In an unexpected announcement, the IRS recently stated that there is no statute of limitations for penalties assessed against employers that fail to comply with the Affordable Care Act’s employer mandate. It’s a slightly ominous turn of events for employers that have been sliding by with sloppy ACA-related processes in the hopes that the law would go away or the IRS would go easy on them or eventually stop assessing penalties due to changing laws, priorities, or administrations.
The reasoning behind the IRS’s position is complicated, but in short the agency says that:
- The ACA itself did not include a statute of limitations
- There is no event that would trigger the statute of limitations that normally applies to tax code violations. If a statute of limitations is not triggered, it can’t run, and as a result, employers could be on the hook for ACA penalties indefinitely.
That could change, of course, if the IRS changes its position (which is entirely possible under a different administration), Congress revises the ACA to include a statute of limitations (which is extremely unlikely), or the Supreme Court strikes down more of the law than it already has (which is more likely).
But for now, employers wanting to avoid ACA penalties need to continue in their diligence to identify and offer affordable coverage to all full-time employees and report such offers of coverage accurately by means of the 1095-C and 1094-C forms. It may also be worthwhile to recheck your past ACA filings for possible problems and correct any that you find.
As always, feel free to contact me or a member of your Account Team with any questions you may have.