On Nov. 30, 2012, the Internal Revenue Service (IRS) released proposed regulations on the Additional Hospital Insurance Tax, also known as the Additional Medicare Tax. Under the Affordable Care Act (ACA), effective Jan. 1, 2013, employers must withhold an additional tax of 0.9 percent on wages in excess of $200,000 that any of their employees receive in a calendar year.

The proposed regulations provide guidance for both employers and employees on the Additional Medicare Tax, including regulations relating to:

* Withholding and computation of the Additional Medicare Tax;

* The employer process for making adjustments of underpayments and overpayments of the Additional Medicare Tax; and

* The employer and employee processes for filing a claim for a refund of overpayment.

Although the regulations are not effective until final regulations have been published, the Additional Medicare Tax applies to all wages, compensation and self-employment income received in tax years beginning after Dec. 31, 2012. Taxpayers may rely on the proposed regulations until the final regulations are effective.