The feds are looking for help catching terminated employees who are no longer eligible for the COBRA subsidy, but still receiving it. Problem is, many of the informants will have to snitch on themselves.
In three new Q&As recently posted to its Web site , IRS says former employees who fail to notify their plans that they’re no longer eligible for the subsidy should “self-report” that they’re subject to the infamous Section 6720C penalty. To blow the whistle on themselves, terminated employees can call the agency at 800-829-1040.
They’ll certainly pay for their “crime”: The penalty is equal to 110% of the subsidy provided on the individual’s behalf after he or she became eligible for the other coverage (e.g., the person got a new job) or Medicare.
In addition, employees should also immediately notify their health plans – in writing – that they’re no longer eligible for the subsidy, and begin paying the full tab for COBRA coverage. Employers can help them along by providing the last page of DOL’s model notice (www.dol.gov/cobra), which includes a form to notify a plan that a terminated employee’s no longer eligible for the subsidy.
Everyone can play cops & robbers
Even those who aren’t receiving a COBRA subsidy can still play informant. Anyone who suspects someone may be improperly receiving the subsidy can blow the whistle by completing Form 3949A and sending it to IRS.
For those who are really into it, IRS posted informant procedures in “How Do You Report Suspected Tax Fraud Activity?”
