Foxes Guard Hen House With New W-2 Reporting Requirement


Posted by Blake Seitz on Friday, August 3rd, 2012, 5:04 PM PERMALINK


This content is provided by the Americans for Tax Reform Foundation.

Tax Provision

The 2010 health care bill includes a requirement that employers report on each of their employees’ Form W-2s the cost of health insurance they sponsor on behalf of that employee. This requirement was made optional for tax year 2011 (when it officially went into effect), and will be optional for small businesses (those with fewer than 250 W-2s) in tax year 2012.

ATRF Analysis

The IRS has waived the W-2 reporting requirement for tax years 2011 and 2012 because of confusion surrounding the provision.

This is understandable, because employers usually use Form W-2 to report salary and wage payments to the IRS so that they can be withheld and taxed appropriately. In a changeup from the form’s usual function, the new reporting requirement does not levy a tax on employees’ health benefits. Instead, its stated justification is to convey to employees the value of their health insurance, and to identify taxpayers who run afoul of the Individual Mandate tax and 40% “Cadillac” tax on “comprehensive” health plans.

Taxpayers should be uncomfortable with the implications of the W-2 reporting requirement, which portends higher taxes in the future. Reporting the value of employees’ health benefits opens the door to new taxes on these benefits in the future.

Rapacious lawmakers and bureaucrats are always eager for new streams of revenue (which explains such absurdities as the death tax and tax on Olympic medals due to the U.S.'s “worldwide” system of taxation), so the W-2 reporting requirement for health benefits may prove a stalking horse for higher taxes.

There is little reason to trust these same revenue-grabbers with personal information about what is, as of yet, an untouched sphere of our financial freedom.

10 Year Cost to Taxpayers

Joint Committee on Taxation: Negligible Revenue Effect

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