Tax executives are getting up to speed on the tax implications of healthcare reform, including a subtle but significant new provision that has little to do with healthcare directly.
The provision is Section 1409 of the Health Care and Education Affordability Reconciliation Act. Essentially, it takes a concept developed and applied sporadically in case law—the “economic substance doctrine,” which says transactions must have a business purpose beyond simply getting a tax benefit to pass regulatory scrutiny—and makes it a permanent feature of the Internal Revenue Code. Congress included Section 1409 as a way to raise revenue for expanded healthcare services.
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