Reg-113792-13

Federal Register / Vol. 78, No. 165 / Monday, August 26, 2013 / Proposed Rules
Availability of NPRMs
An electronic copy of this document
may be downloaded through the
Internet at http://www.regulations.gov.
Recently published rulemaking
documents can also be accessed through
the FAA’s Web page at http://
www.faa.gov/airports_airtraffic/air_
traffic/publications/airspace_
amendments/.
You may review the public docket
containing the proposal, any comments
received and any final disposition in
person in the Dockets Office (see
ADDRESSES section for address and
phone number) between 9:00 a.m. and
5:00 p.m., Monday through Friday,
except Federal holidays. An informal
docket may also be examined during
normal business hours at the office of
the Central Service Center, 2601
Meacham Blvd., Fort Worth, TX 76137.
Persons interested in being placed on
a mailing list for future NPRMs should
contact the FAA’s Office of Rulemaking
(202) 267–9677, to request a copy of
Advisory Circular No. 11–2A, Notice of
Proposed Rulemaking Distribution
System, which describes the application
procedure.

ehiers on DSK2VPTVN1PROD with PROPOSALS-1

The Proposal
This action proposes to amend Title
14, Code of Federal Regulations (14
CFR), Part 71 by removing Class E
airspace designated as a surface area at
Vermilion Regional Airport, Danville,
IL. Curtailment of scheduled air taxi
operations and changes in airport usage
has rendered this airspace as
unnecessary for the safety and
management of IFR operations at the
airport.
Class E airspace areas are published
in Paragraph 6002 of FAA Order
7400.9W, dated August 8, 2012 and
effective September 15, 2012, which is
incorporated by reference in 14 CFR
71.1. The Class E airspace designation
listed in this document would be
published subsequently in the Order.
The FAA has determined that this
proposed regulation only involves an
established body of technical
regulations for which frequent and
routine amendments are necessary to
keep them operationally current. It,
therefore, (1) is not a ‘‘significant
regulatory action’’ under Executive
Order 12866; (2) is not a ‘‘significant
rule’’ under DOT Regulatory Policies
and Procedures (44 FR 11034; February
26, 1979); and (3) does not warrant
preparation of a Regulatory Evaluation
as the anticipated impact is so minimal.
Since this is a routine matter that will
only affect air traffic procedures and air
navigation, it is certified that this rule,

VerDate Mar<15>2010

13:45 Aug 23, 2013

Jkt 229001

when promulgated, will not have a
significant economic impact on a
substantial number of small entities
under the criteria of the Regulatory
Flexibility Act.
The FAA’s authority to issue rules
regarding aviation safety is found in
Title 49 of the U.S. Code. Subtitle 1,
Section 106 describes the authority of
the FAA Administrator. Subtitle VII,
Aviation Programs, describes in more
detail the scope of the agency’s
authority. This rulemaking is
promulgated under the authority
described in Subtitle VII, Part A,
Subpart I, Section 40103. Under that
section, the FAA is charged with
prescribing regulations to assign the use
of airspace necessary to ensure the
safety of aircraft and the efficient use of
airspace. This regulation is within the
scope of that authority as it would
remove controlled airspace at Vermilion
Regional Airport, Danville, IL.
Environmental Review

List of Subjects in 14 CFR Part 71
Airspace, Incorporation by reference,
Navigation (air).
The Proposed Amendment
In consideration of the foregoing, the
Federal Aviation Administration
proposes to amend 14 CFR part 71 as
follows:
PART 71—DESIGNATION OF CLASS A,
B, C, D, AND E AIRSPACE AREAS; AIR
TRAFFIC SERVICE ROUTES; AND
REPORTING POINTS
1. The authority citation for part 71
continues to read as follows:

■

Authority: 49 U.S.C. 106(g); 40103, 40113,
40120; E.O. 10854, 24 FR 9565, 3 CFR, 1959–
1963 Comp., p. 389.
[Amended]

2. The incorporation by reference in
14 CFR 71.1 of FAA Order 7400.9W,
Airspace Designations and Reporting
Points, dated August 8, 2012, and
effective September 15, 2012, is
amended as follows:

■

Paragraph 6002 Class E airspace designated
as surface areas.

*

PO 00000

*

*

Frm 00008

*

Fmt 4702

*

Sfmt 4702

Danville, IL [Removed]

Issued in Fort Worth, TX, on August 16,
2013.
David P. Medina,
Manager, Operations Support Group, ATO
Central Service Center.
[FR Doc. 2013–20722 Filed 8–23–13; 8:45 am]
BILLING CODE 4910–13–P

DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 1
[REG–113792–13]
RIN 1545–BL55

Tax Credit for Employee Health
Insurance Expenses of Small
Employers
Internal Revenue Service (IRS),
Treasury.
ACTION: Notice of proposed rulemaking.
AGENCY:

This document contains
proposed regulations provide guidance
on the tax credit available to certain
small employers that offer health
insurance coverage to their employees
under section 45R of the Internal
Revenue Code (Code), enacted by the
Patient Protection and Affordable Care
Act. These proposed regulations affect
certain taxable employers and certain
tax-exempt employers.
DATES: Comments and request for a
public hearing must be received by
November 25, 2013.
ADDRESSES: Send submissions to:
CC:PA:LPD:PR (REG–113792–13),
Internal Revenue Service, room 5205,
PO Box 7604, Ben Franklin Station,
Washington, DC 20044. Submissions
may be hand delivered Monday through
Friday between the hours of 8:00 a.m.
and 4:00 p.m. to CC:PA:LPD:PR (REG–
113792–13), Courier’s Desk, Internal
Revenue Service, 1111 Constitution
Avenue NW., Washington, DC, or sent
electronically via the Federal
eRulemaking Portal at
http:www.regulations.gov (IRS113792–
13).
FOR FURTHER INFORMATION CONTACT:
Concerning these proposed regulations,
call Stephanie Caden at (202) 927–9639;
concerning submission of comments,
and/or to request a hearing,
Oluwafunmilayo Taylor at (202) 622–
7180 (not toll-free numbers).
SUPPLEMENTARY INFORMATION:
SUMMARY:

This proposal will be subject to an
environmental analysis in accordance
with FAA Order 1050.1E,
‘‘Environmental Impacts: Policies and
Procedures’’ prior to any FAA final
regulatory action.

§ 71.1

AGL IL E2

52719

Background
Section 45R of the Internal Revenue
Code (Code) offers a tax credit to certain

E:\FR\FM\26AUP1.SGM

26AUP1

52720

Federal Register / Vol. 78, No. 165 / Monday, August 26, 2013 / Proposed Rules

ehiers on DSK2VPTVN1PROD with PROPOSALS-1

small employers that provide insured
health coverage to their employees.
Section 45R was added to the Code by
section 1421 of the Patient Protection
and Affordable Care Act, enacted March
23, 2010, Public Law No. 111–148 (as
amended by section 10105(e) of the
Patient Protection and Affordable Care
Act, which was amended by the Health
Care and Education Reconciliation Act
of 2010, Public Law 111–152 (124 Stat.
1029)) (collectively, the ‘‘Affordable
Care Act’’).
I. Section 45R
Section 45R(a) provides for a health
insurance tax credit in the case of an
eligible small employer for any taxable
year in the credit period. Section 45R(d)
provides that in order to be an eligible
small employer with respect to any
taxable year, an employer must have in
effect a contribution arrangement that
qualifies under section 45R(d)(4) and
must have no more than 25 full-time
equivalent employees (FTEs), and the
average annual wages of its FTEs must
not exceed an amount equal to twice the
dollar amount determined under section
45R(d)(3)(B). The amount determined
under section 45R(d)(3)(B) is $25,000 (as
adjusted for inflation for taxable years
beginning after December 31, 2013).
Section 45R(d)(4) states that a
contribution arrangement qualifies if it
requires an eligible small employer to
make a nonelective contribution on
behalf of each employee who enrolls in
a qualified health plan (QHP) offered to
employees by the employer through an
Exchange in an amount equal to a
uniform percentage (not less than 50
percent) of the premium cost of the QHP
(referred to in this preamble as the
uniform percentage requirement). For
purposes of section 45R, an Exchange
refers to a Small Business Health
Options Program (SHOP) Exchange,
established pursuant to section 1311 of
the Affordable Care Act and defined in
45 CFR 155.20. For purposes of this
preamble and the proposed regulations,
a contribution arrangement that meets
these requirements is referred to as a
‘‘qualifying arrangement.’’ See also the
section of this preamble entitled
‘‘Explanation of Provisions.’’
Section 45R(b) provides that, subject
to the reductions described in section
45R(c), the amount of the credit is equal
to 50 percent (35 percent in the case of
a tax-exempt eligible small employer) of
the lesser of: (1) The aggregate amount
of nonelective contributions the
employer made on behalf of its
employees during the taxable year
under the qualifying arrangement for
premiums for QHPs offered by the
employer to its employees through a

VerDate Mar<15>2010

13:45 Aug 23, 2013

Jkt 229001

SHOP Exchange, or (2) the aggregate
amount of nonelective contributions the
employer would have made during the
taxable year under the arrangement if
each employee taken into account
under: (1) Of this sentence had enrolled
in a QHP which had a premium equal
to the average premium (as determined
by the Secretary of Health and Human
Services) for the small group market in
the rating area in which the employee
enrolls for coverage. Section 45R(c)
phases out the credit based upon the
number of the employer’s FTEs in
excess of 10 and the amount by which
the average annual wages exceeds
$25,000 (as adjusted for inflation for
taxable years beginning after December
31, 2013 pursuant to section
45R(d)(3)(B)). Specifically, section
45R(c) provides that the credit amount
determined under section 45R(b) is
reduced (but not below zero) by the sum
of: (1) The credit amount determined
under section 45R(b) multiplied by a
fraction, the numerator of which is the
total number of FTEs of the employer in
excess of 10 and the denominator of
which is 15, and (2) the credit amount
determined under section 45R(b)
multiplied by a fraction, the numerator
of which is the average annual wages of
the employer in excess of the dollar
amount in effect under section
45R(d)(3)(B) and the denominator of
which is such dollar amount. Section
45R(d)(3) provides that the average
annual wages of an eligible small
employer for any taxable year is the
amount determined by dividing the
aggregate amount of wages that were
paid by the employer to employees
during the taxable year by the number
of FTEs of the employer and rounding
such amount to the next lowest multiple
of $1,000.
Section 45R(e)(2) provides that for
taxable years beginning in or after 2014,
the credit period means the twoconsecutive-taxable year period
beginning with the first taxable year in
which the employer (or any
predecessor) offers one or more QHPs to
its employees through a SHOP
Exchange.
For taxable years beginning in 2010,
2011, 2012, and 2013, section 45R(g)
provides that the credit is determined
without regard to whether the taxable
year is in a credit period, and no credit
period is treated as beginning with a
taxable year beginning before 2014. The
amount of the credit is 35 percent (25
percent in the case of a tax-exempt
eligible small employer) of an eligible
small employer’s nonelective
contributions for premiums paid for
health insurance coverage (within the
meaning of section 9832(b)(1)) of an

PO 00000

Frm 00009

Fmt 4702

Sfmt 4702

employee. Section 45R(g)(3) provides
that an employer does not become
ineligible for the tax credit solely
because it arranges for the offering of
insurance outside of a SHOP Exchange.
The Treasury Department and the IRS
have published two notices addressing
the application of section 45R. Each
notice provides guidance that taxpayers
may rely upon for taxable years
beginning before January 1, 2014. See
Notice 2010–44 (2010–22 IRB 717 (June
10, 2010)) and Notice 2010–82 (2010–51
IRB 857 (December 20, 2010)). Notice
2010–44 also provided transition relief
for taxable years beginning in 2010 with
respect to the requirements for a
qualifying arrangement under section
45R.
II. Notice 2010–44
Notice 2010–44 addresses the
eligibility requirements for employers to
claim the credit, provides guidance on
how to calculate and claim the credit,
and explains the effect on estimated tax,
alternative minimum tax, and
deductions. The notice specifically
describes the rules for how employees
are taken into account in determining an
employer’s FTEs, average wages, and
premiums paid, with certain individuals
excluded and with employees of certain
related employers included.
III. Notice 2010–82
Notice 2010–82 expands on the
guidance provided in Notice 2010–44
and provides additional guidance on
determining whether to take into
account spouses and leased employees
(as defined in section 414(n)) in
computing an employer’s FTEs, average
annual wages, and premiums paid. The
notice provides that employer
contributions to health reimbursement
arrangements (HRAs), health flexible
spending arrangements (FSAs), and
health savings accounts (HSAs) are not
taken into account for purposes of the
section 45R credit. The notice further
explains the requirement that an eligible
small employer must pay a uniform
percentage (not less than 50 percent) of
the premium for each employee
enrolled in health insurance coverage
offered by the employer. The notice
provides rules for applying the uniform
percentage requirement in taxable years
beginning after December 31, 2009 and
prior to 2014, and further provides that
for taxable years beginning in 2010, an
employer may satisfy the uniform
percentage requirement either by
meeting the requirements provided in
Notice 2010–82 or by meeting the
transition relief rules provided in Notice
2010–44. With respect to calculating the
credit, the notice provides guidance on

