With the deadline to electronically file ACA information returns with the IRS fast approaching, employers are reminded that failure to comply with the law's information reporting requirements may result in significant penalties.
What Employers Need to Know
- Self-insured employers, applicable large employers, and health coverage providers are reminded that there is a June 30 deadline to electronically file information returns with the IRS.
- The deadline to provide information returns to employees or responsible individuals was March 31.
- If you file 250 or more Forms 1095-B or Forms 1095-C, you must electronically file them with the IRS.
- Electronically filing ACA information returns requires an application process separate from other electronic filing systems.
- Applicable large employers that provide employer-sponsored self-insured health coverage to non-employees may use either Forms 1095-B or Form 1095-C to report coverage for those individuals and other family members.
- Finally, it is important to remember that these deadlines only apply to coverage reporting for 2015.
Reporting Penalties
Reporting entities that fail to comply with the ACA information reporting requirements may be subject to the general reporting penalty provisions under the Internal Revenue Code, as follows:
- Employers that fail to file correct information returns with the IRS and furnish correct payee statements are generally subject to a $260 penalty for each return for which such failure occurs, with a maximum annual penalty of over $3 million.
- Employers that file correct returns and furnish correct statements on or before 30 days after the required filing date are generally subject to a $50 penalty for each return for which such failure occurs, with a maximum annual penalty of over $500,000.
- Employers that file correct returns and furnish correct statements beyond 30 days after the required filing date but on or before August 1, 2016 are generally subject to a $100 penalty for each return for which such failure occurs, with a maximum annual penalty of over $1 million.
Lower maximum annual penalties are applicable to employers with average annual gross receipts for the most recent three taxable years of $5,000,000 or less. Special rules apply that increase the per-statement and total penalties if there is intentional disregard of the reporting requirements.
Penalty Relief
Generally, the IRS will not impose penalties for 2015 returns and statements filed and furnished in 2016 on reporting entities that can show that they have made good faith efforts to comply with the information reporting requirements. Reporting entities that fail to timely meet the requirements still may be eligible for penalty relief if the IRS determines that the standards for reasonable cause are satisfied.