The Affordable Care Act (ACA) places many requirements on employers nationwide, but Applicable Large Employers (ALEs) have unique health coverage and information reporting requirements that could result in additional non-compliance penalties. An employer is considered an ALE if they had at least 50 full time equivalent employees in the previous calendar year. In addition to providing health coverage that is affordable and provides minimum value, the ACA requires ALEs to file information returns and furnish Form 1095-C to its employees. Because of these extra requirements, it can be easy for any ALE to fall out of compliance and face astronomical fines.
Time is Running Out for 2019: Deadlines and Fines
For 2019 ACA reporting, ALEs are required to furnish Form 1095-C to its current and past employees by January 31st, 2020. ALEs must then file Forms 1094-C and 1095-C to the IRS by February 28th, 2020 if filing with paper or March 31st, 2020 if filing electronically. Electronic filing is required for companies with 250 or more filings. Both failure-to-furnish and failure-to-file (or late filing) each have penalties of $270 per return, and penalty amounts double if non-compliance is ruled to be intentional. For example, an ALE who fails to file or distribute information returns for its 150 employees would be liable for a $81,000 penalty assessment. If the IRS deems the ALE’s non-compliance as intentional, that amount doubles to $162,000!
What is the IRS Letter 226J?
The IRS will send a Letter 226J to ALEs who fail to satisfy the employer mandate responsibilities of the ACA for each 6055/6056 reporting year since 2015. This letter provides an assessment of the ALE’s non-compliance and proposed penalty amount. While it’s not ideal to receive a Letter 226J, it isn’t a final judgement. ALEs have the chance to respond to the letter and attempt to clear things up or make things right. This is why filing on time is essential for ALEs to minimize their risk for ACA fines. The IRS may be more lenient on inaccurate or incorrect ACA reporting if an ALE made an honest attempt to file accurately and did so on time.
Need Help with Your 2019 ACA Filing?
Employers looking to reduce their compliance risk should look no further than BASIC’s ACA Elevate. Our ACA compliance service offers peace of mind with access to dedicated compliance experts for each client, file ready form 1095 generation, automatic e-Filing to the IRS, plus optional ACA corrections transmittal and mailing form 1095-Cs directly to employees for ease of distribution. BASIC can handle preparation of Forms 1094-C and 1095-C with e-Filing for employers of all sizes and complexity– we’ve furnished over 1,000,000 1095-C Forms since 2015! The online ACA portal provides a variety of training videos and materials employers can access at any time. Received a Letter 226J from the IRS? BASIC can help with that too! Don’t risk being non-compliant. Request an ACA Elevate proposal today!
Please Note: Secure your spot as a 2019 ACA Elevate client now. Sign-ups after Nov. 30th will receive a 30% surcharge in rates due to the impending 2019 reporting deadlines.