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Tax Avoidance Schemes
Absent an exception, all benefits provided by employers to their employees must be included in taxable income. Fortunately, the Internal Revenue Code (IRC) provides several exceptions that allow health benefits to be provided on a tax-free basis. However, the rules surrounding these benefits can be complicated and in recent years have been exploited to market to employers tax-savings programs. These programs promise attractive tax savings but leverage impermissible methods to deliver them, presenting a significant risk to employers who buy in.