When Congress passed the Trade Preferences Extension Act of 2015 this summer, it rewrote the rules of U.S. trade policy in ways that ranged from defining the kinds of trade deals the President can negotiate to extending and revising economic benefits and opportunities to sub-Saharan Africa. The law also included a tiny provision that had little to do with international trade and had everything to do with employers who offer healthcare benefits.
It raised penalties for IRS filing errors for Affordable Care Act (ACA) returns that must be filed starting in Q1 of 2016.
To be fair, the section of the law we’re talking about increased the penalties for non-compliance with all IRS submissions, from W-2s to 1099s. The changes affect nearly every disconnect in IRS submissions, from not providing corrected returns in a timely manner to intentionally disregarding the mandated submission, according to the Journal of Accountancy. That includes the new ACA-mandated form 1095-C for employees and Form 1094-C to the IRS.
“If you look at the title of the bill, it wouldn’t tip you off at all that there was this provision in there regarding information reporting penalties,” Michael Chittenden, a senior associate at the law firm of Miller & Chevalier, told CFO.com. According to Chittenden, the provision was included to provide revenue for offsetting costs incurred by other aspects of the trade law.
For the mandated ACA submissions, there is now no cap on the $500 penalty per required return. An ACA return – specifically, IRS Form 1095-C for employees – is required for:
And there’s no grace period for not filing. The payroll processing firm Data Integrity put it this way:
The only grace period the law allows is for calendar year 2015 — and that’s allowed only if you have made a “good faith effort” to comply: you submit the mandated forms but have filing errors. This relief can spare you the $250-per-required-return penalty.
The best way to ensure you comply with the ACA and avoid IRS fines and penalties is to understand what’s expected from companies with 50 or more employees and work with a partner that has the insight and technology to ensure compliance. That includes being able to:
For more information, download our e-book “ACA Danger Zone: Can You Assure the C-suite You’re in Compliance?” or check out our ACA Compliance SuiteSM. It’s flexible ACA compliance software that lets you choose the pieces you need to help you maintain compliance now and into the future.