Compliance Alert: IRS Releases New Form 720

                The IRS has released a new Form 720, Quarterly Federal Excise Tax Return. Employers that sponsor self-funded health plans are required to file this Form 720 on or before July 31, 2013 (with respect to plan years that end on or after October 1, 2012).  In addition to the filing, self-funded plan sponsors will be required to remit $1 multiplied by the average number of covered lives under the plan to the IRS.   This new annual fee was established by the Patient Protection and Affordable Health Care Act to help fund the Patient-Centered Outcomes Research Institute (“PCORI”).

The updated form can be found here:

Instructions for completing the updated form can be found here:

If the Form 720 is being filed for PCORI fee reporting purposes only, the quarterly form should be filed in the second quarter when the PCORI fees are due (July 31st) and not in any other quarter.  For the PCORI fees due July 31, 2013, any reasonable method can be used to calculate the average number of lives covered for the plan year. For plan years ending on or after October 1, 2013, the options for calculating the number of covered lives include; the actual count method, the snapshot method, and the State form method (Form 5500 method).  Once the covered lives are calculated, the number will be placed in line 133, column (a) on the Form 720 and multiplied by the rate in column (b) to determine the total PCORI fee.

About Bose McKinney & Evans LLP

Bose McKinney & Evans LLP is a business law firm, headquartered in Indianapolis, Indiana, serving both publicly held and privately held businesses, governmental entities and high-growth industries. Our clients include Fortune 100 companies, international manufacturers, national and regional financial institutions, agribusinesses, sports teams, university-incubated start-ups, media, utilities, cities and schools, to name a few. We strive to build strong relationships with our clients as key business advisors, to exceed expectations in the quality of our work, to be knowledgeable about our clients’ businesses and sectors, to be responsive to service needs and to continually seek to improve the delivery of client services. Our ultimate focus is on our clients.
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