E:\FR\FM\26AUP1.SGM

26AUP1

Federal Register / Vol. 78, No. 165 / Monday, August 26, 2013 / Proposed Rules
small group markets, taxpayers with
employees in multiple States, the
application of the average premium cap,
and taxpayers with fiscal taxable years.
Explanation of Provisions
These proposed regulations generally
incorporate the provisions of Notice
2010–44 and Notice 2010–82 as
modified to reflect the differences
between the statutory provisions
applicable to years before 2014 and
those applicable to years after 2013. As
in Notices 2010–44 and 2010–82, these
proposed regulations use the term
‘‘qualifying arrangement’’ to describe an
arrangement under which an eligible
small employer pays premiums for each
employee enrolled in health insurance
coverage offered by the employer in an
amount equal to a uniform percentage
(not less than 50 percent) of the
premium cost of the coverage. Section
45R(d)(4) and these proposed
regulations require that, for tax years
beginning during or after 2014, the
health insurance coverage described in
a qualifying arrangement be a QHP
offered by an employer to its employees
through a SHOP Exchange (but see
section II.I of this preamble for a
description of certain transition
guidance for 2014).

ehiers on DSK2VPTVN1PROD with PROPOSALS-1

I. Eligibility for the Credit
A. Eligible Small Employer Defined
Section 45R and these proposed
regulations provide that an eligible
small employer is defined as an
employer that has no more than 25 FTEs
for the taxable year, whose employees
have average annual wages of less than
$50,000 per FTE (as adjusted for
inflation for years after December 31,
2013), and that has a qualifying
arrangement in effect that requires the
employer to pay a uniform percentage
(not less than 50 percent) of the
premium cost of a QHP offered by the
employer to its employees through a
SHOP Exchange. A tax-exempt eligible
small employer is an eligible small
employer that is described in section
501(c) and that is exempt from tax
under section 501(a). An employer that
is an agency or instrumentality of the
Federal government, or of a State, local
or Indian tribal government, is not an
eligible small employer for purposes of
section 45R unless it is an organization
described in section 501(a) (and
otherwise meets the requirements for an
eligible small employer). However, a
farmers’ cooperative described in
section 521 that is subject to tax
pursuant to section 1381 and otherwise
meets the requirements of this section is
an eligible small employer.

VerDate Mar<15>2010

13:45 Aug 23, 2013

Jkt 229001

Section 45R does not require that, in
order for an employer to be an eligible
small employer, the employees perform
services in a trade or business. Thus, an
employer that otherwise meets the
requirements for the section 45R credit
does not fail to be an eligible small
employer merely because the employees
of the employer are not performing
services in a trade or business. For
example, a household employer that
otherwise satisfies the requirements of
section 45R is an eligible small
employer for purposes of the credit.
An employer located outside the
United States (including a U.S.
Territory) may be an eligible small
employer if the employer has income
effectively connected with the conduct
of a trade or business in the United
States, otherwise meets the
requirements of this section and is able
to offer a QHP to its employees through
a SHOP Exchange.
B. Application of Section 414
Aggregation Rules
In accordance with section 45R(e)(5),
these proposed regulations provide that
all employers treated as a single
employer under section 414(b), (c), (m),
or (o) are treated as a single employer
for purposes of section 45R. Thus, for
example, all employees of the
employers treated as a single employer
are counted in computing the single
employer’s FTEs and average annual
wages. This applies to employers that
are corporations in a controlled group of
corporations, employers that are
members of an affiliated service group,
and employers that are partnerships,
sole proprietorships, etc. under common
control under section 414(c). Section
414 also applies to tax-exempt eligible
small employers under common control.
See § 1.414(c)–5.
C. Determining Employees Taken Into
Account
The proposed rules for determining
employees taken into account are the
same as those in the previous notices. In
general, all employees (determined
under the common law standard) who
perform services for the employer
during the taxable year are taken into
account in determining FTEs and
average annual wages, including those
who are not performing services in the
employer’s trade or business. (But see
special rules for seasonal employees
described in this section of the
preamble.) However, section 45R and
these proposed regulations provide that
certain individuals are not considered
employees when calculating the credit,
and hours and wages of these
individuals are not counted when

PO 00000

Frm 00010

Fmt 4702

Sfmt 4702

52721

determining an employer’s eligibility for
the credit. The following individuals are
not employees or are otherwise
excluded for this purpose: independent
contractors (including sole proprietors);
partners in a partnership; shareholders
owning more than two percent of an S
corporation; owners of more than five
percent of other businesses; family
members of these owners and partners,
including a child (or descendant of a
child), a sibling or step sibling, a parent
(or ancestor of a parent), a step-parent,
a niece or nephew, an aunt or uncle, or
a son-in-law, daughter-in-law, father-inlaw, mother-in-law, brother-in-law, or a
sister-in-law. A spouse is also
considered a family member for this
purpose, as is a member of the
household who is not a family member
but qualifies as a dependent on the
individual income tax return of an
excluded individual.
Section 45R(d)(5) and these proposed
regulations provide that seasonal
employees who work for 120 or fewer
days during the taxable year are not
considered employees when
determining FTEs and average annual
wages, but premiums paid on behalf of
seasonal workers may be counted in
determining the amount of the credit.
Seasonal workers include retail workers
employed exclusively during holiday
seasons and workers employed
exclusively during the summer.
Compensation paid to a minister
performing services in the exercise of
his or her ministry generally is subject
to tax under the Self-Employment
Contributions Act (SECA) and not under
the Federal Insurance Contributions Act
(FICA), whether the minister is an
employee or self-employed under the
common law. See sections 1402(c)(2)(d),
1402(c)(4), and 3121(b)(8)(A). For
purposes of income taxes generally,
including the credit under section 45R,
whether a minister is an employee is
determined under the common law
standard for determining worker status.
If under the common law a minister is
not an employee, the minister is not
taken into account in determining an
employer’s FTEs. If under the common
law a minister is an employee, the
minister is taken into account in
determining an employer’s FTEs.
However, because a minister performing
services in the exercise of his or her
ministry is treated as not engaged in
employment for purposes of FICA,
compensation paid to a minister is not
wages as defined under section 3121(a),
and so is not included for purposes of
computing an employer’s average
annual wages.

E:\FR\FM\26AUP1.SGM

26AUP1

52722

Federal Register / Vol. 78, No. 165 / Monday, August 26, 2013 / Proposed Rules

D. Determining Hours of Service
These proposed regulations provide
that an employee’s hours of service for
a year include hours for which the
employee is paid, or entitled to
payment, for the performance of duties
for the employer during the employer’s
taxable year. Hours of service also
include hours for which the employee is
paid for vacation, holiday, illness,
incapacity (including disability), layoff,
jury duty, military duty, or leave of
absence. Hours of service do not include
the hours of seasonal employees who
work for 120 or fewer days during the
taxable year, nor do they include hours
worked for a year in excess of 2,080 for
a single employee.
These proposed regulations describe
three methods for calculating the total
number of hours of service for a single
employee for the taxable year: actual
hours worked; days-worked
equivalency; and weeks-worked
equivalency. Employers need not use
the same method for all employees and
may apply different methods for
different classifications of employees if
the classifications are reasonable and
consistently applied. For example, an
employer may use the actual hours
worked method for all hourly
employees and the weeks-worked
equivalency method for all salaried
employees. These proposed rules are the
same as those in the previous notices.

ehiers on DSK2VPTVN1PROD with PROPOSALS-1

E. Determining FTEs
In accordance with section 45R(d)(2),
these proposed regulations provide that
FTEs are calculated by computing the
total hours of service for the taxable year
using a method described in section 1.D
of this preamble, and dividing the total
hours of service by 2,080. If the result
is not a whole number (0, 1, 2, etc.), the
result is rounded down to the next
lowest whole number. The only
exception to this rule is when the result
is less than one; in this case, the
employer rounds up to one FTE. In
some circumstances, an employer with
25 or more employees may qualify for
the credit if some of its employees work
less than full-time. For example, an
employer with 46 employees that each
are paid wages for 1,040 hours per year
has 23 FTEs and, therefore, may qualify
for the credit. These proposed rules are
the same as those in the previous
notices.
F. Determining Average Annual FTE
Wages
In accordance with section 45R(e)(4),
these proposed regulations define
wages, for purposes of the credit, as
wages defined under section 3121(a) for

VerDate Mar<15>2010

13:45 Aug 23, 2013

Jkt 229001

purposes of FICA, determined without
considering the social security wage
base limitation. To calculate average
annual FTE wages, an employer must
figure the total wages paid during the
taxable year to all employees, divide the
total wages paid by the number of FTEs,
and if the result is not a multiple of
$1,000, round the result to the next
lowest multiple of $1,000. For example,
$30,699 is rounded down to $30,000.
But see special rules for seasonal
employees described in section I.C of
this preamble. These proposed rules are
the same as those in the previous
notices.
II. Calculating the Credit
A. Maximum Credit
Under section 45R and these
proposed regulations, for taxable years
beginning during or after 2014, the
maximum credit for an eligible small
employer other than a tax-exempt
eligible small employer is 50 percent of
the eligible small employer’s premium
payments made on behalf of its
employees under a qualifying
arrangement for QHPs offered through a
SHOP Exchange. For a tax-exempt
eligible small employer for those years,
the maximum credit is 35 percent. The
employer’s tax credit is subject to
several adjustments and limitations as
set forth in this preamble.
B. Average Premium Limitation
Under section 45R and these
proposed regulations, for purposes of
calculating the credit for taxable years
beginning after 2013, the employer’s
premium payments are limited by the
average premium in the small group
market in the rating area in which the
employee enrolls for coverage through a
SHOP Exchange. The credit will be
reduced by the excess of the credit
calculated using the employer’s
premium payments over the credit
calculated using the average premium.
For example, if an employer pays 50
percent of the $7,000 premium for
family coverage for its employees
($3,500), but the average premium for
family coverage in the small group
market in the rating area in which the
employees enroll is $6,000, for purposes
of calculating the credit the employer’s
premium payments are limited to 50
percent of $6,000 ($3,000).
C. Credit Phaseout
Under section 45R and these
proposed regulations, the credit phases
out for eligible small employers if the
number of FTEs exceeds 10, or if the
average annual wages for FTEs exceed
$25,000 (as adjusted for inflation for

PO 00000

Frm 00011

Fmt 4702

Sfmt 4702

taxable years beginning after December
31, 2013). For an employer with both
more than 10 FTEs and average annual
FTE wages exceeding $25,000, the credit
will be reduced based on the sum of the
two reductions. This may reduce the
credit to zero for some employers with
fewer than 25 FTEs and average annual
FTE wages of less than double the
$25,000 dollar amount (as adjusted for
inflation).
D. State Subsidy and Tax Credit
Limitation
Some States offer tax credits to a
small employer that provides health
insurance to its employees. Some of
these credits are refundable credits and
others are nonrefundable credits. In
addition, some States offer premium
subsidy programs for certain small
employers under which the State makes
a payment equal to a portion of the
employees’ health insurance premiums.
Generally, the State pays this premium
subsidy either directly to the employer
or to the employer’s insurance company
(or another entity licensed under State
law to engage in the business of
insurance).
Under these proposed regulations,
and consistent with previous notices, if
the employer is entitled to a State tax
credit or premium subsidy that is paid
directly to the employer, the amount of
employer premiums paid is not reduced
for purposes of calculating the section
45R credit, but the amount of the credit
cannot exceed the net premiums paid,
which are the employer premiums paid
minus the amount of any State tax
credits or premium subsidies received.
If a State makes premium payments
directly to the insurance company, the
State is treated as making these
payments on behalf of the employer for
purposes of determining whether the
employer has satisfied the ‘‘qualifying
arrangement’’ requirement to pay an
amount equal to a uniform percentage
(not less than 50 percent) of the
premium cost of coverage. Also, these
premium payments by the State are
treated as an employer contribution
under section 45R for purposes of
calculating the credit, but the amount of
the credit cannot exceed the premiums
actually paid by the employer. Finally,
if a State-administered program, such as
Medicaid, makes payments on behalf of
individuals and their families who meet
certain eligibility requirements, these
payments do not reduce the amount of
employer premiums paid for purposes
of calculating the credit.

