Specifically, Notice 2014-49 describes a proposed approach to the application of the look-back measurement method, which may be used to determine if an employee is a full-time employee for purposes of Section 4980H of the Internal Revenue Code (Code), in situations in which the measurement period applicable to an employee changes. The IRS explains that such a change may occur because the employee transfers within the same applicable large employer or within the same applicable large employer member from a position to which a different measurement period applies. It may also occur when an applicable large employer member modifies the measurement period applicable to a position.
The notice describes how to address these situations, in both the case in which the employee is in a stability period at the time of the transfer and the case in which the employee is not yet in a stability period at that time. In general, for an employee who has been employed for a full measurement period at the time of transfer, the employee retains his or her status through the end of the associated stability period. For an employee who is not in a stability period at the time of transfer, the employee’s status is determined using the measurement period applicable to the second position, but including hours of service in the first position in applying that measurement period.
The Treasury Department and the IRS invite comments on this proposed approach. However, taxpayers may rely on the approach proposed in this notice until further guidance is issued, and in any case through the end of the 2016 calendar year.