IRS Sees Rise in Wellness Plan Double-Dipping Tax Strategies

An IRS official said the agency is seeing an uptick in a “double-dipping” tax avoidance strategy with some employer wellness plans.

Some health benefit-based programs are promising big payroll tax savings, where employers reimburse workers for a portion of their pretax contributions. The IRS doesn’t allow these types of arrangements.

“We have a seen a return of the double-dip scheme as a way to avoid employment taxes,” said Kevin Knopf, a senior technician reviewer at the IRS Office of Chief Counsel.

It’s an arrangement the IRS has been dealing with for decades. The agency in 2002 released a revenue ...