ACA Penalty Relief Consultation
This post is for Applicable Large Employers (ALEs) required to comply with the Affordable Care Act. We hope you find it useful.
The following is sourced from The ACA Times about ACA penalty notices:
“Another round of Affordable Care Act penalty notices can be expected soon.
IRS staff indicates it is preparing another round of Letter 226J penalty notices to be issued to employers the tax agency believes has failed to comply with the ACA in the 2016 tax year.
And get ready for penalty notices for the 2017 tax year. IRS staff is now gathering the information to start issuing ACA penalty notices for the 2017 tax year.
Those Letter 226J penalty notices for 2017 are expected to arrive sometime in the fourth quarter of 2019.
The latest round of IRS letter 226J penalty notices for the 2016 tax year are being issued to employers the agency refers to as Applicable Larger Employers (ALEs) as part of the effort to enforce the ACA’s Employer Mandate.
Under the ACA’s Employer Mandate, ALEs, employers with 50 or more full-time employees and full-time equivalent employees, are required to offer Minimum Essential Coverage (MEC) to at least 95% of their full-time workforce (and their dependents) whereby such coverage meets Minimum Value (MV) and is Affordable for the employee or be subject to IRC Section 4980H penalties.
1094-C & 1095-C
The IRS has also been issuing ACA penalties to ALEs that failed to file forms 1094-C and 1095-C with the IRS or furnish 1095-C forms to employees under IRC Sections 6721/6722 for the 2015 and 2016 tax years.
These notices focus on the failure to distribute 1095-C forms to employees and to file 1094-C and 1095-C forms with the federal tax agency by required deadlines.
These penalties are in addition to penalties for not offering the required healthcare coverage under IRC Section 4980H.
The IRC Sections 6721/6722 penalty assessment process is the follow-up to information (or lack thereof) employers provided to IRS Letter 5699, which essentially states that the IRS believes that a particular organization was an ALE and failed to file ACA information returns as required by the ACA.
The Letter 5699 notice asks the employer to (1) confirm that the employer was an ALE for the reporting year, and if so, either (a) confirm that the returns were already submitted, along with the name and Employer Identification Number (EIN) used to submit the returns and date of submission, (b) provide the returns as part of the response to the Letter 5699 or (c) the name and EIN intended to be used when submitting the returns and the anticipated date of such submission, or (2) deny that the employer is an ALE with an explanation.
The Letter 5699 also provides for an “Other” response to explain late filings or late filings of more than 90 days to respond to the Letter 5699.
Failure to timely respond to Letter 5699 may result in the penalty assessment being issued in Letter 5005-A/Form 886-A.
Despite legal challenges and other chatter in Washington, D.C., it’s clear that the IRS is continuing with its ACA enforcement efforts, with some of the penalty assessments being in the tens of millions of dollars.”
Passport Software’s ACA Reporting Services include consultation services for penalty notices, and has helped many clients completely avoid, or greatly reduce, penalties.
Call 800-969-7900 – Or Contact Us to see how we can help.