ACA Update: IRS Releasing Tax Year 2017 Penalty Notices

ACA Update: IRS Releasing Tax Year 2017 Penalty Notices

Here’s an update to our IRS ACA Penalty Notice Guide that we sent earlier this year. The IRS recently began issuing Penalty Notices for TY2017. Employers have begun receiving Letter 5699 Failure To File Notices. It’s important to note that some of these employers mailed the necessary 1094 and 1095 forms to the IRS at the end of Tax Year 2017, but they are still receiving penalty notices because the IRS says they have no record of the filing.

We expect many additional employers will begin receiving Letter 226J Notices for Employee Shared Responsibility Payment (ESRP) penalties related to Section 4980H(a) and (b) penalties. The IRS is in the process of reviewing data from ACA Health Care Exchanges for individuals who purchased coverage through an Exchange and received a Premium Tax Credit. They are reconciling the data with TY2017 1094/1095 filings the IRS has received from that individuals’ employer at the time. This will trigger the Letter 226J Notices to employers that are believed to have either offered no minimum coverage to employees or coverage that did not meet affordability standards. Many of these notices are for significant penalties to the employer, and may be due to inaccurate filings by the employer.

If you receive a letter from the IRS regarding ACA penalties here is what to do:

  1. Ensure that all your 2017 ACA Compliance artifacts, including Summary of Benefits Coverage (SBC’s) and tax form filings, are in order and accessible.
  2. Contact the IRS acknowledging you received the letter, and that you are requesting an extension to respond.
  3. Click here to check out our IRS ACA Penalty Notice Guide.

If you have questions or need help of any kind responding to the IRS, please contact BenefitScape.

Call Client Services Director Kim Phillips at 508-655-3307, or

Email Kim with your inquiry at kim.phillips@benefitscape.com.

Connect with us on LinkedIn at https://linkedin.com/company/benefitscape!

Attachment(s): TY2019-IRS-Penalty-Notices-v2-3.pdf

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