The IRS is Sending New ACA Penalty Notices for the 2017 Tax Year

The IRS is now issuing new penalty notices to employers that failed to file forms 1094-C and 1095-C with the federal tax agency of furnish 1095-C forms to employers for the 2017 tax year that was required by the Affordable Care Act.


In January the IRS started to issue penalty notices to employers under IRC 6721/6722 for the 2015 and 2016 tax years. The notices focused on the failure to distribute 1095-C forms to employees and to file 1094-C and 1095-C forms with the federal tax agency by the required deadlines. Once the IRS has come into the knowledge that the employer did not submit these forms, the penalty assessments are starting to be issued in Letter 5005-A/Form 886-A.


These penalties under IRC 6721/6722 are also used in addition to penalties being issued using Letter 226j for not offering healthcare coverage to employees under IRC 4980H. Employers are starting to receive a new round of Letter 226J penalty notices for employers who the IRS believes have failed to comply with the ACA in the  2016 tax years. Currently, IRS staff is gathering the information to start issuing Letter 226J penalty notices for the 2017 tax years. Employers can expect these penalty letters to start being sent in the fourth quarter of the 2019 fiscal year.


The IRS penalty notices that are being issued to employers the agency refers to as Applicable Larger Employers (ALEs) as an effort to enforce the ACA’s Employer Mandate. Under the ACA’s Employer Mandate, ALEs are defined as employers with 50 or more full-time employees and full-time equivalent employees. These employers are required to offer Minimum Essential Coverage (MEC) to at least 95% of their full-time workforce (and their dependents) coverage that meets Minimum Value (MV) and is affordable to employees or be subject to IRC 4980H penalties. Employers are3 also required to annually file ACA-related information contained in forms 1094-C and 1095-C with the IRS and provide forms 1095-C to employees or be subject to IRC 6921/6922 penalties.


The IRC 6721/6722 penalty assessment process is the follow-up to information that employers provided to IRS letter 5699, which states that the IRS believes that a particular organization was an Applicable Larger Employer and failed to file ACA information returns as required by the ACA. The Letter 5699 notice asks the employer to (1) confirm that the employer was an Applicable Larger Employer for the reporting year, and if so, either (a) confirm that the returns were already submitted, along with the name and Employer Identification Number (EIN) used to submit the returns and date of submission, (b) provide the returns as part of the response to the Letter 5699 or (c) the name and EIN intended to be used when submitting the returns and the anticipated date of each submission, or (2) deny that the employer is an Applicable Larger Employer with an explanation. The letter 5699 also provides for an “Other” response to explain late filings or late filings of more than 90 days to respond to the Letter 5699. Failure to timely respond to Letter 5699 may result in the penalty assessment being issued in Letter 5005-A/Form 886-A.

Obamacare (ACA) Ruled Unconstitutional in Texas, but This Fight is Far from Over

Obamacare (ACA) Ruled Unconstitutional in Texas, but This Fight is Far from Over

Uncharacteristically late on Friday evening December the 16th, a Texas U.S. District Court Judge (Reed O’Connor) held that the Affordable Care Act was unconstitutional and should be entirely struck down. The basis of this argument is that the recent decision by Republican Congress to remove the tax penalty for people who do not have health insurance, now places the law in opposition to the constitution.

The decision is certain to be appealed. In fact, house leader Nancy Pelosi almost instantly challenged the decision and said that when Democrats take the house in January, they will certainly appeal. This is widely anticipated to lead to a very long legal battle between Democrats and Republicans.

In the meantime, the current ACA law stands. The white house released a formal statement reiterating just that. White house press secretary Sarah Sanders stated that, “Obamacare will remain in effect while the case is appealed”.

Most legal scholars believe that this case will ultimately be heard by the supreme court. Until then nothing will change with how our current healthcare system operates.

This means that Employers must still comply with the Employer Mandate. ACA Reporting is still required by law and employees must receive their forms 1095C no later than the extended deadline of March 4th 2019, for the 2018 reporting year.

IRS Deadline Extended 2019: Employers get extra time to distribute form 1095-C

IRS Deadline Extended 2019: Employers get extra time to distribute form 1095-C

The IRS has yet again extended the annual deadline for distributing form 1095-C for the 2018 tax year. The new deadline for form distribution to full time employees (required under the Affordable Care Act ACA) is March 4, 2019. This deadline was extended from the original due date of Jan 31, 2019 effectively giving large employers 32 additional days to comply.

On November 29th the IRS released notice 2018-94, which serves to extend the due date for certain 2018 information-reporting requirements for insurers, self-insuring employers, and certain other providers of minimum essential coverage under section 6055 of the Internal Revenue Code (Code) and for applicable large employers under section 6056 of the Code.

The notice specifically mentions that failure to comply with new due dates will result in penalties for Applicable Large Employers (ALEs). The notice states “Employers or other coverage providers that do not comply with the due dates for furnishing Forms 1095-B and 1095-C (as extended under the rules described above) or for filing Forms 1094-B, 1095-B, 1094-C, or 1095-C are subject to penalties under sections 6722 or 6721 for failure to timely furnish and file, respectively. However, employers and other coverage providers that do not meet the relevant due dates should still furnish and file.”

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