Beware – 110 Percent Penalty For Anyone Who Continues to Receive COBRA Subsidy After Becoming Eligible For Alternate Coverage.
[Stacie says: This reminder, issued by the IRS is a must read for anyone who has received a COBRA health insurance subsidy due to involuntary termination from a prior job. As indicated below, the American Recovery and Reinvestment Act of 2009 provided this 65 percent subsidy of COBRA health insurance premiums. ]
The IRS Say:
Individuals who have qualified and received the 65 percent subsidy for COBRA health insurance, due to involuntary termination from a prior job, should notify their former employer if they become eligible for other group health coverage.
The American Recovery and Reinvestment Act of 2009 provides a subsidy of 65 percent of the COBRA health insurance premium for employees who are involuntarily terminated from September 30, 2008, to December 31, 2009. The subsidy requires only 35 percent of the premium to be paid for COBRA coverage for individuals, and their families, who have involuntarily lost their job and do not have coverage available elsewhere.
The IRS announced the subsidy in a February 26, 2009, information release, IR-2009-15.
If an individual becomes eligible for other group health coverage, they should notify their plan in writing that they are no longer eligible for the COBRA subsidy. The notice that the United States Department of Labor sent to the individual advising them of their right to subsidized COBRA continuation payments includes the form individuals should use to notify the plan that they are eligible for other group health plan coverage or Medicare.
If an individual continues to receive the subsidy after they are eligible for other group health coverage, such as coverage from a new job or Medicare eligibility, the individual may be subject to the new IRC § 6720C penalty of 110 percent of the subsidy provided after they became eligible for the new coverage.
Taxpayers who fail to notify their plan that they are no longer eligible for the COBRA subsidy may wish to self-report that they are subject to the penalty by calling the IRS toll-free at 800-829-1040. In addition, taxpayers will need to notify their plan that they are no longer eligible for the COBRA premium subsidy.
Anyone who suspects that someone may be receiving the subsidy after they become eligible for group coverage or Medicare may report this to the IRS by completing Form 3949-A, Information Referral (PDF).
From The Stupid Preparer Files – Rerun of Former IRS Secretary Files Fraudulent Returns for Taxpayers
Here is another one for the “Stupid Preparer” files.
What do you really know about your tax return preparer?
If you hired Debra Windham of Chicago a former secretary with the IRS Criminal Investigative Division, your tax return might have been involved in a tax fraud scheme that resulted in a loss to the government of approximately $850,000. The government has filed suit seeking a permanent injunction against Ms. Wildham.
According to the complaint, Ms. Windham allegedly prepared tax returns for clients claiming bogus deductions and then applied for refund anticipation loans in her client’s name without their consent. In addition, as part of her scheme, she allegedly prepared two sets of returns, one she presented to her client and another return claiming the fraudulent deductions that she filed with the IRS. Ms. Windham then pocketed the additional refunds claimed on the returns.
