The Internal Revenue Service has issued final regulations on the tax credit available to certain small employers that offer health insurance coverage to their employees under the Affordable Care Act.

As under the original law, the final regulations in TD 9672 define an eligible small employer as an employer that has no more than 25 full-time equivalent employees, or FTEs, for the taxable year, whose employees have average annual wages of no more than $50,000 per FTE (as adjusted for inflation for years after 2013), and that has a qualifying arrangement in effect that requires the employer to pay a uniform percentage of not less than 50 percent of the premium cost of a qualified health plan offered by the employer to its employees through a Small Business Health Options Program, or SHOP, Exchange. Consistent with the proposed regulations, the final regulations further provide that employees (determined under the common law standard) who perform services for the employer during the taxable year generally are taken into account in determining FTEs and average annual wages.

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