IRS Notice 2013-54 Poses Changes for Many Churches

Church leaders have flooded us recently with questions about a new Internal Revenue Service notice that addresses the tax treatment of employer-paid medical benefits. Before the enactment of the Affordable Care Act, employers could provide private health insurance, tax-free, to employees either by directly paying the costs of that insurance to health insurers or by reimbursing the employees for the substantiated cost of their premiums.

But several ACA-related reforms called into question the tax-free treatment of these arrangements heading into 2014. The IRS addressed this question directly in late 2013 when it issued IRS Notice 2013-54. The implications of this notice are significant for churches because, in many instances, these arrangements are no longer allowed and may be subject to substantial penalties.

Churches and Ministers Should Be Aware of the Following Deadlines in May and June ...