The IRS has issued guidance that it plans to issue notices to employers who have failed to comply with shared responsibility provisions of the affordable care act for 2015.
The guidance was posted on the IRS Q&A website (see question 58), and is the only posted official guidelines regarding how ACA penalties will be communicated to employers for violations of the shared employer responsibility provisions as well as how employers may respond and make payments.
Get to Know Letter 226-J
The guidance introduces the notice Letter 226-J. It's the letter the IRS will issue notify employers of a penalty. The letter will contain a summary of the violation, propose penalties, and describe the steps necessary to respond and appeal a determination.
Be aware of this letter and be on the lookout for it, it could show before the end of the 2017 calendar year if you weren't vigilant in your ACA compliance efforts in 2015. If you get a copy of the letter then be sure to note the due dates for your reply or be prepared to accept thepenalties outlined.
Are You At Risk?
You may be if you're considered an Applicable Large Employer (ALE).
The IRS makes this determination based on the size of your workforce. In general, employers employing at least a certain threshold number of employees (generally 50 full-time employees including full-time equivalent employees, which means a combination of part-time employees that count as one or more full-time employees) are ALEs and subject to the shared responsibility provisions.
What are the Shared Responsibility Provisions?
The employer shared responsibility provisions were added under section 4980H of the Internal Revenue Code by the Affordable Care Act.
Under these provisions, certain employers (called applicable large employers or ALEs) must either offer health coverage that is “affordable” and that provides “minimum value” to their full-time employees (and offer coverage to the full-time employees’ dependents), or potentially make an employer shared responsibility payment to the IRS, if at least one of their full-time employees receives a premium tax credit for purchasing individual coverage on a Health Insurance Marketplace (Marketplace), also called the Exchange.
Helpful IRS Affordable Care Act Resources
- IRS Affordable Care Act for Employers
- Questions and Answers on Employer Shared Responsibility Provisions Under the Affordable Care Act
- Understanding your Letter 226-J
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