Author Topic: Finding the letter of the law on HSA distributions  (Read 308 times)

not_a_trex

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Finding the letter of the law on HSA distributions
« on: February 10, 2018, 06:43:45 AM »
My 1099-SA listed fees for account maintenance as normal distributions and these fees are showing up in my tax forms not only as taxable distributions, but distributions that I need to pay a 20% penalty on. According to page 9 on IRS publication 969, account maintenance fees should not be listed as distributions. I've brought this up with my HSA administrator and, while I get a lot of puzzled responses back in the face of the publication, they are hesitant to update my tax form because publications aren't the letter of the law.

So, my question is, where can I find the rules that publication 969 comes from? Is there a readily available source that I can look up and bring to my administrator?


not_a_trex

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Re: Finding the letter of the law on HSA distributions
« Reply #2 on: February 10, 2018, 10:01:05 PM »
Thanks for searching, MDM. For future reference, how did you find these?

At the top of both pages, it says they are to be used as guidelines and not as actual rulings. Is there something deeper that these guidelines stem from?

MDM

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Re: Finding the letter of the law on HSA distributions
« Reply #3 on: February 10, 2018, 10:34:41 PM »
Thanks for searching, MDM. For future reference, how did you find these?

At the top of both pages, it says they are to be used as guidelines and not as actual rulings. Is there something deeper that these guidelines stem from?
HSA administration and maintenance fees irs revenue ruling - Google Search

Typically once Congress passes a law, the Internal Revenue Service (IRS) issues Regulations which offer an interpretation of the statute.

In other words, Congress typically doesn't consider all possible situations when writing a law, and agencies (e.g., the IRS) have to resolve ambiguous items.  If someone thinks an agency has overstepped its bounds and/or misinterpreted a statute, a court may need to decide.  In this case, I don't foresee anyone suing the IRS to have HSA fees declared as distributions. ;)

At this point, the onus is on your HSA administrator to find something in the US Code that contradicts Pub. 969 and the IRS Revenue Bulletins cited.  Otherwise you can report them to the IRS for not following the regulations.

See Tax Code, Regulations and Official Guidance | Internal Revenue Service for more.  Good luck!