Employers who are Applicable Large Employers (ALEs) subject to the IRC 6056 Employer Mandate to provide health coverage are just now beginning to receive, for the very first time, penalty letters from the IRS regarding their 4980H requirements. These penalty letters are in regard to employees who were full time employees under the Affordable Care Act but not offered coverage by their employer. As an employer navigates through addressing these letters, they should follow a process similar to how we work with employers successfully to resolve such issues.
First things first
The first thing to do is to ensure your reporting was performed correctly and that you do indeed owe a penalty. We speak with employers every single day who will receive these letters from the IRS yet it would have been preventable if they had performed the ACA reporting correctly. Essentially this step involves having an expert to personally review the reporting and conduct an interview with the employer for the purpose of fully understanding what coverage the employer actually offered and to whom an offer of coverage should have been made.
Next, assess true penalties
The next step should begin by making any corrections to prior filed forms and submitting those corrections to the IRS. This will leave you in a place of assessing the true penalties you are faced with under 4980H (A) and 4980H (B).
Apply all possible transitional relief items
At this point, it is critical that you fully analyze the various transitional relief options to prevent these penalties from being applied. Transitional relief items can be incredibly complex and confusing, and proper application requires in-depth knowledge of many areas of the Affordable Care Act and all ACA reporting areas.
Respond to the IRS
Once you have developed your game plan, you are now ready to respond to the IRS. Depending upon the severity of your outstanding issues, it could make sense at this point to also involved an attorney who specializes in this area. Be aware however, there are very few attorneys who truly understand ACA reporting.
We are experts in all things ACA reporting related, and can help you to resolve IRS inquiries and audits regarding your filed forms 1094 and 1095 (B and C). Contact our customer support team to learn about how we can help your company maneuver through this process, ensure your ACA reporting is performed correctly and that ultimately you are able to resolve the outstanding items with the IRS.