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Not many exempt organizations claimed the Small Employer Health Insurance Tax Credit in 2010, though the IRS hopes that steps the agency implemented will bolster those numbers.
A recent Government Accounting Office report showed that only 170,000 small employers, including nonprofits, claimed the credit in 2010, though upward to 4 million were eligible. Reasons cited in the report are these small groups don't offer health coverage; some of the rules are complex; and the length of time to calculate the cost is too long.
The IRS accepted the GAO's recommendations to improve participation by improving instructions to examiners, and analyzing results from examinations of credit claimants and use those results to identify and address any errors through alternative approaches.
Also, the Treasury Department said it is taking steps to boost awareness of this credit as well as others included the Affordable Care Act.
According to ASAE, the credit targets small businesses and tax-exempt organizations with 25 or fewer employees offer health insurance coverage. Qualifying groups must have employees that earn an average wage of less than $50,000 a year and pay at least half of employee health insurance premiums. For tax years 2010 to 2013, the maximum credit for eligible small business employers is 35 percent of premiums paid and for eligible tax-exempt employers, the maximum credit is 25 percent of premiums paid. Beginning in 2014, the maximum credit will go up to 50 percent of qualifying premiums paid by eligible small business employers and 35 percent of premiums paid by eligible tax-exempt organizations. Details: www.asaecenter.org.