As the shutdown reaches day 11, it may have crossed some employers’ and benefit advisers’ minds that the Internal Revenue Service and U.S. Departments of Treasury and Labor are seemingly absent. While the government may be closed for as long as six weeks with the deal that Speaker of the House John Boehner (R-Ohio) laid out Thursday, there could be some significant implications for employee benefits professionals, whether the shutdown is long or short.
As Bill Sweetnam, principal at Washington-based Groom Law Group, notes, “during the shutdown, you’re not going to see any guidance come out from the IRS or Treasury, … which is frustrating to employers and plan sponsors because they want to know what they have to do.” He adds: “The fact that we have a shutdown doesn’t postpone an effective date.”
Garrett Fenton, a lawyer at Miller & Chevalier, also in D.C., says there could be an increase in guidance once the shutdown finally ends, but in the meantime acknowledges that employers may be wondering how to comply with certain rules while waiting for final regulations.
“When we have proposed regulations, without final regulations typically the agencies will allow you to rely on those proposed regulations in good faith,” he says. “Short of any other guidance coming out in the meantime, that’s typically what we recommend. … It’s not an ideal situation when you don’t have final guidance before the effective date, but that does happen relatively frequently, especially in the Affordable Care Act context.”
The ACA is another area of potential impact for employers. “If this shutdown became protracted and government was really in a true state of paralysis, I think there’d be concern about whether certain regulations that need to be issued would be issued in connection to the [Affordable Care] Act,” says Steven Friedman of the law firm Littler Mendelson P.C.
What would happen, says Paul M. Hamburger of Proskauer Rose LLP, is that the ACA guidance quality and format might be compromised. “When the shutdown is over, if there is a short window of opportunity to get [ACA] guidance worked through the system, we might end up with more FAQ-type guidance, which is not the preferred way … they may have to rely more on quicker guidance like that to give people some help in dealing with rules,” he says.
Bob Christenson, partner at Fisher & Phillips LLP, told EBA and EBN earlier this week that he suspects that with fewer personnel at the Internal Revenue Service, the voluntary compliance program “that a lot of qualified programs use to correct errors” will probably be down. “They’re not going to advertise that they don’t have the usual personnel,” he says. And that also goes for IRS and DOL audits and Employee Benefits Securities Administration investigations as well.
EBA placed a call Tuesday to the U.S. Department of Labor hotline, which is not being answered due to furloughs at the organization. The message does provide options for those calling about mental health and/or life-threatening workplace issues.
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