E:\FR\FM\26AUP1.SGM

26AUP1

Federal Register / Vol. 78, No. 165 / Monday, August 26, 2013 / Proposed Rules

ehiers on DSK2VPTVN1PROD with PROPOSALS-1

E. Payroll Tax Limitation for TaxExempt Employers
Section 45R and these proposed
regulations define the term ‘‘payroll
taxes’’ as (1) amounts required to be
withheld under section 3402 1 and (2)
the employee’s and employer’s shares of
Medicare tax required to be withheld
and paid under sections 3101(b) and
3111(b) on employees’ wages for the
year. For a tax-exempt eligible small
employer, the amount of the credit
cannot exceed the amount of the payroll
taxes of the employer during the
calendar year in which the taxable year
begins.

period under section 45R. Therefore, if
the predecessor employer had
previously claimed the credit under
section 45R for a period, that period will
count towards the successor employer’s
two-consecutive-taxable year credit
period.
G. Premium Payments by the Employer

F. Two-Consecutive-Taxable Year Credit
Period Limitation
These proposed regulations provide
that the first year for which an eligible
small employer files Form 8941, ‘‘Credit
for Small Employer Health Insurance
Premiums,’’ claiming the credit, or files
Form 990–T, ‘‘Exempt Organization
Business Income Tax Return,’’ with an
attached Form 8941, is the first year of
the two-consecutive-taxable year credit
period. Even if the employer is only
eligible to claim the credit for part of the
first year, the filing of Form 8941 begins
the first year of the two-consecutivetaxable year credit period. For
application of the two-consecutivetaxable year credit period under the
transition relief related to taxable years
beginning in 2014, see § 1.45R–3(i) of
these proposed regulations and section
II.I of the Explanation of Provisions
section of this preamble.
Section 45R(i) provides that
regulations shall be prescribed as
necessary to prevent the avoidance of
the two-year limit on the credit period
through the use of successor entities and
the avoidance of the credit phaseout
limitations through the use of multiple
entities. For purposes of identifying
successor entities, these proposed
regulations generally apply the rules for
identifying successor employers
applicable under the employment tax
provisions for determining when wages
paid by a predecessor may be attributed
to a successor employer (see
§ 31.3121(a)(1)–1(b)). Accordingly,
under the proposed regulations, an
entity that would be treated as a
successor employer for employment tax
purposes will also be treated as a
successor employer for purposes of the
two-consecutive-taxable year credit

In general, only premiums paid by the
employer for employees enrolled in a
QHP offered through a SHOP Exchange
are counted when calculating the
credit.2 If the employer pays a portion
of the premiums and the employees pay
the rest, only the portion paid by the
employer is taken into account. For this
purpose, any premium paid through a
salary reduction arrangement under a
section 125 cafeteria plan is not treated
as an employer-paid premium.
Premiums paid with employer-provided
flex credits that employees may elect to
receive as cash or as a taxable benefit
are treated as paid pursuant to a salary
reduction arrangement under a section
125 cafeteria plan. See Notice 2012–40
(2012–26 IRB 1046 (June 25, 2012)). The
proposed regulations further provide
that amounts made available by an
employer under or contributed by an
employer to HRAs, FSAs and HSAs are
not taken into account for purposes of
determining premium payments by the
employer.
The proposed regulations provide that
if a minister is a common law employee
and is taken into account in an
employer’s FTEs, the premiums paid by
the employer for health insurance may
be counted in calculating the credit.
A leased employee is defined in
section 414(n)(2) as a person who is not
an employee of the service recipient and
who provides services to the service
recipient pursuant to an agreement with
the leasing organization. The person
must have performed services for the
service recipient on a substantially fulltime basis for a period of at least one
year under the primary direction and
control of the service recipient. Leased
employees are counted in computing a
service recipient’s FTEs and average
annual wages. See section 45R(e)(1)(B).
See section II.I of this preamble for
special rules related to taxable years
beginning in 2014.

1 Although section 45R(f)(3)(A)(i) cites to section
3401(a)(1) as imposing the obligation on employers
to withhold income tax from employees, it is
actually section 3402 that imposes the withholding
obligation. We have cited to section 3402
throughout this preamble and in the proposed
regulation.

2 In general a stand-alone dental health plan will
be considered a qualifed health plan. Patient
Protection and Affordable Care Act; Establishment
of Exchanges and Qualified Health Plans; Exchange
Standards for Employers, 77 Fed. Reg. 18310, 18315
(March 27, 2012).

VerDate Mar<15>2010

13:45 Aug 23, 2013

Jkt 229001

PO 00000

Frm 00012

Fmt 4702

Sfmt 4702

52723

H. Trusts, Estates, Regulated Investment
Companies, Real Estate Investment
Trusts and Cooperative Organizations
Section 45R(e)(5)(B) provides that
rules similar to the rules of section
52(c), (d) and (e) will apply. Because
section 45R(f) explicitly provides that a
tax-exempt eligible small employer may
be eligible for the credit, these proposed
regulations do not adopt a rule similar
to section 52(c). However, these
proposed regulations provide that rules
similar to the rules of section 52(d) and
(e) and the regulations thereunder apply
in calculating and apportioning the
credit with respect to trusts, estates,
regulated investment companies, real
estate investment trusts, and
cooperative organizations.
I. Transition Rules
If an eligible small employer’s plan
year begins on a date other than the first
day of its taxable year, it may not be
practical or possible for the employer to
offer insurance to its employees through
a SHOP Exchange at the beginning of its
first taxable year beginning in 2014.
These proposed regulations provide that
if: (1) As of August 26, 2013, a small
employer offers coverage in a plan year
that begins on a date other than the first
day of its taxable year, (2) the employer
offers coverage during the period before
the first day of the plan year beginning
in 2014 that would have qualified the
employer for the credit under the rules
otherwise applicable to the period
before January 1, 2014, and (3) the
employer begins offering coverage
through a SHOP Exchange as of the first
day of its plan year that begins in 2014,
then it will be treated as offering
coverage through a SHOP Exchange for
its entire 2014 taxable year for purposes
of eligibility for, and calculation of, a
credit under section 45R. Thus, for an
employer that meets these requirements,
the credit will be calculated at the 50
percent rate (35 percent rate for taxexempt eligible small employers) for the
entire 2014 taxable year and the 2014
taxable year will be the start of the twoconsecutive-taxable year credit period.
III. Application of Uniform Percentage
Requirement
A. Uniform Premium
Section 45R and these proposed
regulations require that to be eligible for
the credit, an eligible small employer
must generally pay a uniform
percentage (not less than 50 percent) of
the premium for each employee
enrolled in a QHP offered to its
employees through a SHOP Exchange.
These proposed regulations set forth
rules for applying this requirement in

E:\FR\FM\26AUP1.SGM

26AUP1

52724

Federal Register / Vol. 78, No. 165 / Monday, August 26, 2013 / Proposed Rules

separate situations depending upon (1)
whether the premium established for
the QHP is based upon list billing or is
based upon composite billing, (2)
whether the QHP offers only self-only
coverage, or other coverage (such as
family coverage) for which a higher
premium is charged, and (3) whether
the employer offers one QHP or more
than one QHP. The uniform percentage
rule applies only to the employees
offered coverage and does not impose a
coverage requirement.

ehiers on DSK2VPTVN1PROD with PROPOSALS-1

B. Composite Billing and List Billing
These proposed regulations define the
term ‘‘composite billing’’ to mean a
system of billing under which a health
insurer charges a uniform premium for
each of the employer’s employees or
charges a single aggregate premium for
the group of covered employees that the
employer may then divide by the
number of covered employees to
determine the uniform premium. In
contrast, the term ‘‘list billing’’ is
defined as a billing system under which
a health insurer lists a separate
premium for each employee based on
the age of the employee or other factors.
C. Employers Offering One QHP
For an employer offering one QHP
under a composite billing system with
one level of self-only coverage, these
proposed regulations provide that the
uniform percentage requirement is met
if an eligible small employer pays the
same amount for each employee
enrolled in coverage and that amount is
equal to at least 50 percent of the
premium for self-only coverage. For
employers offering one QHP under a
composite billing system with different
tiers of coverage (for example, self-only,
self plus one, and family coverage) for
which different premiums are charged,
the uniform percentage requirement is
satisfied if the eligible small employer
either: (1) Pays the same amount for
each employee enrolled in that tier of
coverage and that amount is equal to at
least 50 percent of the premium for that
tier of coverage, or (2) pays an amount
for each employee enrolled in the more
expensive tiers of coverage that is the
same for all employees and is no less
than the amount that the employer
would have contributed toward selfonly coverage for that employee (and is
equal to at least 50 percent of the
premium for self-only coverage).
For an employer offering one QHP
under a list billing system that offers
only self-only coverage, the uniform
percentage requirement is satisfied if the
eligible small employer either: (1) Pays
an amount equal to a uniform
percentage (not less than 50 percent) of

VerDate Mar<15>2010

13:45 Aug 23, 2013

Jkt 229001

the premium charged for each
employee, or (2) determines an
‘‘employer-computed composite rate’’
and, if any employee contribution is
required, each enrolled employee pays a
uniform amount toward the self-only
premium that is no more than 50
percent of the employer-computed
composite rate for self-only coverage.
The proposed regulations define
‘‘employer-computed composite rate’’ as
the average rate determined by adding
the premiums for that tier of coverage
for all employees eligible to participate
in the employer’s health insurance plan
(whether or not the eligible employee
enrolls in coverage under the plan or in
that tier of coverage under the plan) and
dividing by the total number of such
eligible employees.
For eligible small employers offering
one QHP under list billing with
different tiers of coverage for which
different premiums are charged, the
uniform percentage requirement is
satisfied if the eligible small employer
pays toward the premium for each
employee covered under each tier of
coverage an amount equal to or
exceeding the amount the employer
would have contributed with respect to
that employee for self-only coverage,
calculated either based on the actual
premium that would have been charged
by the insurer for that employee for selfonly coverage, or based on the
employer-computed composite rate for
self-only coverage, and the employer
premium payments within the same tier
are uniform in percentage or amount.
Alternatively, the eligible small
employer may satisfy the uniform
percentage requirement by meeting the
uniform percentage requirement
separately for each tier of coverage and
substituting the employer-computed
composite rate for that tier of coverage
for the employer-computed composite
rate for self-only coverage.
The proposed regulations provide
examples of how the uniform
percentage requirement is applied in all
of these situations.
D. Employers Offering More Than One
Plan
As set forth in these proposed
regulations, if an employer offers more
than one QHP through a SHOP
Exchange, the uniform percentage
requirement may be satisfied in one of
two ways. The first is on a plan-by-plan
basis, meaning that the employer’s
premium payments for each plan must
individually satisfy the uniform
percentage requirement stated above.
The amounts or percentages of
premiums paid toward each QHP do not
have to be the same, but they must each

PO 00000

Frm 00013

Fmt 4702

Sfmt 4702

satisfy the uniform percentage
requirement if each QHP is tested
separately. The other permissible
method to satisfy the uniform
percentage requirement is through the
reference plan method. Under the
reference plan method, the employer
designates one of its QHPs as a reference
plan. Then the employer either
determines a level of employer
contributions for each employee such
that, if all eligible employees enrolled in
the reference plan, the contributions
would satisfy the uniform percentage
requirement as applied to that reference
plan, or the employer allows each
employee to apply the minimum
amount of employer contribution
determined necessary to meet the
uniform percentage requirement toward
the reference plan or toward coverage
under any other available QHP.
E. Employers Complying With State
Law
The Treasury Department and the IRS
understand that at least one State
requires employers to contribute a
certain percentage (50%) to an
employee’s premium cost, but also
requires that the employee’s
contribution not exceed a certain
percentage of monthly gross earnings so
that, in some instances, the employer’s
required contribution for a particular
employee may exceed 50 percent of the
premium.3 To satisfy the uniform
percentage requirement under section
45R, that employer generally would be
required to increase the employer
contribution to all its employees’
premiums to match the increase for that
one employee, which may be difficult
especially if the percentage increase is
substantial. Accordingly, for taxable
years beginning in 2014, an employer
will be treated as meeting the uniform
percentage requirement if the failure to
satisfy the uniform percentage
requirement is attributable to additional
employer contributions made to certain
employees solely to comply with an
applicable State or local law.
IV. Claiming the Credit
A. Form 8941, Credit for Small
Employer Health Insurance Premiums
For an eligible small employer that is
not a tax-exempt eligible small
employer, the credit is calculated on
Form 8941, ‘‘Credit for Small Employer
Health Insurance Premiums,’’ and can
be applied against both regular and
alternative minimum tax. For taxexempt eligible small employers, the
credit is also calculated on Form 8941
3 See Hawaii Prepaid Health Care Act, Hawaii
Revised Statutes Chapter 393 (1974).

