In March, the GOP was unsuccessful in its first attempt to repeal and replace the Affordable Care Act (ACA). This meant the ACA remained in effect — and employers were still responsible for meeting the ACA filing requirement under the employer mandate.
Now, the IRS has clearly conveyed its intent to fully enforce the rules for applicable large employers. The system for enforcement is delayed but will be up and running as early as May 2017, according to a U.S. Treasury report.
The report states, “The IRS is developing new systems that will use employer-reported information returns as well as other tax data to identify employers that are not compliant with the Employer Shared Responsibility Payment.” Further, non-compliance could lead to penalties: “If the IRS determines that an employer is liable — the IRS will send the employer a notice and demand for payment.”
The takeaway? If you haven’t done so already, complete your mandatory filings as soon as possible! Not only is the ACA still “the law of the land,” but the IRS is positioned to enforce the rules and impose penalties.
Pay Special Attention If You’re an ALE
Under the ACA, applicable large employers (or ALEs) — those with 50 or more full-time employees, including full-time equivalent employees — are required to file 1095 information returns with the IRS, as well as provide statements to full-time employees about health coverage.
This reporting requirement is in addition to reporting healthcare costs on W-2 forms.
Tracking and reporting detailed employee healthcare coverage is already a big undertaking. On top of this responsibility, employers faced an accelerated schedule this year. The date for distributing 1095-Cs to recipients was March 2, plus:
- February 28 – paper filing with the IRS OR
- March 31 – electronic filing with the IRS
If you were one of the employers who held off reporting to the IRS, thinking the ACA would be repealed, you should act now. Although the IRS may be lenient with incomplete or late filings, the agency will not tolerate ignoring the law altogether. In fact, outright failure to file could amount to penalties of $260 per filing, up to $3 million.
“Employers who delayed filing during this ‘wait and see’ period with the ACA should make every effort to proceed,” says Rick Roddis, President of ComplyRight Tax Solutions. “Because the ACA stills stands, so do the mandatory reporting requirements.”
Further still, you should plan to continue tracking health care data throughout 2017 so you’re prepared next tax season. Even if the ACA is repealed down the road, you can’t assume the reporting requirement will be eliminated. A new plan could uphold a tax-related component, such as tax subsidies or tax breaks, which would require some level of IRS reporting.
“Better safe than sorry when it comes to the ACA rules,” says Roddis. “For now, the ACA — and all that it entails for employers — is here to stay.”
Late Is Better than Never
Yes, the ACA electronic filing deadline has passed. But again, the IRS is likely to recognize good-faith efforts to meet the requirements, even if you’re late. And now it has been made clear that they do intend to proceed with enforcement, so not filing carries the biggest risk.
For ease of reporting, look to an online e-filing service such as efile4biz to satisfy this year’s ACA filing requirements. With this low-cost service, you simply upload your ACA form data (or complete the forms online) and the service provider does the rest — including e-filing the 1095 forms with the IRS, and optionally, printing and mailing the 1095 forms to recipients.
This is an updated article as of 4/19/17 based on the IRS' recent announcement about enforcement of the ACA filing requirements for applicable employers. Although the filing deadline has passed, the agency plans to check on employer compliance and impose penalties, if necessary.