Ezel / IRS Rulings / 1205008
Chief Counsel Advice 1205008 Released February 3, 2012 Advice

CCA 1205008: Counsel recommends correcting wage-withholding authorities for health insurance payments

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This page covers one taxpayer's ruling from 2012, which can't be cited as precedent. Ask about your situation and see what the current Code and IRS guidance say, with citations.

Currency note: this determination was released in 2012
Statutory amendments, regulation changes, court decisions, or later IRS guidance may have changed the analysis since then. Treat this page as historical context, not current tax advice. Verify current law before relying on any specific rule, threshold, or position mentioned here.
Not precedent. Under 26 U.S.C. § 6110(k)(3), this written determination may not be used or cited as precedent. It resolved one taxpayer's situation on its specific facts, and identifying details were redacted by the IRS before release. The official IRS release (linked on this page as a PDF) is the authoritative source.
About this page: The plain-English summary and ruling snapshot below were written by Ezel based on the official IRS release. The full text is the IRS's own document.
View official IRS release (PDF)

Plain-English summary

The Office of Chief Counsel reviewed a draft congressional response concerning wage withholding. Counsel recommended removing a citation to IRC § 3401(a)(21), because that provision excepts payments to Archer MSAs and does not address general accident and health insurance. Counsel instead recommended citing Rev. Rul. 56-632, 1956-2 C.B. 101, for the proposition that accident and health insurance is not subject to income tax withholding. A separate reviewer was asked to consider the draft’s paragraph on capital-gains treatment.

Ruling snapshot

  • Question: Which authorities should support the treatment of accident and health insurance payments for income tax withholding purposes?
  • Outcome: advice given
  • Key authorities: IRC §§ 3401(a)(21) and 106; Rev. Rul. 56-632, 1956-2 C.B. 101.

Full text (IRS public release)

ID: CCA_2012011109392732 Number: 201205008
Release Date: 2/3/2012
Office: -------------
UILC: 3401.01-00

From: --------------------
Sent: Wednesday, January 11, 2012 9:39:36 AM
To: ---------------
Cc: ----------------------------------------------------
Subject: RE: Congressional Response for Counsel Review

Thanks -----. The letter looks pretty good to me, but there are a couple of things I noticed. First of all, shouldn't it be ----------------------------------?

Also I think the citation to section 3401(a)(21) should be taken out since it only excepts payments to Archer MSAs only (amounts excepted under section 106(b)). The exception from wages for income tax withholding purposes for general accident and health insurance is not in the Code. We usually cite Rev. Rul. 56-632. 1956-2 C.B. 101 for the proposition that accident and health insurance is not subject to income tax withholding, so I recommend citing that instead of section 3401(a)(21).

I've asked -------------------------from -------to take a look at that paragraph at the end on capital gains treatment, because that is not in my jurisdiction. I'll pass on any comments ------- has as soon as I receive them.

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