IRS continues to lay the groundwork for 2016 ACA reporting penalties

IRS continues to lay the groundwork for 2016 ACA reporting penalties

By now, many employers have received penalty assessments (Letter 226J) for noncompliance with the employer mandate in the tax year 2015. These penalty letters where not issues until Nov 1st of 2017. However, U.S. Treasury Inspector General for Tax Administration (TIGTA) reports from this year show that the IRS is gearing up to begin issuing penalty letters for the 2016 tax year very soon.

At Sky Insurance Tech, we do a good deal of penalty consulting for prospective clients. These are almost always clients that did their reporting with a lower priced, sub-par vendor, if they did their reporting at all. Recently, we have been getting a ton of phone calls regarding letter 5699 from the IRS for the 2016 tax year.

Letter 5699 is what the IRS uses to inquire about an employer’s reason for not properly filing their forms 1094/1095C. Employers who receive this letter have 30 days to respond. If the employer cannot prove that the letter was sent in error, then there is serious consequence, including a letter 226J for the 2016 tax year.

The IRS didn’t issue 2015 letter 226J penalty assessments until November 1st of 2017. However, November 1st of 2018 is right around the corner, which is the time frame we are expecting to see the 2016 penalty letters released. It is also important to note that just because the 2016 notices are set to be issued, this does not mean that the 2015 notices are finished being distributed.

For these reasons we encourage employers to revisit their previous year’s filings. Make sure that these were both accurate and timely.

If assistance is needed with either previous reporting years, or with penalty notices from the IRS, we are here to help.