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IRS Assessing Substantial ACA Reporting Penalties to Large Employers – Including Government Entities

By: Hope Pendergrass, CPA, and Charlotte Way, JD, LLM, CPA

The Affordable Care Act (ACA) requires employers, including governments, with fifty or more employees, to provide health insurance and report coverage on IRS Forms 1094-C and 1095-C. The IRS is actively assessing penalties on large employers covered by the ACA.

The penalties assessed for failing to file or failing to furnish correct ACA information returns are significant. For 2022, the penalty for failure to file an information return with the IRS is $280 per return, and the penalty for failure to furnish a correct information return to employees is also $280 per return, for a total of $560 per employee.  For example, an employer who failed to timely file and furnish correct information returns for 500 employees would be penalized $280,000.

In addition, for 2022, an employer could be charged an Employer Shared Responsibility Penalty (ESRP) of $2,750 per full-time employee if the employer fails to meet affordability and minimum essential value coverage. However, many employers are being charged these penalties because the forms filed were not correctly coded.  Responding to the IRS with the correct codes will result in penalty removal.

The IRS has a series of notices and forms that it will send to employers for failure to furnish, failure to file, and ESRP assessment. Once contacted that there is a problem, there is limited time to respond.  An employer receiving a notice from the IRS should seek help in preparing a timely response.

Mauldin & Jenkins is available to help respond to any notices from the IRS. We are a full-service accounting firm, available to handle tax resolution matters as well as audit matters. If penalties are charged, we can help navigate the IRS penalty abatement process, including Appeals representation, if necessary. Please reach out to your M&J professional with any questions or visit our website for more information. We are happy to help!

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