Large employer - no coverage

[ILLMAS]

Does anybody here have a client that didn't offer any health insurance and is now getting notices from the IRS?  If yes, did you or the IRS calculate the penalty?

 

Thanks

[Lee B]

My largest client has about 70 employees and does not offer health insurance.

They received a proposed penalty for 2015 in June 2018 which was triggered by an employee going to and receiving a PTC from the marketplace.

Fortunately they only received the credit for 5 months.

The IRS proposed penalty was way bigger than it should have been

I  recalculated the penalty supported by the 1095s, which I had filed, which was about 70 % lower than the proposed penalty.

They accepted the penalty that I calculated.

They have yet to receive any letters etc for 2016.

 

[ILLMAS]

59 minutes ago, cbslee said:

My largest client has about 70 employees and does not offer health insurance.

They received a proposed penalty for 2015 in June 2018 which was triggered by an employee going to and receiving a PTC from the marketplace.

Fortunately they only received the credit for 5 months.

The IRS proposed penalty was way bigger than it should have been

I  recalculated the penalty supported by the 1095s, which I had filed, which was about 70 % lower than the proposed penalty.

They accepted the penalty that I calculated.

They have yet to receive any letters etc for 2016. 

 

I sent you a PM

[Lee B]

"Lost amid the confusion of the federal government shutdown this year was a new set of penalties the IRS began to issue as part of the agency’s ongoing enforcement of the Affordable Care Act.

In the final days of 2018, the agency started issuing notices to assess penalties against employers that failed to file Forms 1094-C and 1095-C with the IRS or to furnish 1095-C forms to employees under IRC Sections 6721 and 6722 for the 2015 or 2016 tax year. These penalties are separate from the IRC Section 4980H penalties for failing to offer the required healthcare coverage.

It appears the IRS is calculating these IRC 6721 and 6722 penalty assessments for certain employers based on the number of W-2s the employers filed with the IRS. These IRC 6721/6722 penalty assessments are proposed using Letter 5005-A and Form 886-A.

This penalty assessment process is a follow-up to Letter 5699. The IRS sends Letter 5699 to employers that did not file any ACA information returns (i.e., 1094-C/1095-C schedules) for a reporting year. The employer must, in essence, respond to (1) confirm the name the employer used when filing its ACA information returns and identification information for tracking, (2) provide the ACA information returns or indicate when they will be submitted, or (3) explain why the employer is not an Applicable Large Employer, which is an employer with 50 or more full-time employees and full-time equivalent employees. Failure to respond to Letter 5699 or to take action to address any filing issues resulted in the penalty assessment being issued in Letter 5005-A/Form 886-A.

The penalties for failing to file and furnish are indexed each tax year. For the 2018 tax year, penalties for failing to file and furnish can be as much as $540 per return. The penalties for the 2016 tax year can be as much as $520 per return."

This doubling up or piggybacking of penalties will be a huge shock for any ALE who both did not provide health insurance

and also did not file and furnish Forms 1094C and 1095C. The combined penalties for a smaller sized ALE could easily approach $100k

[Lee B]

The same client that I posted about 13 months ago just received a proposed penalty for 2017.

Again it was triggered by an employee receiving a Premium Tax Credit from the Marketplace for 4 months.

This time the penalty was calculated correctly. Since they have not received a proposed penalty for 2016,

my tentative assumption is that none of their employees received a PTC during 2016.

[Dustan]

Do you file Forms 1094-C and 1095-C for your client who does not provide health insurance? If so, what is there to fill out on the forms? I have one client in the same shoes.

[Lee B]

Yes, I have filed the 1094 C & the 1095 C every year. My client being a restaurant has turnover and a number of employees don't work enough hours to qualify.

Therefore I report who is a full time employee and who isn't on a month by month basis. The number of full time employees in excess of 30 each month determines the penalty.