Recently, the IRS Chief Counsel’s office issued a memorandum addressing the deductibility of the Patient-Centered Outcomes Research Fees (“Fees”) as ordinary and necessary business expenses.  The memorandum explains that Code § 162(a) allows a deduction for all ordinary and necessary business expenses incurred in carrying out a trade or business. The memorandum concludes that the Fees are incurred in carrying on a trade or business and, therefore, are deductible under Code § 162(a).  While some fees and taxes imposed under health care reform are specifically made nondeductible under the Code, the memorandum points out that there is nothing in the ACA that specifically provides that the Patient-Centered Outcomes Research fees are nondeductible.

Remember, the deadline for the first Fee is July 31, 2013.  This Fee is for plan years ending between October 1 and December 31, 2012 and will be reported on the revised Form 720 (see prior post).