The Internal Revenue Service (IRS) has released Notice 2009-27, Premium assistance for COBRA benefits. Pursuant to the American Recovery and Reinvestment Act of 2009 or ARRA, certain involuntarily terminated employees are eligible for employer-provided subsidies to help pay for their Consolidated Omnibus Budget Reconciliation Act (COBRA) continuation coverage. Employers may then claim a payroll tax credit on their Form 941 to be reimbursed for the assistance provided.
In recently issued guidance, the IRS provided information for an employer who has elected to file Form 2678, Employer/Payer Appointment of Agent. In such situations, the employer does not file Form 941; the agent files Form 941 using its own employer identification number. If the employer is entitled to claim a credit, the agent should claim the credit on its Form 941 and reduce the amount of taxes paid on behalf of the employer. The employer should not file a zero Form 941 showing only the credit as a refundable amount. Contact Vision Payroll if you have any questions on the COBRA premium reduction credit.