Final Regulation Released - Additional Medicare Tax

Last week, the IRS released final regulations on the .9% Additional Medicare Tax under ACA. Specifically, the final regulations provide guidance for employers and individuals relating to implementing this Tax, including withholding and reporting requirements. This also articulates the employer requirement and process for adjusting for over- and under-payments of this Additional Medicare Tax. Regulations became effective November 29, 2013. 

While the majority of the final rules are very similar to those proposed approximately a year ago, one modification will have direct impact on employers. Prior to the final regulations, employers who did not withhold enough from employee wage to cover the Tax were liable for the additional amount unless the employee paid this amount. The employer would no longer be liable for the difference. In the final regulation, however, employers must use designated forms 4669 and 4670 to request relief from any tax amount already paid by the employee. This additional requirement has many questioning the additional regulatory burden, and the ability of employers to efficiently manage this process.