The IRS has begun auditing employers for Affordable Care Act penalties. A mass mailing of IRS letters signaled the start of the audit process, and the IRS is expected to collect as much as thirty-one billion dollars in ACA penalties. These letters and penalties are in reference to tax year 2015.
The notices were triggered by an IRS review of records that showed employers having more than 50 full-time employees or full-time equivalents, but failing to file 1094-C and 1095-C forms. ACA filings are mandatory for employers of that size, also known as Applicable Large Employers (ALEs). If an employer receives one of these letters, they are required to respond within 30 days by checking a box.
Below are the four responses allowed for by the IRS:
1. Confirm that you were an ALE in 2015 and already filed the requisite forms.
2. Confirm that you were an ALE in 2015 but did not file the requisite forms, including the forms for filing in your response.
3. Confirm that you were an ALE in 2015 but did not file the requisite forms, indicating that you will file them within 90 days of the letter unless otherwise noted.
4. Confirm that you weren’t an ALE in 2015.
If you receive one of these letters, the easiest way to minimize and potentially avoid a penalty is to respond within thirty days. If you have questions, you can and should contact the IRS immediately. Penalties can range from $50 to $520 per missing form.
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Disclaimer: Clarity Benefit Solutions, LLC does not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.