Benjamin Franklin knew “an ounce of prevention is worth a pound of cure.” This holds especially true now as IRS penalties have been noted, announced and increased for 2016 ACA compliance and reporting deficiencies. And, while the 2016 presidential election has come and gone, penalties are still in place for 2016 ACA reporting.
Also, no longer can corporations rely on “good faith efforts” to get past the stack of paperwork. The new penalty amounts are specific and enforceable with the filings for 2016 in 2017:
- The penalty for failure to file a correct information return is $260 for each return for which the failure occurs, with the total penalty for a calendar year not to exceed $3,193,000.
- The penalty for failure to provide a correct payee statement is $260 for each statement for which the failure occurs, with the total penalty for a calendar year not to exceed $3,193,000.
- Special rules apply that increase the per-statement and total penalties if there is intentional disregard of the requirement to file the returns and furnish the required statements. (The IRS offers comprehensive information regarding 1095 and 1094 IRS submissions and penalties for 2016.)
Those who are not using a software platform for ACA tracking and reporting run the risk of not being able to respond quickly enough, even in a correction cycle, which will cause the most financial pain.
To abate the possibilities of penalties, be sure all data collection is complete and there are no critical mistakes. Using a software platform that verifies codes before submission, like ACA-Track™, can be particularly useful. For third party administrators, data remains the gem in the setting. Clean, accurate data can lead to true accomplishment in meeting compliance requirements.
For Applicable Large Employers (ALEs), 2016 is the calendar year in which the “A” penalty for employers is a penalty of $2,160 per full-time employee, and you count all of your full-time employees, not just the ones to whom you did not offer coverage.
In the past, ALEs only had to offer coverage to 70% of their ACA full-time employees to avoid the “A” penalty for not providing coverage. For benefits plan years beginning in 2016, however, Applicable Large Employers (ALEs) may be subject to a tax penalty under Section 4980H of the Internal Revenue Code (IRC) if (1) a full-time employee receives a premium tax credit or costs-sharing subsidy through a marketplace and, (2) the company failed to offer minimum essential health care coverage to at least 95% of its full-time employees and their dependent children up to age 26.
We know the end of the 2016 tax year is creeping up as we speak, and there is no indication at this time of change for 2016 ACA reporting, regardless of the recent presidential election. Plan ahead. The 1094/1095-C filing time requires forethought in advance.
