As we have mentioned several times over the past couple of years, the IRS continues to aggressively enforce the ACA’s employer mandate in spite of numerous efforts to overturn it legislatively and through various court challenges. The latest example of this is that the agency just started assessing ACA penalties for 2017. As recently as March, the agency was still issuing penalties for 2016.
As has been our experience with nearly all previous penalties, the 2017 penalty letters we have seen so far have been the result of reporting errors on the part of the employer and/or the vendor used to complete the forms on its behalf. Specifically, the form 1094-C for 2017 has indicated (incorrectly) that the employer didn’t offer coverage to at least 95% of its full-time employees for part or all of 2017.
In light of this continuing problem for many employers, we recommend that our clients pay close attention to their forms this year to be certain of their accuracy. This is especially true if you see a blank on Line 14 or 16 of an individual employee’s 1095-C (unless the “All 12 Months” column is completed) or the “No” box is checked in Part III of the 1094-C. For most of our clients, these will usually be reporting errors that, left uncorrected, will result in an unwelcome penalty letter in their mailbox at some point down the road.
We are also seeing reports that the IRS is assessing penalties for 2017 forms that were filed late. They have never assessed penalties for late filings before.
As always, if you have any questions or need help understanding the forms or codes used, feel free to contact me.