small employer
(4) Small employer (A) In general The term “small employer” means, with respect to any calendar year, any employer if such employer employed an average of 50 or fewer employees on business days during either of the 2 preceding calendar years. For purposes of the preceding sentence, a preceding calendar year may be taken into account only if the employer was in existence throughout such year. (B) Employers not in existence in preceding year In the case of an employer which was not in existence throughout the 1st preceding calendar year, the determination under subparagraph (A) shall be based on the average number of employees that it is reasonably expected such employer will employ on business days in the current calendar year. (C) Certain growing employers retain treatment as small employer The term “small employer” includes, with respect to any calendar year, any employer if— (i) such employer met the requirement of subparagraph (A) (determined without regard to subparagraph (B)) for any preceding calendar year after 1996, (ii) any amount was contributed to the Archer MSA of any employee of such employer with respect to coverage of such employee under a high deductible health plan of such employer during such preceding calendar year and such amount was excludable from gross income under section 106(b) or allowable as a deduction under this section, and (iii) such employer employed an average of 200 or fewer employees on business days during each preceding calendar year after 1996. (D) Special rules (i) Controlled groups For purposes of this paragraph, all persons treated as a single employer under subsection (b), (c), (m), or (o) of section 414 shall be treated as 1 employer. (ii) Predecessors Any reference in this paragraph to an employer shall include a reference to any predecessor of such employer.