E:\FR\FM\26AUP1.SGM

26AUP1

Federal Register / Vol. 78, No. 165 / Monday, August 26, 2013 / Proposed Rules
and attached to Form 990–T, ‘‘Exempt
Organization Business Income Tax
Return.’’ Filing Form 990–T with an
attached Form 8941 is required for a taxexempt eligible small employer to claim
the credit, even if it is not otherwise
required to file Form 990–T.
B. Estimated Tax Payments and
Alternative Minimum Tax (AMT)
Liability
These proposed regulations provide
that the section 45R credit may be
reflected in an eligible small employer’s
estimated tax payments in accordance
with the estimated tax rules. The credit
can also be used to offset an eligible
small employer’s AMT liability for the
year, subject to certain limitations based
on the amount of an employer’s regular
tax liability, AMT liability and other
allowable credits. See section 38(c)(1),
as modified by section 38(c)(4)(B)(vi),
for these limitations.
C. Reduced Section 162 Deduction
No deduction is allowed under
section 162 for that portion of the
premiums paid equal to the amount of
the credit claimed under section 45R.
See section 280C(h).

ehiers on DSK2VPTVN1PROD with PROPOSALS-1

Proposed Effective/Applicability Dates
These regulations are proposed to be
effective the date the final regulations
are published in the Federal Register,
and apply to taxable years beginning
after December 31, 2013. To assist with
any preparation needed for transition to
the requirements applicable to taxable
years beginning after December 31,
2014, employers may also rely on these
proposed regulations for guidance for
taxable years beginning after December
31, 2013, and before December 31, 2014.
If and to the extent future guidance is
more restrictive than the guidance in
these proposed regulations, the future
guidance will be applied without
retroactive effect and employers will be
provided with time to come into
compliance with the final regulations
(and will in any case not be required to
comply for taxable years beginning prior
to January 1, 2015).
Availability of IRS Documents
IRS notices cited in this preamble are
made available by the Superintendent of
Documents, U.S. Government Printing
Office, Washington, DC 20402.
Special Analyses
It has been determined that this notice
of proposed rulemaking is not a
significant regulatory action as defined
in Executive Order 12866, as
supplemented by Executive Order
13563. Therefore, a regulatory

VerDate Mar<15>2010

13:45 Aug 23, 2013

Jkt 229001

assessment is not required. It has also
been determined that section 553(b) of
the Administrative Procedure Act (5
U.S.C. chapter 5) does not apply to these
regulations.
It is hereby certified that this
regulation will not have a significant
economic impact on a substantial
number of small entities. Accordingly, a
regulatory flexibility analysis is not
required. While the number of small
entities affected is substantial, the
economic impact on the affected small
entities is not significant. The
information required to determine a
small employer’s eligibility for, and
amount of, an applicable credit,
generally consisting of the annual hours
worked by its employees, the annual
wages paid to its employees, the cost of
the employees’ premiums for qualified
health plans and the employer’s
contribution towards those premiums, is
information that the small employer
generally will retain for business
purposes and be readily available to
accumulate for purposes of completing
the necessary form for claiming the
credit. In addition, this credit is
available to any eligible small employer
only twice (because the credit can be
claimed by a small employer only for
two consecutive taxable years beginning
after December 31, 2013, beginning with
the taxable year for which the small
employer first claims the credit).
Accordingly, no small employer will
calculate the credit amount or complete
the process for claiming the credit under
this regulation more than two times.
Based on these facts, a Regulatory
Flexibility Analysis under the
Regulatory Flexibility Act (5 U.S.C.
chapter 6) is not required.
Pursuant to section 7805(f) of the
Code, this notice of proposed
rulemaking has been submitted to the
Chief Counsel for Advocacy of the Small
Business Administration for comment
on its impact on small business.
Comments and Requests for Public
Hearing
Before these proposed regulations are
adopted as final regulations,
consideration will be given to any
comments that are timely submitted to
the IRS as prescribed in this preamble
under the ‘‘Addresses’’ heading. The
IRS and the Treasury Department
request comments on all aspects of the
proposed rules. All comments will be
available at www.regulations.gov or
upon request. A public hearing will be
scheduled if requested in writing by any
person that timely submits written or
electronic comments. If a public hearing
is scheduled, notice of the date, time,

PO 00000

Frm 00014

Fmt 4702

Sfmt 4702

52725

and place for the hearing will be
published in the Federal Register.
Drafting Information
The principal author of these
proposed regulations is Stephanie
Caden, Office of the Division Counsel/
Associate Chief Counsel (Tax Exempt
and Government Entities). However,
other personnel from the IRS and the
Treasury Department participated in
their development.
List of Subjects in 26 CFR Part 1
Income taxes, Reporting and
recordkeeping requirements.
Proposed Amendments to the
Regulations
Accordingly, 26 CFR part 1 is
proposed to be amended as follows:
PART I—INCOME TAXES
Paragraph 1. The authority citation
for part 1 continues to read as follows:

■

Authority: 26 U.S.C. 7805 * * *

Par. 2. Section 1.45R–0 is added to
read as follows:

■

§ 1.45R–0

Table of Contents

This section lists the table of contents
for §§ 1.45R–1 through 1.45R–5.
§ 1.45R–1 Definitions.
(a) Definitions.
(1) Average premium.
(2) Composite billing.
(3) Credit period.
(4) Eligible small employer.
(5) Employee.
(6) Employer-computed composite rate.
(7) Exchange.
(8) Family member.
(9) Full-time equivalent employee (FTE).
(10) List billing.
(11) Net premium payments.
(12) Nonelective contribution.
(13) Payroll taxes.
(14) Qualified health plan QHP.
(15) Qualifying arrangement.
(16) Seasonal worker.
(17) Small Business Health Options
Program (SHOP).
(18) State.
(19) Tax-exempt eligible small employer.
(20) Tier.
(21) United States.
(22) Wages.
(b) Effective/applicability date.
§ 1.45R–2 Eligibility for the credit.
(a) Eligible small employer.
(b) Application of section 414 employer
aggregation rules.
(c) Employees taken into account.
(d) Determining the hours of service
performed by employees.
(1) In general.
(2) Permissible methods.
(3) Examples.
(e) FTE calculation.
(1) In general.
(2) Example.

E:\FR\FM\26AUP1.SGM

26AUP1

52726

Federal Register / Vol. 78, No. 165 / Monday, August 26, 2013 / Proposed Rules

ehiers on DSK2VPTVN1PROD with PROPOSALS-1

(f) Determining the employer’s average
annual wages.
(1) In general.
(2) Example.
(g) Effective/applicability date.
§ 1.45R–3 Calculating the credit.
(a) In general.
(b) Average premium limitation.
(1) In general.
(2) Examples.
(c) Credit phaseout.
(1) In general.
(2) $25,000 dollar amount adjusted for
inflation.
(3) Examples
(d) State credits and subsidies for health
insurance.
(1) Payments to employer.
(2) Payments to issuer.
(3) Credits may not exceed net premium
payment.
(4) Examples.
(e) Payroll tax limitation for tax-exempt
eligible small employers.
(1) In general.
(2) Example.
(f) Two-consecutive-taxable year credit
period limitation.
(g) Premium payments by the employer for
a taxable year.
(1) In general.
(2) Excluded amounts.
(h) Rules applicable to trusts, estates,
regulated investment companies, real estate
investment trusts and cooperative
organizations.
(i) Transition rule for 2014.
(1) In general.
(2) Example.
(j) Effective/applicability date.
§ 1.45R–4 Uniform percentage of premium
paid.
(a) In general.
(b) Employers offering one QHP.
(1) Employers offering one QHP, self-only
coverage, composite billing.
(2) Employers offering one QHP, other tiers
of coverage, composite billing.
(3) Employers offering one QHP, self-only
coverage, list billing.
(4) Employers offering one QHP, other tiers
of coverage, list billing.
(c) Employers offering more than one QHP.
(1) QHP-by-QHP method.
(2) Reference QHP method.
(d) Special rules regarding employer
compliance with applicable State and local
law.
(e) Examples.
(f) Effective/applicability date.
§ 1.45R–5 Claiming the credit.
(a) Claiming the credit.
(b) Estimated tax payments and alternative
minimum tax (AMT) liability.
(c) Reduction of section 162 deduction.
(d) Effective/applicability date.

Par. 3. Sections 1.45R–1, 1.45R–2,
1.45R–3, 1.45R–4 and 1.45R–5 are
added to read as follows:

■

§ 1.45R–1

Definitions.

(a) Definitions. The definitions in this
section apply to this section and
§§ 1.45R–2, 1.45R–3, 1.45R–4, and
1.45R–5.

VerDate Mar<15>2010

13:45 Aug 23, 2013

Jkt 229001

(1) Average premium. The term
average premium means an average
premium for the small group market in
the rating area in which the employee
enrolls for coverage. The average
premium for the small group market in
a rating area is determined by the
Secretary of Health and Human
Services.
(2) Composite billing. The term
composite billing means a system of
billing under which a health insurer
charges a uniform premium for each of
the employer’s employees or charges a
single aggregate premium for the group
of covered employees that the employer
then divides by the number of covered
employees to determine the uniform
premium.
(3) Credit period—(i) In general. The
term credit period means, with respect
to any eligible small employer (or any
predecessor employer), the twoconsecutive-taxable year period
beginning with the first taxable year
beginning after December 31, 2013, for
which the eligible small employer files
an income tax return with an attached
Form 8941, ‘‘Credit for Small Employer
Health Insurance Premiums’’ (or files a
Form 990–T, ‘‘Exempt Organization
Business Income Tax Return,’’ with an
attached Form 8941 in the case of a taxexempt eligible employer). For a
transition rule for 2014, see § 1.45R–3(i).
(ii) Examples. The following
examples illustrate the provisions of
paragraph (a)(3)(i) of this section:
Example 1. (i) Facts. In 2014, an eligible
small employer (Employer) that uses a
calendar year as its taxable year begins to
offer insurance through a SHOP Exchange.
Employer has 4 employees and otherwise
qualifies for the credit, but none of the
employees enroll in the coverage offered by
Employer through the SHOP Exchange. In
mid-2015, the 4 employees enroll for
coverage through the SHOP Exchange but
Employer does not file Form 8941 or claim
the credit. In 2016, Employer has 20
employees and all are enrolled in coverage
offered through the SHOP Exchange.
Employer files Form 8941 with Employer’s
2016 tax return to claim the credit.
(ii) Conclusion. Employer’s taxable year
2016 is the first year of the credit period.
Accordingly, Employer’s two-year credit
period is 2016 and 2017.
Example 2. (i) Facts. Same facts as
Example 1, but Employer files Form 8941
with Employer’s 2015 tax return.
(ii) Conclusion. Employer’s taxable year
2015 is the first year of the credit period.
Accordingly, Employer’s two-year credit
period is 2015 and 2016 (and does not
include 2017). Employer is entitled to a
credit based on a partial year of SHOP
Exchange coverage for Employer’s taxable
year 2015.

