H&W: COBRA Coverage Audit

COBRA Coverage Audit: The IRS seems to be stepping up its efforts to ensure that employers comply with COBRA continuation coverage rules — most recently by updating its standards for COBRA audits, which may require employers to provide at least 15 pieces of information to prove they complied with the law.

The COBRA statute has long provided for excise tax sanctions that the IRS can assess against noncomplying employers, plans, insurers and third-party administrators. However, such sanctions were rarely, if ever, imposed, primarily because no enforcement structure was in place to do so. But in 2010, the IRS indicated that entities failing to comply with COBRA are to self-report excise tax sanctions on Form 8928, Return of Certain Excise Taxes Under Chapter 43 of the Internal Revenue Code.

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