IRS Fines Increase for ACA and Other Required Reporting Failures

The Trade Preferences Extension Act, signed into law June 29, 2015, more than doubled penalties for failure to properly file IRS information returns or provide payee statements. The new penalty structure applies to the Affordable Care Act (ACA) health care coverage filings required in 2016, and other IRS required reports and filings such as W-2s and the 1099-series.

The basic penalty increased from $100 to $250 per return or statement, with a maximum penalty for all failures in a calendar year rising from $1.5 to $3 million. For failures related to both an information return and payee statement, penalties increased to $500 per statement with a $6 million cap.

While the IRS has indicated they will be lenient with those who make a good-faith effort to report by the 2016 deadlines, they have stated there will be no relief for those failing to either file timely or provide required payee statements.

Applicable Large Employers and all employers with self-insured coverage must file the ACA-required IRS reports and provide payee statements to individuals in early 2016. Small employers (under 50 full-time equivalents) with insured coverage may want to check with their insurance carrier to confirm the carrier will do the IRS filings and statements for them.

See the MSEC Healthcare Reform Learning Zone for more information on required ACA reporting here.