
“(3) a report containing the TINs of all covered employees, the amount of subsidy
reimbursed with respect to each covered employee and qualified beneficiaries, and
a designation with respect to each covered employee as to whether the subsidy reimbursement
is for coverage of 1 individual or 2 or more individuals.
“(g) Regulations.—The Secretary shall issue such regulations or other guidance as
may be necessary or appropriate to carry out this section, including—
“(1) the requirement to report information or the establishment of other methods for
verifying the correct amounts of reimbursements under this section, and
“(2) the application of this section to group health plans that are multiemployer
plans (as defined in section 3(37)
of the Employee Retirement Income Security Act of 1974).”
