Bauman CPA - Tax Alerts - February 2010 - Due date relief now available for COBRA premium payment assistance

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Due date relief now available for COBRA premium payment assistance

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Due date relief now available for COBRA premium payment assistance

The IRS is providing relief to employers who may inadvertently miss the January 31, 2010 deadline for claiming the payroll tax credit for providing COBRA premium assistance to former employees during 2009. This new relief was announced by the IRS during a recent agency teleconference. The due date for claiming the credit is now the end of the quarter in which the employer actually receives the former employee's portion of the COBRA premium payment or any subsequent quarter in 2010.

When an individual is involuntarily terminated from employment between September 1, 2008 and February 28, 2010, they will be qualified for 15 months of COBRA premium assistance. The individual's former employer may pay up to 65 percent of former employees' COBRA premiums and receive a credit against its payroll tax liability for the amounts.

However, even though an individual may qualify for COBRA premium assistance, they are still required to pay at least 35 percent of COBRA premium payments. In situations where the employer does not receive the former employee's payment before January 31, 2010 for his or her share of COBRA during the fourth quarter of 2009, the IRS has now extended the due date. The employer may now claim its payroll tax credit during either the quarter in 2010 in which it receives payment from the former employee or a later quarter in 2010.