Jul 20, 2015
Congress has significantly increased the penalties for failure to report information required under the Affordable Care Act (ACA). Health coverage providers and applicable large employers (ALEs) subject to the ACA information reporting provisions are required to report for the first time in early 2016 for the 2015 calendar year. The increased penalty amounts will apply to returns filed after December 31, 2015.
Self-insuring employers that provide minimum essential health coverage information (regardless of size) and employers with 50 or more full-time and full-time equivalent employees that fail to comply with the information reporting requirements may be subject to penalties.
The penalty for failure to file an information return with the Internal Revenue Service (IRS) increases from $100 per return to $250 per return, and the maximum for all failed information returns for a calendar year increases from $1.5 million to $3 million. Likewise, the penalty for failure to provide correct returns to employees increases from $100 per return to $250 per return and the maximum for all failed employee returns for a calendar year increases from $1.5 million to $3 million. “Failures” include:
Penalties increase if there is an intentional disregard for the filing requirements. The per-return penalty increases to $500, and the calendar year cap does not apply. The IRS stated it will not impose these penalties for 2015 if an employer can show it made a good faith effort to comply with the reporting requirements.
What this means to you – Employers subject to the ACA information reporting requirements are subject to large penalties for failure to comply. Employers with 50-100 full-time and full-time equivalent employees utilizing the transition rule to delay ACA compliance until 2016 should be especially careful to comply with the reporting requirements to ensure the ability to rely on the transition rule. While these returns will not be due until early 2016, the reporting is for the 2015 calendar year, so employers must have a plan in place now to capture the information needed for reporting.