The health care reform legislation enacted in March requires employers to include the aggregate cost of applicable employer-sponsored health care coverage on employees’ W-2s for tax years starting on or after Jan. 1, 2011 (new IRC § 6051(a)(14)). The IRS decided that employers need additional time to make changes to their payroll systems and procedures to comply with this rule. Therefore, the notice says the reporting requirement will not be mandatory for W-2s issued for 2011 and employers will not be subject to penalties for failure to meet the requirements of section 6051(a)(14) for 2011 tax years.
Employers who choose to report 2011 health care coverage costs to their employees will do so in Box 12 using the code “DD.” The IRS anticipates issuing guidance on the reporting requirement before the end of the year.