IRS Intends to Pursue Employers Over ACA Violations

Letters released this summer by the IRS continue to point to the agency moving forward with its plans to enforce the Affordable Care Act (ACA). The IRS has indicated it could be issuing penalty notices as soon as the end of the year to companies that have not filed mandated information for the 2015 tax year, for filing inaccurate or incomplete information, or for submitting information after identified filing deadlines.

Organizations with 50 or more full-time or full-time equivalent employees, known as Applicable Large Employers (ALEs), are required to make ACA-mandated filings with the IRS annually.

Take, for instance, the letter the IRS Office of Chief Counsel sent to U.S. Representative Bill Huizenga (R- Michigan). Rep. Huizenga  inquired if a waiver of the Employer Shared Responsibility Payment (ESRP) might be provided to an ALE that had not complied with the ACA in offering required health insurance to employees for financial and religious reasons. The IRS said there is no provision in the ACA that provides a waiver of an ESRP.

In its letter, the IRS stated: “Section 4980H of the Internal Revenue Code provides that if an applicable large employer (generally, an employer with at least 50 full-time employees, including full-time equivalent employees, on business days in the preceding calendar year) fails to offer health coverage to its full-time employees, and if the other conditions in the statute are met, the employer is liable under the statute for the ESRP.”

The letter notes that President Trump’s January Executive Order Minimizing the Economic Burden of the Patient Protection and Affordable Care Act Pending Repeal does not change the law. “The legislative provisions of the ACA are still in force until changed by the Congress, and taxpayers remain required to follow the law and pay what they may owe,” stated the IRS. For additional information on the ACA Executive Order and the current tax filing season visit this site.

If you are an ALE and haven’t filed your ACA-mandated information with the IRS for the 2015 or 2016 tax years, you should do so as soon as possible to minimize any financial penalties that might be levied against you by the IRS. As you can see from this recently released letter, the IRS will be enforcing the ACA and will be addressing compliance issues with those ALEs that have failed to make the ACA-mandated filings with the IRS.

Article Continues Below

Draft forms for reporting 2017 tax year information are now out for review. Learn more at this link.

You can view the other recent IRS information letters on the ESPR and the individual taxpayer mandate at these links:

This article originally was published on The ACA Times.

Robert Sheen is founder and president of First Capitol Consulting, Inc.


First Capitol provides companies with advice on tax incentives, tax credits and other complex tax and regulatory matters. Within five years of its founding in 1999, First Capitol was the largest firm of its kind in California, representing over 3,000 Fortune 100 to middle-market companies.

Since the passage of the Affordable Care Act, First Capitol has assisted companies with ACA compliance while minimizing healthcare costs for both employers and employees.

Robert is a graduate of the University of Southern California, in Business Administration with an emphasis in International Finance. He earned his Juris Doctor from Loyola Law School, Los Angeles, concentrating in tax law.

He began his career at the public accounting firm KPMG, then joined BDO USA. He is Founder, Organizer, Vice Chairman of the Board and Chairman of the Asset-Liability Committee of US Metro Bank; a trustee of the USC Pacific Asia Museum; a member of the national advisory board of Asian Americans Advancing Justice; a former board member of Rock The Vote, a former president of the Korean American Bar Association and a member of The Breakfast Club. In 2003 he was named one of “The Men of LA” by The Women’s Foundation.