(4) Eligible small employer. (i) The
term eligible small employer means an

PO 00000

Frm 00015

Fmt 4702

Sfmt 4702

employer that meets the requirements
set forth in § 1.45R–2.
(ii) For the definition of tax-exempt
eligible small employer, see paragraph
(a)(19) of this section.
(iii) A farmers’ cooperative described
under section 521 that is subject to tax
pursuant to section 1381, and otherwise
meets the requirements of this
paragraph (a)(4) and § 1.45R–2, is an
eligible small employer.
(5) Employee—(i) In general. Except
as otherwise specifically provided in
this paragraph (a)(5), the term employee
means an individual who is an
employee of the eligible small employer
under the common law standard. See
§ 31.3121(d)–1(c).
(ii) Leased employees. For purposes of
this paragraph (a)(5), the term employee
also includes a leased employee (as
defined in section 414(n)).
(iii) Certain individuals excluded. The
term employee does not include
independent contractors (including sole
proprietors), partners in a partnership,
shareholders owning more than two
percent of an S corporation, and any
owners of more than five percent of
other businesses. The term employee
also does not include family members of
these owners and partners including the
employee-spouse of a shareholder
owning more than two percent of the
stock of an S corporation, the employeespouse of an owner of more than five
percent of a business, the employeespouse of a partner owning more than
a five percent interest in a partnership,
and the employee-spouse of a sole
proprietor.
(iv) Seasonal employees. The term
employee does not include seasonal
workers unless the seasonal worker
provides services to the employer on
more than 120 days during the taxable
year.
(v) Dependents. The term employee
does not include any other member of
the household of owners and partners
who qualifies as a dependent under
section 152(d)(2)(H).
(vi) Ministers. Whether a minister is
an employee is determined under the
common law standard for determining
worker status. If, under the common law
standard, a minister is not an employee,
the minister is not an employee for
purposes of this paragraph (a)(5) and is
not taken into account in determining
an employer’s FTEs, and premiums paid
for the minister’s health insurance
coverage are not taken into account in
computing the credit. If, under the
common law standard, a minister is an
employee, the minister is an employee
for purposes of this paragraph (a)(5),
and is taken into account in determining
an employer’s FTEs, and premiums paid

E:\FR\FM\26AUP1.SGM

26AUP1

ehiers on DSK2VPTVN1PROD with PROPOSALS-1

Federal Register / Vol. 78, No. 165 / Monday, August 26, 2013 / Proposed Rules
by the employer for the minister’s
health insurance coverage can be taken
into account in computing the credit.
Because the performance of services by
a minister in the exercise of his or her
ministry is not treated as employment
for purposes of the Federal Insurance
Contributions Act (FICA), compensation
paid to the minister is not wages as
defined under section 3121(a), and is
not counted as wages for purposes of
computing an employer’s average
annual wages.
(6) Employer-computed composite
rate. The term employer-computed
composite rate refers to a rate for a tier
of coverage (such as self-only or family)
of a QHP that is the average rate
determined by adding the premiums for
that tier of coverage for all employees
eligible to participate in the QHP
(whether or not they actually receive
coverage under the plan or under that
tier of coverage) and dividing by the
total number of such eligible employees.
The employer-computed composite rate
is used in list billing to convert
individual premiums for a tier of
coverage into an employer-computed
composite rate for that tier of coverage.
(7) Exchange. The term Exchange
means an exchange as defined in 45
CFR 155.20.
(8) Family member. The term family
member is defined with respect to a
taxpayer as a child (or descendant of a
child); a sibling or step-sibling; a parent
(or ancestor of a parent); a step-parent;
a niece or nephew; an aunt or uncle; or
a son-in-law, daughter-in-law, father-inlaw, mother-in-law, brother-in-law or
sister-in-law. A spouse of any of these
family members is also considered a
family member.
(9) Full-time equivalent employee
(FTE). The number of full-time
equivalent employees (FTEs) is
determined by dividing the total
number of hours of service for which
wages were paid by the employer to
employees during the taxable year by
2,080. See § 1.45–2(d) and (e) for
permissible methods of calculating
hours of service and the method for
calculating the number of an employer’s
FTEs.
(10) List billing. The term list billing
refers to a system of billing under which
a health insurer lists a separate
premium for each employee based on
the age of the employee or other factors.
(11) Net premium payments. The term
net premium payments means, in the
case of an employer receiving a State tax
credit or State subsidy for providing
health insurance to its employees, the
excess of the employer’s actual
premium payments over the State tax
credit or State subsidy received by the

VerDate Mar<15>2010

13:45 Aug 23, 2013

Jkt 229001

employer. In the case of a State payment
directly to an insurance company (or
another entity licensed under State law
to engage in the business of insurance),
the employer’s net premium payments
are the employer’s actual premium
payments. If a State-administered
program (such as Medicaid or another
program that makes payments directly
to a health care provider or insurance
company on behalf of individuals and
their families who meet certain
eligibility guidelines) makes payments
that are not contingent on the
maintenance of an employer-provided
group health plan, those payments are
not taken into account in determining
the employer’s net premium payments.
(12) Nonelective contribution. The
term nonelective contribution means an
employer contribution other than a
contribution pursuant to a salary
reduction arrangement under section
125.
(13) Payroll taxes. For purposes of
section 45R, the term payroll taxes
means amounts required to be withheld
as tax from the employees of a taxexempt eligible small employer under
section 3402, amounts required to be
withheld from such employees under
section 3101(b), and amounts of tax
imposed on the tax-exempt eligible
small employer under section 3111(b).
(14) Qualified health plan (QHP). The
term qualified health plan (QHP) means
a qualified health plan as defined in
Affordable Care Act section 1301(a) (see
42 U.S.C. 18021(a)), but does not
include a catastrophic plan described in
Affordable Care Act section 1302(e) (See
42 U.S.C. 18022(e)).
(15) Qualifying arrangement. The
term qualifying arrangement means an
arrangement that requires an eligible
small employer to make a nonelective
contribution on behalf of each employee
who enrolls in a QHP offered to
employees by the employer through a
SHOP Exchange in an amount equal to
a uniform percentage (not less than 50
percent) of the premium cost of the
QHP.
(16) Seasonal worker. The term
seasonal worker means a worker who
performs labor or services on a seasonal
basis as defined by the Secretary of
Labor, including (but not limited to)
workers covered by 29 CFR 500.20(s)(1),
and retail workers employed exclusively
during holiday seasons.
(17) Small Business Health Options
Program (SHOP). The term Small
Business Health Options Program
(SHOP) means an Exchange established
pursuant to section 1311 of the
Affordable Care Act and defined in 45
CFR 155.20.

PO 00000

Frm 00016

Fmt 4702

Sfmt 4702

52727

(18) State. The term State means a
State as defined in section 7701(a)(10),
including the District of Columbia.
(19) Tax-exempt eligible small
employer. The term tax-exempt eligible
small employer means an eligible small
employer that is exempt from federal
income tax under section 501(a) as an
organization described in section 501(c).
(20) Tier. The term tier refers to a
category of coverage under a benefits
package that varies only by the number
of individuals covered. For example,
self-only coverage, self plus one
coverage, and family coverage would
constitute three separate tiers of
coverage.
(21) United States. The term United
States means United States as defined in
section 7701(a)(9).
(22) Wages. The term wages for
purposes of section 45R means wages as
defined under section 3121(a) for
purposes of the Federal Insurance
Contributions Act (FICA), determined
without regard to the social security
wage base limitation under section
3121(a)(1).
(b) Effective/applicability date. This
section is applicable for periods after
December 31, 2013.
§ 1.45R–2

Eligibility for the credit.

(a) Eligible small employer. To be
eligible for the credit, an employer must
be an eligible small employer. In order
to be an eligible small employer, with
respect to any taxable year, an employer
must have no more than 25 full-time
equivalent employees (FTEs), must have
in effect a qualifying arrangement, and
the average annual wages of its FTEs
must not exceed an amount equal to
twice the dollar amount in effect under
§ 1.45R–3(c)(2). To claim the credit for
taxable years beginning in or after 2014,
the qualifying arrangement is an
arrangement that requires an employer
to make a nonelective contribution on
behalf of each employee who enrolls in
a qualified health plan (QHP) offered to
employees through a small business
health options program (SHOP)
Exchange in an amount equal to a
uniform percentage (not less than 50
percent) of the premium cost of the
QHP. Notwithstanding the foregoing, an
employer that is an agency or
instrumentality of the federal
government, or of a State, local or
Indian tribal government, is not an
eligible small employer unless it is an
organization described in section 501(c)
that is exempt from tax under section
501(a). An employer does not fail to be
an eligible small employer merely
because its employees are not
performing services in a trade or
business of the employer. An employer

E:\FR\FM\26AUP1.SGM

26AUP1

ehiers on DSK2VPTVN1PROD with PROPOSALS-1

52728

Federal Register / Vol. 78, No. 165 / Monday, August 26, 2013 / Proposed Rules

located outside the United States
(including a U.S. Territory) must have
income effectively connected with the
conduct of a trade or business in the
United States, and otherwise meet the
requirements of this section, to be an
eligible small employer. For eligibility
standards for SHOP related to foreign
employers, see 45 CFR 155.710.
Paragraphs (b) through (f) of this section
provide the rules for determining
whether the requirements to be an
eligible small employer are met,
including rules related to identifying
and counting the employer’s number of
the employer’s FTEs, counting the
employees’ hours of service, and
determining the employer’s average
annual FTE wages for the taxable year.
For rules on determining whether the
uniform percentage requirement is met,
see § 1.45R–4.
(b) Application of section 414
employer aggregation rules. All
employers treated as a single employer
under section 414(b), (c), (m) or (o) are
treated as a single employer for
purposes of this section. Thus, all
employees of a controlled group under
section 414(b), (c) or (o), or an affiliated
service group under section 414(m), are
taken into account in determining
whether any member of the controlled
group or affiliated service group is an
eligible small employer. Similarly, all
wages paid to, and premiums paid for,
employees by the members of the
controlled group or affiliated service
group are taken into account when
determining the amount of the credit for
a group treated as a single employer
under these rules.
(c) Employees taken into account. To
be eligible for the credit, an employer
must have employees as defined in
§ 1.45R–1(a)(5) during the taxable year.
All employees of the eligible small
employer are taken into account for
purposes of determining the employer’s
FTEs and average annual FTE wages.
Employees include former employees
who terminated employment during the
year for which the credit is being
claimed, employees covered under a
collective bargaining agreement, and
employees who do not enroll in a QHP
offered by the employer through a SHOP
Exchange.
(d) Determining the hours of service
performed by employees—(1) In general.
An employee’s hours of service for a
year include each hour for which an
employee is paid, or entitled to
payment, for the performance of duties
for the employer during the employer’s
taxable year. It also includes each hour
for which an employee is paid, or
entitled to payment, by the employer on
account of a period of time during

VerDate Mar<15>2010

13:45 Aug 23, 2013

Jkt 229001

which no duties are performed due to
vacation, holiday, illness, incapacity
(including disability), layoff, jury duty,
military duty or leave of absence (except
that no more than 160 hours of service
are required to be counted for an
employee on account of any single
continuous period during which the
employee performs no duties).
(2) Permissible methods. In
calculating the total number of hours of
service that must be taken into account
for an employee during the taxable year,
eligible small employers need not use
the same method for all employees, and
may apply different methods for
different classifications of employees if
the classifications are reasonable and
consistently applied. Eligible small
employers may change the method for
calculating employees’ hours of service
for each taxable year. An eligible small
employer may use any of the following
three methods.
(i) Actual hours worked. An employer
may use the actual hours of service
provided by employees including hours
worked and any other hours for which
payment is made or due (as described in
paragraph (d)(1) of this section).
(ii) Days-worked equivalency. An
employer may use a days-worked
equivalency whereby the employee is
credited with 8 hours of service for each
day for which the employee would be
required to be credited with at least one
hour of service under paragraph (d)(1) of
this section.
(iii) Weeks-worked equivalency. An
employer may use a weeks-worked
equivalency whereby the employee is
credited with 40 hours of service for
each week for which the employee
would be required to be credited with
at least one hour of service under
paragraph (d)(1) of this section.
(3) Examples. The following examples
illustrate the rules of paragraph (d) of
this section:
Example 1. Counting hours of service by
hours actually worked or for which payment
is made or due. (i) Facts. An eligible small
employer (Employer) has payroll records that
indicate that Employee A worked 2,000
hours and that Employer paid Employee A
for an additional 80 hours on account of
vacation, holiday and illness. Employer uses
the actual hours worked method described in
paragraph (d)(2)(i) of this section.
(ii) Conclusion. Under this method of
counting hours, Employee A must be
credited with 2,080 hours of service (2,000
hours worked and 80 hours for which
payment was made or due).
Example 2. Counting hours of service
under days-worked equivalency. (i) Facts.
Employee B worked from 8:00 a.m. to 12:00
p.m. every day for 200 days. Employer uses
the days-worked equivalency method
described in paragraph (d)(2)(ii) of this
section.

PO 00000

Frm 00017

Fmt 4702

Sfmt 4702

(ii) Conclusion. Under this method of
counting hours, Employee B must be credited
with 1,600 hours of service (8 hours for each
day Employee B would otherwise be credited
with at least 1 hour of service × 200 days).
Example 3. Counting hours of service
under weeks-worked equivalency. (i) Facts.
Employee C worked 49 weeks, took 2 weeks
of vacation with pay, and took 1 week of
leave without pay. Employer uses the weeksworked equivalency method described in
paragraph (d)(2)(iii) of this section.
(ii) Conclusion. Under this method of
counting hours, Employee C must be credited
with 2,040 hours of service (40 hours for each
week during which Employee C would
otherwise be credited with at least 1 hour of
service × 51 weeks).
Example 4. Excluded employees. (i) Facts.
Employee D worked 3 consecutive weeks at
32 hours per week during the holiday season.
Employee D did not work during the
remainder of the year. Employee E worked
limited hours after school from time to time
through the year for a total of 350 hours.
Employee E does not work through the
summer. Employer uses the actual hours
worked method described in paragraph
(d)(2)(i) of this section.
(ii) Conclusion. Employee D is a seasonal
employee who worked for 120 days or less
for Employer during the year. Employee D’s
hours are not counted when determining the
hours of service of Employer’s employees.
Employee E works throughout most of the
year and is not a seasonal employee.
Employer counts Employee E’s 350 hours of
service during the year.

