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Novel IRS Guidance on HRAs, VEBAs and Domestic Partner Benefits (PDF)
Katten Muchin Rosenman LLP Link to more items from this source
[Guidance Overview]
Mar. 3, 2014
"[An IRS private letter ruling to be published later this year] addresses the technical tax and benefit issues that arise when a Health Reimbursement Arrangement (HRA) (funded through a Voluntary Employees' Beneficiary Association (VEBA)) provides coverage to a domestic partner who does not qualify as a dependent under the Internal Revenue Code.... [1] The federal and state income and employment taxes reportable to the employee as a result of the coverage may be paid from the participant's individual HRA account.... [2] The VEBA will not lose its qualified tax-exempt status [provided certain requirements are met] ... [3] The VEBA is considered the 'employer' and is thereby obligated to conduct the tax withholding and reporting ... [4] The fair market value of the coverage provided to a non-dependent domestic partner is includible in the employee- participant's gross income, and is considered wages for FICA, FUTA and income tax withholding purposes."

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