Step-by-Step Guide to Completing Form 720 for PCORI Tax

As a healthcare provider or insurance company, you are required to pay the Patient-Centered Outcomes Research Institute (PCORI) tax. This tax is used to fund research that helps patients and caregivers make informed healthcare decisions. In order to pay this tax, you must complete and file Form 720.

Here is a step-by-step guide to completing Form 720 for PCORI tax:

Step 1: Determine if you are required to pay the PCORI tax

The PCORI tax applies to medical plans that are self-insured, as well as to health insurance issuers. If you are unsure whether you are required to pay this tax, consult with your tax advisor or accountant.

Step 2: Gather necessary information

To complete Form 720 for PCORI tax, you will need the following information:

• Taxpayer identification number (TIN)
• Business name and address
• Total number of lives covered under the policy or plan during the plan year
• Applicable dollar amount per covered life

Step 3: Complete Form 720

Form 720 is a quarterly excise tax return, but the PCORI tax is only due once a year. Be sure to select the correct quarter in which to file the PCORI tax. To complete the form:

• Enter your business information, including TIN and address.
• Check the box for PCORI under Other Taxes on Line 3
• Enter the total number of lives covered under the policy or plan during the plan year on Line 2.
• Calculate the applicable dollar amount per covered life for the year using the chart provided in the instructions. For plan years ending in 2020, the applicable dollar amount is $2.54.
• Multiply the number of lives by the applicable dollar amount and enter the total on Line 4.
• Complete any additional lines as necessary, such as making adjustments or credits for overpayment.
• Sign and date the form.

Step 4: File Form 720

Form 720 must be filed by the due date of July 31 of the year following the end of the plan year. For example, for a plan year ending in 2020, the PCORI tax return is due by July 31, 2021. Form 720 can be filed electronically through simple720.com or by mail. If you are filing electronically, refer to the instructions for the IRS e-file system. If you are filing by mail, send the completed form and payment to the address listed in the instructions.

Completing and filing Form 720 for PCORI tax can seem daunting, but by following this step-by-step guide, you can ensure that you are in compliance with the tax regulations. It is important to keep accurate records and consult with a tax advisor or accountant if you have any questions or concerns.