(e) FTE Calculation—(1) In general.
The number of an employer’s FTEs is
determined by dividing the total hours
of service, determined in accordance
with paragraph (d) of this section,
credited during the year to employees
taken into account under paragraph (c)
of this section (but not more than 2,080
hours for any employee) by 2,080. The
result, if not a whole number, is then
rounded to the next lowest whole
number. If, however, after dividing the
total hours of service by 2,080, the
resulting number is less than one, the
employer rounds up to one FTE.
(2) Example. The following example
illustrates the provisions of paragraph
(e) of this section:
Example. Determining the number of FTEs.
(i) Facts. A sole proprietor pays 5 employees
wages for 2,080 hours each, pays 3
employees wages for 1,040 hours each, and
pays 1 employee wages for 2,300 hours. One
of the employees working 2,080 hours is the
sole proprietor’s nephew. The sole
proprietor’s FTEs would be calculated as
follows: 8,320 hours of service for the 4
employees paid for 2,080 hours each (4 ×
2,080); the sole proprietor’s nephew is
excluded from the FTE calculation; 3,120
hours of service for the 3 employees paid for
1,040 hours each (3 × 1,040); and 2,080 hours
of service for the 1 employee paid for 2,300
hours (lesser of 2,300 and 2,080). The sum of
the included hours of service equals 13,520
hours of service.

E:\FR\FM\26AUP1.SGM

26AUP1

Federal Register / Vol. 78, No. 165 / Monday, August 26, 2013 / Proposed Rules
(ii) Conclusion. The sole proprietor’s FTEs
equal 6 (13,520 divided by 2,080 = 6.5,
rounded to the next lowest whole number).

(f) Determining the employer’s
average annual FTE wages—(1) In
general. All wages paid to employees
(including overtime pay) are taken into
account in computing an eligible small
employer’s average annual FTE wages.
The average annual wages paid by an
employer for a taxable year is
determined by dividing the total wages
paid by the eligible small employer
during the employer’s taxable year to
employees taken into account under
paragraph (c) of this section by the
number of the employer’s FTEs for the
year. The result is then rounded down
to the nearest $1,000 (if not otherwise a
multiple of $1,000). For purposes of
determining the employer’s average
annual wages for the taxable year, only
wages that are paid for hours of service
determined under paragraph (d) of this
section are taken into account.
(2) Example. The following example
illustrates the provision of paragraphs
(e) and (f) of this section:
Example. (i) Facts. An employer has 26
FTEs with average annual wages of $23,000.
Only 22 of the employer’s employees enroll
for coverage offered by the employer through
a SHOP Exchange.
(ii) Conclusion. The hours of service and
wages of all employees are taken into
consideration in determining whether the
employer is an eligible small employer for
purposes of the credit. Because the employer
does not have fewer than 25 FTEs for the
taxable year, the employer is not an eligible
small employer for purposes of this section,
even if less than 25 employees (or FTEs)
enroll for coverage through the SHOP
Exchange.

(g) Effective/applicability date. This
section is applicable for periods after
December 31, 2013.

ehiers on DSK2VPTVN1PROD with PROPOSALS-1

§ 1.45R–3

Calculating the credit.

(a) In general. The tax credit available
to an eligible small employer equals 50
percent of the eligible small employer’s
premium payments made on behalf of
its employees under a qualifying
arrangement, or in the case of a taxexempt eligible small employer, equals
35 percent of the employer’s premium
payments made on behalf of its
employees under a qualifying
arrangement. The employer’s tax credit
is subject to the following adjustments
and limitations:
(1) The average premium limitation
for the small group market in the rating
area in which the employee enrolls for
coverage, described in paragraph (b) of
this section;
(2) The credit phaseout described in
paragraph (c) of this section;

VerDate Mar<15>2010

13:45 Aug 23, 2013

Jkt 229001

(3) The net premium payment
limitation in the case of State credits or
subsidies described in paragraph (d) of
this section;
(4) The payroll tax limitation for a taxexempt eligible small employer
described in paragraph (e) of this
section;
(5) The two-consecutive-taxable year
credit period limitation, described in
paragraph (f) of this section;
(6) The rules with respect to the
premium payments taken into account,
described in paragraph (g) of this
section;
(7) The rules with respect to credits
applicable to trusts, estates, regulated
investment companies, real estate
investment trusts and cooperatives
described in paragraph (h) of this
section; and
(8) The transition relief for 2014
described in paragraph (i) of this
section.
(b) Average premium limitation—(1)
In general. The amount of an eligible
small employer’s premium payments
that are taken into account in
calculating the credit is limited to the
premium payments the employer would
have made under the same arrangement
if the average premium for the small
group market in the rating area in which
the employee enrolls for coverage were
substituted for the actual premium.
(2) Examples. The following examples
illustrate the provisions of paragraph
(b)(1) of this section:
Example 1. Comparing premium payments
to average premium for small group market.
(i) Facts. An eligible small employer
(Employer) offers a health insurance plan
with self-only and family coverage through a
small business options program (SHOP)
Exchange. Employer has 9 full-time
equivalent employees (FTEs) with average
annual wages of $23,000 per FTE. All 9
employees are employees as defined under
§ 1.45R–1(a)(5). Four employees are enrolled
in self-only coverage and 5 are enrolled in
family coverage. Employer pays 50% of the
premiums for all employees enrolled in selfonly coverage and 50% of the premiums for
all employees enrolled in family coverage
(and the employee is responsible for the
remainder in each case). The premiums are
$4,000 a year for self-only coverage and
$10,000 a year for family coverage. The
average premium for the small group market
in Employer’s rating area is $5,000 for selfonly coverage and $12,000 for family
coverage. Employer’s premium payments for
each FTE ($2,000 for self-only coverage and
$5,000 for family coverage) do not exceed 50
percent of the average premium for the small
group market in Employer’s rating area
($2,500 for self-only coverage and $6,000 for
family coverage).
(ii) Conclusion. The amount of premiums
paid by Employer for purposes of computing
the credit equals $33,000 ((4 × $2,000) plus
(5 × $5,000)).

PO 00000

Frm 00018

Fmt 4702

Sfmt 4702

52729

Example 2. Premium payments exceeding
average premium for small group market. (i)
Facts. Same facts as Example 1, except that
the premiums are $6,000 for self-only
coverage and $14,000 for family coverage.
Employer’s premium payments for each
employee ($3,000 for self-only coverage and
$7,000 for family coverage) exceed 50% of
the average premium for the small group
market in Employer’s rating area ($2,500 for
self-only coverage and $6,000 for family
coverage).
(ii) Conclusion. The amount of premiums
paid by Employer for purposes of computing
the credit equals $40,000 ((4 × $2,500) plus
(5 × $6,000)).

(c) Credit phaseout—(1) In general.
The tax credit is subject to a reduction
(but not reduced below zero) if the
employer’s FTEs exceed 10 or average
annual FTE wages exceed $25,000. If the
number of FTEs exceeds 10, the
reduction is determined by multiplying
the otherwise applicable credit amount
by a fraction, the numerator of which is
the number of FTEs in excess of 10 and
the denominator of which is 15. If
average annual FTE wages exceed
$25,000, the reduction is determined by
multiplying the otherwise applicable
credit amount by a fraction, the
numerator of which is the amount by
which average annual FTE wages
exceed $25,000 and the denominator of
which is $25,000. In both cases, the
result of the calculation is subtracted
from the otherwise applicable credit to
determine the credit to which the
employer is entitled. For an employer
with both more than 10 FTEs and
average annual FTE wages exceeding
$25,000, the total reduction is the sum
of the two reductions.
(2) $25,000 dollar amount adjusted
for inflation. For taxable years beginning
in a calendar year after 2013, each
reference to ‘‘$25,000’’ in paragraph
(c)(1) of this section is replaced with a
dollar amount equal to $25,000
multiplied by the cost-of-living
adjustment under section 1(f)(3) for the
calendar year, determined by
substituting ‘‘calendar year 2012’’ for
‘‘calendar year 1992’’ in section
1(f)(3)(B).
(3) Examples. The following examples
illustrate the provisions of paragraph (c)
this section. For purposes of these
examples, no employer is a tax-exempt
organization and no other adjustments
or limitations on the credit apply other
than those adjustments and limitations
explicitly set forth in the example.
Example 1. Calculating the maximum
credit for an eligible small employer without
an applicable credit phaseout. (i) Facts. An
eligible small employer (Employer) has 9
FTEs with average annual wages of $23,000.
Employer pays $72,000 in health insurance
premiums for those employees (which does

E:\FR\FM\26AUP1.SGM

26AUP1

52730

Federal Register / Vol. 78, No. 165 / Monday, August 26, 2013 / Proposed Rules

ehiers on DSK2VPTVN1PROD with PROPOSALS-1

not exceed the total average premium for the
small group market in the rating area), and
otherwise meets the requirements for the
credit.
(ii) Conclusion. Employer’s credit equals
$36,000 (50% × $72,000)
Example 2. Calculating the credit phaseout
if the number of FTEs exceeds 10 or average
annual wages exceed $25,000, as adjusted for
inflation. (i) Facts. An eligible small
employer (Employer) has 12 FTEs and
average annual FTE wages of $30,000 in a
year when the amount in paragraph (c)(1) of
this section, as adjusted for inflation, is
$25,000. Employer pays $96,000 in health
insurance premiums for its employees
(which does not exceed the average premium
for the small group market in the rating area)
and otherwise meets the requirements for the
credit.
(ii) Conclusion. The initial amount of the
credit is determined before any reduction
(50% × $96,000) = $48,000. The credit
reduction for FTEs in excess of 10 is $6,400
($48,000 × 2/15). The credit reduction for
average annual FTE wages in excess of
$25,000 is $9,600 ($48,000 × $5,000/$25,000),
resulting in a total credit reduction of
$16,000 ($6,400 + $9,600). Employer’s total
tax credit equals $32,000 ($48,000–$16,000).

(d) State credits and subsidies for
health insurance—(1) Payments to
employer. If the employer is entitled to
a State tax credit or a premium subsidy
that is paid directly to the employer, the
premium payment made by the
employer is not reduced by the credit or
subsidy for purposes of determining
whether the employer has satisfied the
requirement to pay an amount equal to
a uniform percentage (not less than 50
percent) of the premium cost. Also,
except as described in paragraph (d)(3)
of this section, the maximum amount of
the credit is not reduced by reason of a
State tax credit or subsidy or by reason
of payments by a State directly to an
employer.
(2) Payments to issuer. If a State
makes payments directly to an
insurance company (or another entity
licensed under State law to engage in
the business of insurance) to pay a
portion of the premium for coverage of
an employee enrolled for coverage
through a SHOP Exchange, the State is
treated as making these payments on
behalf of the employer for purposes of
determining whether the employer has
satisfied the requirement to pay an
amount equal to a uniform percentage
(not less than 50 percent) of the
premium cost of coverage. Also, except
as described below in paragraph (d)(3)
of this section, these premium payments
by the State are treated as an employer
contribution under this section for
purposes of calculating the credit.
(3) Credits may not exceed net
premium payment. Regardless of the
application of paragraphs (d)(1) and

VerDate Mar<15>2010

13:45 Aug 23, 2013

Jkt 229001

(d)(2) of this section, in no event may
the amount of the credit exceed the
amount of the employer’s net premium
payments as defined in § 1.45R–1(a)(11).
(4) Examples. The following examples
illustrate the provisions of paragraphs
(d)(1) through (d)(3) of this section. For
purposes of these examples, the eligible
small employer’s taxable year and plan
year begin during or after 2014. No other
adjustments or limitations on the credit
apply other than those adjustments and
limitations explicitly set forth in the
example.
Example 1. State premium subsidy paid
directly to employer. (i) Facts. The State in
which an eligible small employer (Employer)
operates provides a health insurance
premium subsidy of up to 40% of the health
insurance premiums for each eligible
employee. The State pays the subsidy
directly to Employer. Employer has one
employee, Employee D. Employee D’s health
insurance premiums are $100 per month and
are paid as follows: $80 by Employer and $20
by Employee D through salary reductions to
a cafeteria plan. The State pays Employer $40
per month as a subsidy for Employer’s
payment of insurance premiums on behalf of
Employee D. Employer is otherwise an
eligible small employer that meets the
requirements for the credit.
(ii) Conclusion. For purposes of calculating
the credit, the amount of premiums paid by
the employer is $80 per month (the premium
payment by the Employer without regard to
the subsidy from the State). The maximum
credit is $40 ($80 × 50%).
Example 2. State premium subsidy paid
directly to insurance company. (i) Facts. The
State in which Employer operates provides a
health insurance premium subsidy of up to
30% for each eligible employee. Employer
has one employee, Employee E. Employee E
is enrolled in self-only coverage through a
qualified health plan (QHP) offered by
Employer through a SHOP Exchange.
Employee E’s health insurance premiums are
$100 per month and are paid as follows: $50
by Employer; $30 by the State and $20 by the
employee. The State pays the $30 per month
directly to the insurance company and the
insurance company bills Employer for the
employer and employee’s share, which equal
$70 per month. Employer is otherwise an
eligible small employer that meets the
requirements for the credit.
(ii) Conclusion. For purposes of calculating
the amount of the credit, the amount of
premiums paid by Employer is $80 per
month (the sum of Employer’s payment and
the State’s payment). The maximum credit is
$40 ($80 × 50%).
Example 3. Credit limited by employer’s
net premium payment. (i) Facts. Employer is
an eligible small employer that is not a taxexempt organization. The State in which
Employer operates provides a health
insurance premium subsidy of up to 50% for
each eligible employee. Employer has one
employee, Employee F. Employee F is
enrolled in self-only coverage under the QHP
offered to Employee F by Employer through
a SHOP Exchange. Employee F’s health

