The IRS issued proposed regulations on Friday that provide guidance on the tax credit available to certain small employers that offer health insurance coverage to their employees under Code Section 45R, enacted by the Patient Protection and Affordable Care Act.

Section 45R offers a tax credit to certain small employers that provide insured health coverage to their employees. The regs define an eligible small employer as an employer with no more than 25 full-time employees for the taxable year, whose employees have average annual wages of less than $50,000 per FTE (as adjusted for inflation for years after Dec. 31, 2013), and that has a qualifying arrangement in effect that requires the employer to pay a uniform percentage (not less than 50 percent) of the premium cost of a qualified health plan offered by the employer through a Small Business Health Options Program, or SHOP, Exchange.

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