The IRS has started sending letters to some employers asking them where their Affordable Care Act returns are, according to the National Association of Health Underwriters.
The letters, says the association, appear to be one of the first efforts by the IRS to enforce the employer responsibility requirements of the ACA.
Under the ACA, applicable large employers (ALEs) – those with 50 or more full-time and full-time-equivalent employees – are required to file Forms 1094-C and 1095-C with the IRS. The requirement started in 2016 when those employers for the first time had to file these forms with the IRS.
The letters are for the 2015 policy year and the IRS requires that employers respond to the letter within 30 days. These letters are being sent out because the IRS did not receive the forms from some employers it has deemed as ALEs.
Letter 5699
The document the IRS sends out is Letter 5699, titled “Request for Employer Reporting of Offers of Health Insurance Coverage (Forms 1094-C and 1095-C)”.
The letter, which will be signed by a tax compliance officer, is a notification that the recipient employer is non-compliant with Internal Revenue Code (IRC) Section 6056 because the IRS has not received 2015 returns.
IRC Section 6056 requires applicable large employers to file ACA information returns with the IRS and provide statements to full-time employees relating to the health insurance coverage, if any, that was offered to them.
Employers can respond by attesting that they:
- Were an ALE for calendar year 2015, and have already filed Form 1094-C and Form 1095-C.
- Were an ALE for calendar year 2015, and include the forms with the response letter.
- Were an ALE for calendar year 2015, and state that they will file the forms with the IRS.
- Were not an ALE for calendar year 2015.
- Had other circumstances (must explain).
If ALEs do not comply with IRC Section 6056, they can be assessed penalties.
The takeaway
If you have not gotten your paperwork in order and are also prepared to file the required documents for 2016, you should make sure you file on time.
The letters are an indication that the IRS is preparing to assess fines.
The IRS is monitoring non-compliance and has dedicated caseworkers (tax compliance officers) handling this process. The next step will be penalty assessments.
Finally, if you have not yet filed for 2015, you can still do so – and avoid the risk of incurring a late penalty of $530 per form.