The IRS has issued instructions for Forms 1094-C and 1095-C for the 2025 tax year. There were no changes to the 1095-C/1094-C form or the electronic transmission files, but there are several updates for 2026 ACA reporting.

According to the IRS, “Employers no longer have to automatically send Form 1095-C to individuals. The requirement for furnishing the statement is met if the employer responsible for providing the statements provides clear, conspicuous, and accessible notice on its website that an individual may request a copy of their statement and the copy is timely furnished. For this purpose, the statement is timely furnished if provided to the individual no later than the later of January 31, 2026, or 30 days after the date of the request.”

However, if an employee lives/moves to a state with its own requirements, you could be out of compliance, so it’s important to check state furnishing mandates.

Filing deadlines remain the same: The paper filing deadline is Feb. 28, 2026, and the electronic filing deadline is March 31, 2026.

Employers filing 10+ returns must file electronically, and companies unable to e-file may submit Form 8508 to request a waiver. The e-filing threshold for 2025 tax year returns is 10+ information returns (including W-2s and 1099s).

2025 Tax Year Penalty Amounts

Employers can face penalties for failing to file correct information returns with the IRS or furnish correct statements to employees by the 2026 deadlines:

• Failing to file a correct information return with the IRS incurs a penalty of $340 per return (up to an annual maximum of $4,098,500).
• Failing to furnish a correct statement to employees also results in a $340 penalty per statement (up to an annual maximum of $4,098,500).
• If the failure is due to intentional disregard, the penalty is $680 per return or statement (with no annual limit) or 10% of the aggregate amount of the items required to be reported, whichever is greater.

Penalties for late filing with the IRS vary depending on how quickly the return is corrected:

• $60 per return/statement if corrected within 30 days.
• $130 per return/statement if corrected after 30 days but before August 1.
• $340 per return/statement if corrected on or after August 1 or not filed at all.

Employer Shared Responsibility (ESR) Penalties

Applicable Large Employers (ALEs) may also face penalties under Section 4980H if they do not meet the requirements of the “play or pay” mandate:

• Section 4980H(a) Penalty: Applies if an ALE fails to offer minimum essential coverage to at least 95% of full-time employees and their dependents and at least one employee receives a premium tax credit. The annualized penalty for 2025 is $2,900 per full-time employee (excluding the first 30).
• Section 4980H(b) Penalty: Applies if an ALE offers coverage that is unaffordable or does not provide minimum value, and an employee receives a premium tax credit. The annualized penalty for 2025 is $4,350 per full-time employee who receives a premium tax credit. Coverage is considered unaffordable if the employee contribution for self-only coverage exceeds 9.02% of their household income.

Passport Software

Managing Affordable Care Act compliance can be burdensome, and increased complexity of data management can heighten the risk of penalties.

Year-round data management and reporting can be streamlined with comprehensive ACA software or by outsourcing the entire process.

By outsourcing ACA compliance management, you turn over the time-consuming data management and filing to a trusted professional. Our ACA Full Service option is the easiest, as we take care of the entire process for you, including filing.

Here are several reasons to consider our cost-effective ACA software and services:

• Year-round compliance management as opposed to a filing-only solution
• Ease and improved accuracy compared to managing data with a spreadsheet
• Outstanding ACA support and customer service

Passport Software’s affordable IRS-certified ACA Software facilitates year-round tracking and filing. We are IRS-approved for optional proxy filing on behalf of our customers. Here’s a helpful video about our easy-to-use Affordable Care Act compliance software: From Spreadsheet to Ready to File in 10 Minutes.

We also offer penalty response consultation services and have helped many ALEs avoid or drastically reduce penalties.

To learn more about how our ACA software and services can ease the burden of compliance, call 800-969-7900. Or, contact us – we are here to help.