Reimbursement of COBRA subsidy when no payroll taxes

It is my understanding that plan sponsors will be reimbursed for the COBRA subsidy through a credit against quarterly payroll taxes.  With a multiemployer plan that uses a TPA, there are no payroll taxes against which to take a credit.  How does the plan gets reimbursed?  Do they need to fill out the tax form and just put 0 for the payroll taxes owed?

Don't have any precise answer, but this was one area where the statute specifically directed regulations. See Code Section 6432(g)(2) added by Section 9501(b) of the ARP.

Relatedly, I have seen some commentary suggesting that in a fully insured plan employers will still continue to pay COBRA premiums to the insurer for all AEIs, and that there is no statutory mechanism for the employer to offset or take credit for those premium payments because the insurer gets the payroll tax credit. My understanding was that the premiums for all AEIs would be treated as being paid (i.e., they pay nothing and the insurance company treats them as being fully paid), then the insurer claims the same amount under the new tax credit. Presumably the employer will provide the insurer a list of AEIs eligible for the subsidy.

In that case, why would the employer continue paying the premiums to the insurer for those AEIs? I feel like I must be missing something.

The statute sets up authority for the Secretary of the Treasury to use credits and adjustments beyond the OASDI-HI and other wage tax credits the statute sets up as the first go-to.

One must look for “[t]he Secretary [to] issue such regulations, or other guidance, forms, instructions, and publications, as may be necessary or appropriate to carry out [the continuation subsidy].”

Won’t the news be all over the web about an hour after the IRS’s release?

True, but we've been in limbo for quite a while now.  It's becoming increasingly difficult to advise clients to wait for the impending IRS guidance when it was expected so long ago.

Yes, it's frustrating; but until the IRS says something, what other advice could one render?

Thanks for your comments - I just wanted to make sure I wasn't missing anything!   I guess we'll just have to wait.

There are a number of areas (e.g., definition of involuntary termination) where we're being forced to rely on best judgment interpretations and prior 2009 ARRA guidance at this point.  Most of the COBRA TPAs have set a deadline that's already passed or is about up on getting out the model notices of the extended election periods for those who qualify. 

But I agree in this situation there is really nothing to do but wait considering how unclear he issue is.

IRS just issued Notice 2021-31 (41 pages, 86 Q&As) -- which does address this question (Q&A 77, page 36):

https://www.irs.gov/pub/irs-drop/n-21-31.pdf