TAX BILLS COMING OVER ACA ISSUES

Two forms of tax bills may be coming to employers this year concerning the ACA.  First, certain reporting requirements are required of employers who average 50 or more full-time employees.  Such employers who did not file Forms 1094-C and 1095-C in a timely manner will be subject to penalties of as much as $250 for each untimely disclosure to an employee and each filing with the IRS.  The IRS may reduce the penalty under certain circumstances and also has the discretion to abate any penalty if the employer shows reasonable cause.  Even some employers who timely filed may receive penalties based upon the information provided to the IRS being incomplete or incorrect.

Some employers are also getting estimates from the IRS of penalties they owe for not providing health coverage to employees in 2015.  2015 was the first-year employers had to report to the IRS about coverage under the ACA.  In 2015, employers with at least 100 full-time employees were required to offer affordable minimum essential coverage to at least 70% of full-time employees.  If that didn’t happen, employers could face a penalty of $2,080 for every full-time employee.

After receiving a letter, employers should check their records to see if the employees in question are actually full-time employees and also to make sure that the codes reported to the IRS in the forms were accurate.  Employers who discover errors need to tell the IRS about the problems they had and get the penalties corrected.