PO 00000

Frm 00019

Fmt 4702

Sfmt 4702

insurance premiums are $100 per month and
are paid as follows: $20 by Employer; $50 by
the State and $30 by Employee F. The State
pays the $50 per month directly to the
insurance company and the insurance
company bills Employer for the employer’s
and employee’s shares, which total $50 per
month. Employer is otherwise an eligible
small employer that meets the requirements
for the credit. The amount of premiums paid
by Employer (the sum of Employer’s payment
and the State’s payment) is $70 per month,
which is more than 50% of the $100 monthly
premium payment. The amount of the
premium for calculating the credit is also $70
per month.
(ii) Conclusion. The maximum credit
without adjustments or limitations is $35
($70 × 50%). Employer’s net premium
payment is $20 (the amount actually paid by
Employer excluding the State subsidy).
Because the credit may not exceed
Employer’s net premium payment, the credit
is $20 (the lesser of $35 or $20).

(e) Payroll tax limitation for taxexempt eligible small employers—(1) In
general. For a tax-exempt eligible
employer, the amount of the credit
claimed cannot exceed the total amount
of payroll taxes (as defined in § 1.45R–
1(a)(13)) of the employer during the
calendar year in which the taxable year
begins.
(2) Example. The following example
illustrates the provisions of paragraph
(e)(1) of this section. For purposes of
this example, the eligible small
employer’s taxable year and plan year
begin during or after 2014. No other
adjustments or limitations on the credit
apply other than those adjustments and
limitations explicitly set forth in the
example.
Example. Calculating the maximum credit
for a tax-exempt eligible small employer. (i)
Facts. Employer is a tax-exempt eligible
small employer that has 10 FTEs with
average annual wages of $21,000. Employer
pays $80,000 in health insurance premiums
for its employees (which does not exceed the
average premium for the small group market
in the rating area) and otherwise meets the
requirements for the credit. The total amount
of Employer’s payroll taxes equals $30,000.
(ii) Conclusion. The initial amount of the
credit is determined before any reduction:
(35% × $80,000) = $28,000, and Employer’s
payroll taxes are $30,000. The total tax credit
equals $28,000 (the lesser of $28,000 and
$30,000).

(f) Two-consecutive-taxable year
credit period limitation. The credit is
only available to an eligible small
employer, including a tax-exempt
eligible small employer, during that
employer’s credit period. For a
transition rule for 2014, see paragraph
(i) of this section. To prevent the
avoidance of the two-year limit on the
credit period through the use of
successor entities, a successor entity
and a predecessor entity are treated as

E:\FR\FM\26AUP1.SGM

26AUP1

ehiers on DSK2VPTVN1PROD with PROPOSALS-1

Federal Register / Vol. 78, No. 165 / Monday, August 26, 2013 / Proposed Rules
the same employer. For this purpose,
the rules for identifying successor
entities under § 31.3121(a)(1)–1(b)
apply. Accordingly, for example, if an
eligible small employer claims the
credit for the 2014 and 2015 taxable
years, that eligible small employer’s
credit period will have expired so that
any successor employer to that eligible
small employer will not be able to claim
the credit for any subsequent taxable
years.
(g) Premium payments by the
employer for a taxable year—(1) In
general. Only premiums paid by an
eligible small employer or tax-exempt
eligible small employer on behalf of
each employee enrolled in a QHP or
payments paid to the issuer in
accordance with paragraph (d)(2) of this
section are counted in calculating the
credit. If an eligible small employer
pays only a portion of the premiums for
the coverage provided to employees
(with employees paying the rest), only
the portion paid by the employer is
taken into account. Premiums paid on
behalf of seasonal workers may be
counted in determining the amount of
the credit (even though seasonal worker
wages and hours of service are not
included in the FTE and average annual
FTE wage calculation unless the
seasonal worker works for the employer
on more than 120 days during the
taxable year).
(2) Excluded amounts—(i) Salary
reduction amounts. Any premium paid
pursuant to a salary reduction
arrangement under a section 125
cafeteria plan is not treated as paid by
the employer for purposes of section
45R and these regulations. For this
purpose, premiums paid with employerprovided flex credits that employees
may elect to receive as cash or other
taxable benefit are treated as paid
pursuant to a salary reduction
arrangement under a section 125
cafeteria plan.
(ii) HSAs, HRAs, and FSAs. Employer
contributions to, or amounts made
available under, health savings
accounts, reimbursement arrangements,
and health flexible spending
arrangements are not taken into account
in determining the premium payments
by the employer for a taxable year.
(h) Rules applicable to trusts, estates,
regulated investment companies, real
estate investment trusts and cooperative
organizations. Rules similar to the rules
of section 52(d) and (e) and the
regulations thereunder apply in
calculating and apportioning the credit
with respect to a trust, estate, a
regulated investment company or real
estate investment trusts or cooperative
organization.

VerDate Mar<15>2010

13:45 Aug 23, 2013

Jkt 229001

(i) Transition rule for 2014—(1) In
general. This paragraph (i) applies if as
of August 26, 2013 an eligible small
employer offers coverage on a plan year
that begins on a date other than the first
day of its taxable year. In such a case,
if an eligible small employer has a
health plan year beginning after January
1, 2014 but before January 1, 2015 (2014
health plan year) that begins after the
start of its first taxable year beginning
after January 1, 2014 (2014 taxable year),
and the employer offers one or more
QHPs to its employees through a SHOP
Exchange as of the first day of its 2014
health plan year, then the eligible small
employer is treated as offering coverage
through a SHOP Exchange for its entire
2014 taxable year for purposes of
section 45R if the health care coverage
provided from the first day of the 2014
taxable year through the day
immediately preceding the first day of
the 2014 health plan year would have
qualified for a credit under section 45R
using the rules applicable to taxable
years beginning before January 1, 2014.
If the eligible small employer claims the
section 45R credit in the 2014 taxable
year, the 2014 taxable year begins the
first year of the credit period.
(2) Example. The following example
illustrates the rule of paragraph (i) of
this section. For purposes of this
example, the eligible small employer is
not a tax-exempt organization. No other
adjustments or limitations on the credit
apply other than those adjustments and
limitations explicitly set forth in the
example.
Example. (i) Facts. An eligible small
employer (Employer) has a 2014 taxable year
that begins January 1, 2014 and ends on
December 31, 2014, and a 2014 health plan
year that begins July 1, 2014 and ends June
30, 2015. Employer offers a QHP through a
SHOP Exchange the coverage under which
begins July 1, 2014. Employer provides
coverage from January 1, 2014 through June
30, 2014 that would have qualified for a
credit under section 45R using the rules
applicable to taxable years beginning before
January 1, 2014.
(ii) Conclusion. Employer may claim the
credit at the 50% rate under section 45R for
the entire 2014 taxable year using the rules
under paragraph (i) of this section.
Accordingly, in calculating the credit,
Employer may count premiums paid for
coverage from January 1, 2014 through June
30, 2014, as well as premiums paid from July
1, 2014 through December 31, 2014. If
Employer claims the credit for the 2014
taxable year, that taxable year is the first year
of the credit period.

(j) Effective/applicability date. This
section is applicable for periods after
December 31, 2013.

PO 00000

Frm 00020

Fmt 4702

Sfmt 4702

§ 1.45R–4
paid.

52731

Uniform percentage of premium

(a) In general. An eligible small
employer must pay a uniform
percentage (not less than 50 percent) of
the premium for each employee
enrolled in a qualified health plan
(QHP) offered to employees by the
employer through a small business
health options program (SHOP)
Exchange.
(b) Employers offering one QHP. An
employer that offers a single QHP
through a SHOP Exchange must satisfy
the requirements of this paragraph (b).
(1) Employers offering one QHP, selfonly coverage, composite billing. For an
eligible small employer offering selfonly coverage and using composite
billing, the employer satisfies the
requirements of this paragraph if it pays
the same amount toward the premium
for each employee receiving self-only
coverage under the QHP, and that
amount is equal to at least 50 percent of
the premium for self-only coverage.
(2) Employers offering one QHP, other
tiers of coverage, composite billing. For
an eligible small employer offering one
QHP providing at least one tier of
coverage with a higher premium than
self-only coverage and using composite
billing, the employer satisfies the
requirements of this paragraph (b)(2) if
it either—
(i) Pays an amount for each employee
enrolled in that more expensive tier of
coverage that is the same for all
employees and that is no less than the
amount that the employer would have
contributed toward self-only coverage
for that employee, or
(ii) Meets the requirements of
paragraph (b)(1) of this section for each
tier of coverage that if offers.
(3) Employers offering one QHP, selfonly coverage, list billing. For an eligible
small employer offering one QHP
providing only self-only coverage and
using list billing, the employer satisfies
the requirements of this paragraph (b)(3)
if either—
(i) The employer pays toward the
premium an amount equal to a uniform
percentage (not less than 50 percent) of
the premium charged for each
employee, or
(ii) The employer converts the
individual premiums for self-only
coverage into an employer-computed
composite rate for self-only coverage,
and, if an employee contribution is
required, each employee who receives
coverage under the QHP pays a uniform
amount toward the self-only premium
that is no more than 50 percent of the
employer-computed composite rate for
self-only coverage.

E:\FR\FM\26AUP1.SGM

26AUP1

ehiers on DSK2VPTVN1PROD with PROPOSALS-1

52732

Federal Register / Vol. 78, No. 165 / Monday, August 26, 2013 / Proposed Rules

(4) Employers offering one QHP, other
tiers of coverage, list billing. For an
eligible small employer offering one
QHP providing at least one tier of
coverage with a higher premium than
self-only coverage and using list billing,
the employer satisfies the requirements
of this paragraph (b)(4) if it either—
(i) Pays toward the premium for each
employee covered under each tier of
coverage an amount equal to or
exceeding the amount that the employer
would have contributed with respect to
that employee for self-only coverage,
calculated either based upon the actual
premium that would have been charged
by the insurer for that employee for selfonly coverage or based upon the
employer-computed composite rate for
self-only coverage, or
(ii) Meets the requirements of
paragraph (b)(3) of this section for each
tier of coverage that it offers substituting
the employer-computed composite rate
for each tier of coverage for the
employer-computed composite rate for
self-only coverage.
(c) Employers offering more than one
QHP. If an eligible small employer offers
more than one QHP, the employer must
satisfy the requirements of this
paragraph (c). The employer may satisfy
the requirements of this paragraph (c) in
either of the following two ways:
(1) QHP-by-QHP method. The
employer makes payments toward the
premium with respect to each QHP for
which the employer is claiming the
credit that satisfy the uniform
percentage requirement under
paragraph (b) of this section on a QHPby-QHP basis (so that the amounts or
percentages of premium paid by the
employer for each QHP need not be
identical, but the payments with respect
to each QHP must satisfy paragraph (b)
of this section); or
(2) Reference QHP method. The
employer designates a reference QHP
and makes employer contributions in
accordance with the following
requirements—
(i) The employer determines a level of
employer contributions for each
employee such that, if all eligible
employees enrolled in the reference
QHP, the contributions would satisfy
the uniform percentage requirement
under paragraph (b) of this section, or
(ii) The employer allows each
employee to apply the minimum
amount of employer contribution
determined necessary to meet the
uniform percentage requirement under
paragraph (b) of this section either
toward the reference QHP or toward the
cost of coverage under any of the other
available QHPs.

