ACA and 10-Series Form Penalties Increase Again

March 14, 2016

The IRS has raised penalty amounts once again. As stated in IRS announcement 16-11, you may now be penalized up to $260 per record if you are late or inaccurate in all tax information, 10-series, and ACA form reporting requirements.

Background Around This Increase

You may be thinking, “Again? Didn’t these penalties just increase last year?”

Not only that, but these new increases affect all tax information reporting from ACA to 10-series reporting—from 1095 forms to 1099.

For five years the penalty per record sat at $100. However, in 2015, IRS sections 6721 and 6722 were amended via the Trade Preferences Extension Act of 2015. The amendment applied to returns and statements required to be filed after December 31, 2015. The Act increased penalties as follows:

  • You must make corrections within 30 days or face an increased fine of $30 to $50 per record; maximum penalties now increase from $250,000 to $500,000.
  • Corrections before August 1st but after 30 days increased from $60 to $100/record; maximum penalties increased from $500,000 to $1.5 million.
  • Failure to file increased from $100 to $250/record maximum penalties increased from $1.5 million to $3 million.

New Increase Reasoning

The 2016-11 announcement goes onto state that further penalty increases are the result of inflation-adjusted items, which is something that regularly occurs. These increases apply for taxable years beginning in 2015. Those increases are as follows:

  • Corrections within 30 days remains $50/record, the maximum penalties increase to $529,500.
  • Corrections before August 1st but after 30 days remains at $100/record, the maximum penalties increase to $1,589,000.
  • Failure to file penalties increase from $250 to $260, maximum penalties increase to $3,178,500.

Both of the increases apply to Taxable Year 2015, filing in 2016 (i.e. they are current and apply now). This affects all 10 series (1099s, 1098, 5498 and W-2G) information returns, including the ACA information 1094 and 1095 returns.

Additionally, the IRS addressed corrections and reduced penalties for 2016 ACA in FAQs 30 and 32.

The FAQ notes that the August 1, 2016 deadlines for reduction in penalty amounts are also extended.

  • For statements to provided to individuals, any failures that reporting entities correct by April 30 and October 1, 2016 respectively, will be subject to reduced penalties.
  • For paper returns filed with the IRS, any failures that reporting entities correct by June 30 or November 1, 2016, respectively, will be subject to reduced penalties.
  • For returns filed electronically with the IRS, any failures that reporting entities correct by July 30, or November 1, 2016 will be subject to reduced penalties.

Keep up-to-date by sticking with Sovos and following our blog series. We are here to keep you informed and compliant.

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Sovos is a leading global provider of software that safeguards businesses from the burden and risk of modern transactional taxes. As VAT and sales and use tax go digital, businesses face increased risks, costs and complexity. The Sovos Intelligent Compliance Cloud is the first complete solution for modern tax, giving businesses a global solution for tax determination, e-invoicing compliance and tax reporting. Sovos supports more than 7,000 customers, including half of the Fortune 500, and integrates with a wide variety of business applications. The company has offices throughout North America, Latin America and Europe. Sovos is owned by London-based Hg. For more information visit and follow us on LinkedIn and Twitter.
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