Are You Ready for Your $1 Excise Tax Filing Requirement!

Published on: 18:21PM Jun 18, 2013

Many farmers have taken advantage of a self-insured medical reimbursement plans or other similar plans.  In many cases, a farmer is able to deduct medical expenses that they might otherwise not deduct due to the 10% of AGI limitations or they do not itemize their deductions.

As part of the Affordable Health Care Act (ObamaCare), there is now a new excise tax effective as of 2012.  It is based upon the number of participants enrolled or covered by the plan and the tax is $1 a person if your plan year ends between October 1, 2012 and September 30, 2013 and rises 100% to a $2 per person tax for plan years ending by September 30, 2014 with an undetermined per person fee thereafter.

If a farmer has one of these plans that covers him, his spouse and four children, then the fee is $6, however, there are two methods of how to calculate the numbers covered and you may end up with a slightly different number under each method.  The filing deadline for this tax is July 31 and is based upon your year-end ending in the previous calendar year.  For example, a plan that had a calendar year-end for 2012 is required to file by July 31, 2013.

There is no de minimis exception to this filing and a penalty may apply for not making the required filing.

CliftonLarsonAllen LLP has provided additional information regarding this filing and you may access that information here.

Also, here is a link to the federal form 720 needed for filing.