VerDate Mar<15>2010

13:45 Aug 23, 2013

Jkt 229001

(d) Special rules regarding employer
compliance with applicable State or
local law. An employer will be treated
as satisfying the uniform percentage
requirement if the failure to otherwise
satisfy the uniform percentage
requirement is attributable solely to
additional employer contributions made
to certain employees to comply with an
applicable State or local law.
(e) Examples. The following examples
illustrate the provisions of paragraphs
(a) through (d) of this section:
Example 1. (i) Facts. An eligible small
employer (Employer) offers a QHP on a
SHOP Exchange, Plan A, which uses
composite billing. The premiums for Plan A
are $5,000 per year for self-only coverage,
and $10,000 for family coverage. Employees
can elect self-only or family coverage under
Plan A. Employer pays $3,000 (60% of the
premium) toward self-only coverage under
Plan A and $6,000 (60% of the premium)
toward family coverage under Plan A.
(ii) Conclusion. Employer’s contributions
of 60% of the premium for each tier of
coverage satisfy the uniform percentage
requirement.
Example 2. (i) Facts. Same facts as
Example 1, except that Employer pays $3,000
(60% of the premium) for each employee
electing self-only coverage under Plan A and
pays $3,000 (30% of the premium) for each
employee electing family coverage under
Plan A.
(ii) Conclusion. Employer’s contributions
of 60% of the premium toward self-only
coverage and the same dollar amount toward
the premium for family coverage satisfy the
uniform percentage requirement, even
though the percentage is not the same.
Example 3. (i) Facts. Employer offers two
QHPs, Plan A and Plan B, both of which use
composite billing. The premiums for Plan A
are $5,000 per year for self-only coverage and
$10,000 for family coverage. The premiums
for Plan B are $7,000 per year for self-only
coverage and $13,000 for family coverage.
Employees can elect self-only or family
coverage under either Plan A or Plan B.
Employer pays $3,000 (60% of the premium)
for each employee electing self-only coverage
under Plan A, $3,000 (30% of the premium)
for each employee electing family coverage
under Plan A, $3,500 (50% of the premium)
for each employee electing self-only coverage
under Plan B, and $3,500 (27% of the
premium) for each employee electing family
coverage under Plan B.
(ii) Conclusion. Employer’s contributions
of 60% (or $3,000) of the premiums for selfonly coverage and the same dollar amounts
toward the premium for family coverage
under Plan A, and of 50% (or $3,500) of the
premium for self-only of coverage and the
same dollar amount toward the premium for
family coverage under Plan B, satisfy the
uniform percentage requirement on a QHPby-QHP basis; therefore the employer’s
contributions to both plans satisfy the
uniform percentage requirement.
Example 4. (i) Facts. Same facts as
Example 3, except that Employer designates
Plan A as the reference QHP. Employer pays

PO 00000

Frm 00021

Fmt 4702

Sfmt 4702

$2,500 (50% of the premium) for each
employee electing self-only coverage under
Plan A and pays $2,500 of the premium for
each employee electing family coverage
under Plan A or either self-only or family
coverage under Plan B.
(ii) Conclusion. Employer’s contribution of
50% (or $2,500) toward the premium of each
employee enrolled under Plan A or Plan B
satisfies the uniform percentage requirement.
Example 5. (i) Facts. Employer receives a
list billing premium quote with respect to
Plan X, a QHP offered by Employer on a
SHOP Exchange for health insurance
coverage for each of Employer’s four
employees. For Employee L, age 20, the selfonly premium is $3,000 per year, and the
family premium is $8,000. For Employees M,
N and O, each age 40, the self-only premium
is $5,000 per year and the family premium
is $10,000. The total self-only premium for
the four employees is $18,000 ($3,000 + (3 ×
5,000)). Employer calculates an employercomputed composite self-only rate of $4,500
($18,000/4). Employer offers to make
contributions such that each employee would
need to pay $2,000 of the premium for selfonly coverage. Under this arrangement,
Employer would contribute $1,000 toward
self-only coverage for L and $3,000 toward
self-only coverage for M, N, and O. In the
event an employee elects family coverage,
Employer would make the same contribution
($1,000 for L or $3,000 for M, N, or O) toward
the family premium.
(ii) Conclusion. Employer satisfies the
uniform percentage requirement because it
offers and makes contributions based on an
employer-calculated composite self-only rate
such that, to receive self-only coverage, each
employee must pay a uniform amount which
is not more than 50% of the composite rate,
and it allows employees to use the same
employer contributions toward family
coverage.
Example 6. (i) Facts. Same facts as
Example 5, except that Employer calculates
an employer-computed composite family rate
of $9,500 (($8,000 + 3 × 10,000)/4) and
requires each employee to pay $4,000 of the
premium for family coverage.
(ii) Conclusion. Employer satisfies the
uniform percentage requirement because it
offers and makes contributions based on a
calculated self-only and family rate such that,
to receive either self-only or family coverage,
each employee must pay a uniform amount
which is not more than 50% of the composite
rate for coverage of that tier.
Example 7. (i) Facts. Same facts as
Example 5, except that Employer also
receives a list billing premium quote from
Plan Y with respect to a second QHP offered
by Employer on a SHOP Exchange for each
of Employer’s 4 employees. Plan Y’s quote
for Employee L, age 20, is $4,000 per year for
self-only coverage or $12,000 per year for
family coverage. For Employees M, N and O,
each age 40, the premium is $7,000 per year
for self-only coverage or $15,000 per year for
family coverage. The total self-only premium
under Plan Y is $25,000 ($4,000 + (3 ×
7,000)). The employer-computed composite
self-only rate is $6,250 ($25,000/4). Employer
designates Plan X as the reference plan.
Employer offers to make contributions based

E:\FR\FM\26AUP1.SGM

26AUP1

Federal Register / Vol. 78, No. 165 / Monday, August 26, 2013 / Proposed Rules
on the employer-calculated composite
premium for the reference QHP (Plan X) such
that each employee has to contribute $2,000
to receive self-only coverage through Plan X.
Under this arrangement, Employer would
contribute $1,000 toward self-only coverage
for L and $3,000 toward self-only coverage
for M, N, and O. In the event an employee
elects family coverage through Plan X or
either self-only or family coverage through
Plan Y, Employer would make the same
contributions ($1,000 for L or $3,000 for M,
N, or O) toward that coverage.
(ii) Conclusion. Employer satisfies the
uniform percentage requirement because it
offers and makes contributions based on the
employer-calculated composite self-only
premium for the Plan X reference QHP such
that, in order to receive self-only coverage,
each employee must pay a uniform amount
which is not more than 50% of the self-only
composite premium of the reference QHP; it
allows employees to use the same employer
contributions toward family coverage in the
reference QHP or coverage through another
QHPs.
Example 8. (i) Facts. Employer has five
employees. Employer is located in a State
that requires employers to pay 50% of
employees’ premium costs, but also requires
that an employee’s contribution not exceed a
certain percentage of the employee’s monthly
gross earnings from that employer. Employer
offers to pay 50% of the premium costs for
all its employees, and to comply with the
State law, Employer contributes more than
50% of the premium costs for two of its
employees.
(ii) Conclusion. Employer satisfies the
uniform percentage requirement because its
failure to otherwise satisfy the uniform
percentage requirement is attributable solely
to compliance with the applicable State or
local law.

(f) Effective/applicability date. This
section is applicable for periods after
December 31, 2013.

ehiers on DSK2VPTVN1PROD with PROPOSALS-1

§ 1.45R–5

[FR Doc. 2013–20769 Filed 8–23–13; 8:45 am]
BILLING CODE 4830–01–P

40 CFR Parts 52 and 81

(a) Claiming the credit. The credit is
a general business credit and is claimed
on an eligible small employer’s annual
income tax return and offsets an
employer’s actual tax liability for the
year. The credit is claimed by attaching
Form 8941, ‘‘Credit for Small Employer
Health Insurance Premiums,’’ to the
eligible small employer’s income tax
return or, in the case of a tax-exempt
eligible small employer, by attaching
Form 8941 to the employer’s Form 990–
T, ‘‘Exempt Organization Business
Income Tax Return.’’ To claim the
credit, a tax-exempt eligible small
employer must file a form 990–T with
an attached Form 8941, even if a Form
990–T would not otherwise be required
to be filed.
(b) Estimated tax payments and
alternative minimum tax (AMT)
liability. An eligible small employer
may reflect the credit in determining
estimated tax payments for the year in

13:45 Aug 23, 2013

Heather C. Maloy,
Acting Deputy Commissioner for Services and
Enforcement.

ENVIRONMENTAL PROTECTION
AGENCY

Claiming the credit.

VerDate Mar<15>2010

which the credit applies in accordance
with the estimated tax rules as set forth
in section 6654 and 6655 and the
applicable regulations. An eligible small
employer may also use the credit to
offset the employer’s alternative
minimum tax (AMT) liability for the
year, if any, subject to certain
limitations based on the amount of an
eligible small employer’s regular tax
liability, AMT liability and other
allowable credits. See section 38(c)(1),
as modified by section 38(c)(4)(B)(vi).
However, an eligible small employer,
including a tax-exempt eligible small
employer, may not reduce its deposits
and payments of employment tax (that
is, income tax required to be withheld
under section 3402, social security and
Medicare tax under sections 3101 and
3111, and federal unemployment tax
under section 3301) during the year in
anticipation of the credit.
(c) Reduction of section 162
deduction. No deduction under section
162 is allowed for the eligible small
employer for that portion of the health
insurance premiums that is equal to the
amount of the credit under § 1.45R–2.
(d) Effective/applicability date. This
section is applicable for periods after
December 31, 2013.

Jkt 229001

[EPA–R05–OAR–2011–0597; FRL–9900–29Region 5]

Approval and Promulgation of Air
Quality Implementation Plans; Ohio;
Redesignation of the Columbus Area
to Attainment of the 1997 Annual
Standard for Fine Particulate Matter
Environmental Protection
Agency (EPA).
ACTION: Proposed rule.
AGENCY:

EPA is proposing to grant,
under the Clean Air Act (CAA), a
redesignation request and approve a
State Implementation Plan (SIP)
revision request submitted by the state
of Ohio on June 3, 2011, and
supplemented on April 30, 2013. The
Ohio Environmental Protection Agency
(OEPA) has requested the redesignation
of the Columbus, Ohio (OH) area to
attainment of the 1997 annual fine
particulate (PM2.5) National Ambient

SUMMARY:

PO 00000

Frm 00022

Fmt 4702

Sfmt 4702

52733

Air Quality Standard (NAAQS or
standard). The Columbus, Ohio area
(Columbus area) includes Coshocton,
Delaware, Licking, Fairfield, and
Franklin Counties. EPA is proposing to
determine that the Columbus area has
attained the 1997 annual PM2.5 NAAQS
and to approve the state’s redesignation
request. EPA is proposing to approve
related Ohio SIP revisions, including
the state’s plan for maintaining
attainment of the 1997 annual PM2.5
NAAQS in the Columbus area through
2023, the state’s 2022 Nitrogen Oxides
(NOX) and PM2.5 Motor Vehicle
Emission Budgets (MVEBs) for the
Columbus area (which EPA is also
proposing to find adequate), and 2005
NOX, Sulfur Dioxide (SO2), and primary
PM2.5 and 2007 Volatile Organic
Compound (VOC) and ammonia
emission inventories for the Columbus
area. In the context of this proposal to
redesignate the Columbus area, EPA
addresses a number of additional issues,
including the effects of two decisions of
the United States Court of Appeals for
the District of Columbia (D.C. Circuit or
Court): The Court’s August 21, 2012,
decision to vacate and remand to EPA
the Cross-State Air Pollution Rule
(CSAPR); and the Court’s January 4,
2013, decision to remand to EPA two
final rules implementing the 1997
annual PM2.5 standard.
DATES: Comments must be received on
or before September 25, 2013.
ADDRESSES: Submit your comments,
identified by Docket ID No. EPA–R05–
OAR–2011–0597, by one of the
following methods:
• http://www.regulations.gov: Follow
the on-line instructions for submitting
comments.
• Email: [email protected].
• Fax: (312) 408–2279.
• Mail: Douglas Aburano, Chief,
Attainment Planning and Maintenance
Section (AR–18J), U.S. Environmental
Protection Agency, 77 West Jackson
Boulevard, Chicago, Illinois 60604.
• Hand Delivery: Douglas Aburano,
Attainment Planning and Maintenance
Section, Air Programs Branch (AR–18J),
U.S. Environmental Protection Agency,
77 West Jackson Boulevard, 18th Floor,
Chicago, Illinois 60604. Such deliveries
are only accepted during the Regional
Office’s normal hours of operation, and
special arrangements should be made
for deliveries of boxed information. The
Regional Office official hours of
business are Monday through Friday,
8:30 a.m. to 4:30 p.m., excluding
Federal holidays.
Instructions: Direct your comments to
Docket ID No. EPA–R05–OAR–2011–
0597. EPA’s policy is that all comments

E:\FR\FM\26AUP1.SGM

26AUP1