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ACA Penalties Intensify


You’ll remember that voluntary filing of ACA forms 1094 and 1095 began in 2015. The IRS offered voluntary reporting to help filers adjust to the reporting requirements. Many filers were anxious about gathering information. After a couple years of lax penalties, the IRS is strengthening penalties and doing away with broad-sweeping exceptions to the filing requirements.

The IRS applied “good faith” exceptions to filing requirements for the 2015 and 2016 filings.

According to IRS Notice 2018-06, this transition relief will also apply to 1094 and 1095 forms that were filed in 2017. Here’s the catch: the penalty relief is only available to filers who submitted the information on time. Those who filed late, or who failed to furnish recipient information, will not receive an exception to the penalties.

The IRS has already begun sending penalty letters to employers that owe shared responsibility payments. Recipients must respond to Letter 226J within 30 days. Though the penalties can be disputed, the process involves massive amounts of documentation. Be proactive in filing correct information.

This year, protect yourself from penalties, and prepare to file your ACA forms 1095-B and 1095-C. Make sure the information you file is correct with Tax1099’s TIN matching feature. Check name-TIN combinations against the IRS database. If a match is rejected, eSolicit a W-9 for correct information. We’ll email the form, and after it’s been completed and eSigned, we’ll sync the information to our platform.

We securely store your information for seven years, so that you’ll have easy access to everything you need to prove due diligence in your filing process. Documenting your process is key when it comes to defending yourself against penalties.

Ensuring correct and timely filing will be particularly important this year. This season, the IRS may reduce abatement even further. Those who file incorrect or late forms, or who do not file at all, could face hefty fines. Fines could total $3 million in a calendar year. Click here to read more from the IRS website.

The good news? This year, the due date for supplying 1095-B and 1095-C recipient statements has been extended from January the 31st to March the 2nd. The change in the deadline applies to everyone, no need to file an extension. The IRS is extending this deadline, in hopes that more filers will adhere to the guidelines. It’s important to note that it is unlikely that the IRS will grant extensions past March the 2nd.

So, in summary: The IRS is taking steps to tighten up on 1094 and 1095 reporting. Make sure that you stay ahead of the penalties by beginning the process early. Visit Tax1099 today.