Newly Released Report States That IRS Reporting Penalties are Coming

IRS ACA Review crop


By now it should come as no surprise that the IRS has been stretched thin when it comes to their ability to implement penalties associated with the Employer Shared Responsibility Provision of the Affordable Care Act (Obamacare). Over the past couple of years, the IRS has been tasked with creating new tools that will allow them to identify Applicable Large Employers and then determine their Compliance within the Employer Mandate guidelines. Now we know that they are serious.

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On April 7th the Treasury Inspector General for Tax Administration (TIGTA) released their recent audit report of the IRS’s efforts to implement employer penalties. This report outlines both the agency’s findings and their recommendations. A full copy of the report can be found here. A summary of the report is located on page 3 of the document.

Perhaps the most important take away for employers can be found in Recommendation 7 of the assessment. This recommendation (which was agreed upon by the IRS) states, “ensure that forms 1094-C and forms 1095-C management reports correctly report errors statistics”. What this means is that the IRS is working on an “ACA Compliance Validation” system which will identify all non-compliant Applicable Large Employers (ALEs). These employers will then be subject to penalties under section 4980H for the tax year 2015.

This system was initially scheduled to come online in January of 2017. This date was pushed back and is now scheduled to be operational in May of 2017.

So what is the Take away for Large Employers?

  • The Internal Revenue Service fully intends on implementing systems to allow them to accurately identify 1094-C filings by May of this year.
  • The purpose of these systems is to collect penalties from all employers who did not comply with the Employer Shared Responsibly Provisions and filings.
  • Other IRS systems outlined in the assessment are also undergoing improvements, all of which are aimed at collecting money for non-compliance.

Many have taken the stance of, “let’s see what happens to the ACA”. Employers who are taking that stance, may be playing a dangerous game.

If you have not yet filed your forms 1094-C and 1095-C for 2015 or 2016, we can help. Please give us a call at 888-978-8310 or email us at