ACA Penalties for 2015 Have Arrived
It took a while, but the Internal Revenue Service (IRS) is actively sending invoices to collect taxes from employers. We are hearing about non-Tango Health customers getting notified about penalties directly based on information that employers provided to the IRS during the 2015 1095-C and 1094-C tax form filing season. If you have received IRS letter 226J with a discussion about ESRP (Employee Shared Responsibility Payment), then the IRS has identified your company or your EIN as out of compliance to the ACA laws and is asking for payment. Within the IRS letter 226J, it will call out two laws, both with an aggressive multiplier impact even in circumstances where just a one person for one month was out of compliance:
- Non-compliance to offering MEC (Minimum Essential Coverage) at the 2015 level of 70% and an employee took a PTC (Premium Tax Credit) in 2015. (The IRS increased this threshold to 95% in 2016 and later years.)
- Non-compliance to affordable coverage laws or minimum value laws and an employee took the PTC in 2015.
- NOTE: For more info on these laws, see IRS regulations 4980H section “About the ESRP”, and then Form 14764 and 14765. This is a good starter link for the deep dive on understanding these complex regulations with huge fine/penalty/tax implications: https://www.irs.gov/individuals/understanding-your-letter-226-j
Categorized in: ACA