Pay or Play Rules: IRS Proposes Approach for Measurement Period Changes

On Sept. 18, 2014, the Internal Revenue Service (IRS) issued Notice 2014-49, which describes a proposed approach for applying the look-back measurement method if the measurement period for a particular employee changes. This notice addresses measurement period changes resulting from the following situations:

  • An employee transfers from one position to another within the same Applicable Large Employer ALE (or ALE member), where a different measurement period is used for each position; or
  • The ALE changes the measurement period applicable to a category of employees.

ALEs may use different measurement methods (either the look-back measurement method or the monthly measurement method), or may use measurement periods that differ in length or start on a different date, for the following specified categories of employees:

  • Collectively bargained and non-collectively bargained employees;
  • Each group of collectively bargained employees covered by a separate collective bargaining agreement;
  • Salaried and hourly employees; and
  • Employees whose primary places of employment are in different states.

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