Hiring holiday help is subject of latest IRS health care tax tip

Employers who hire seasonal or holiday workers should know how those employees are counted under the Patient Protection and Affordable Care Act (ACA), according to a new IRS health care tax tip.
An employer’s size – for purposes of the ACA – is determined by the employer’s number of employees. Employer benefits, opportunities and requirements are dependent upon an organization’s size and the applicable rules. If an employer has at least 50 full-time employees, including full-time equivalent employees, on average during the prior year, the employer is an applicable large employer (ALE) for the current calendar year. However, there is an exception for seasonal workers.

If an employer has at least 50 full-time employees, including full-time equivalent employees, on average during the prior year, the organization is an ALE. Here’s the exception: If an employer’s workforce exceeds 50 full-time employees for 120 days or fewer during a calendar year, and the employees in excess of 50 during that period were seasonal workers, the organization is not considered an ALE. For this purpose, a seasonal worker is an employee who performs labor or services on a seasonal basis.

The terms seasonal worker and seasonal employee are both used in the employer shared responsibility provisions, but in two different contexts. Only the term seasonal worker is relevant for determining whether an employer is an ALE subject to the employer shared responsibility provisions.

SOURCE: IRS Health Care Tax Tip 2016-77, November 22, 2016.

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