Treasury Releases ACA Proposed Rule on Collection of Additional Medicare Tax

The Treasury Department has released a proposed rule for one of the important revenue-raising provisions in the Affordable Care Act. Under Section 9015 of the ACA, employers are responsible for withholding an “Additional Medicare Tax” on certain individuals’ wages and other compensation. The tax applies to wages and compensation above a threshold amount received after December 31, 2012. According to the IRS Q&A document on this provision, the threshold amounts are $250,000 for married filing jointly, and $200,000 for singles; the rate is 0.9%.

The proposed rule provides guidance for employers and individuals relating to the implementation of the tax, including the requirement to file a return reporting the Additional Medicare Tax, the employer process for making adjustments of underpayments and overpayments of Additional Medicare Tax and the employer and employee processes for filing a claim for refund for an overpayment of Additional Medicare Tax.