With Deadlines Approaching, Organizations Eye ACA Penalties

This blog was last updated on March 11, 2019

The Affordable Care Act (ACA) is still in place and carries with it compliance requirements and the potential for steep financial penalties.

ACA forms are due to the IRS April 2, 2018 if filed electronically. Penalties for late filing are severe. Failure to file information returns will result in a penalty of $260/return with a maximum penalty of $3,218,500 per organization.

Worse, if the IRS determines that failure to file is the result of intentional disregard, the penalty amount will be $530/return without limitations.

Extension still possible

However, April 2 isn’t necessarily a drop-dead deadline. Organizations can complete form 8809 and receive an automatic 30-day extension. In any case, filing late is better than not filing at all and will result in a reduced penalty amount.

If an organization files within 30 days of the due date, the IRS will reduce the penalty for late filings from $260 to $50. Filing after 30 days past the due date but before August 1 will result in a penalty of $100 per return with a maximum of $1,609,500.

Reporting requirements remain in place

Though Congress did repeal the individual mandate element of the ACA, that change doesn’t go into effect until 2019. Regardless, reporting requirements remain in place permanently, as does the employer mandate.

In another sign that the ACA is alive and well, the IRS has been issuing letter 226Js for organizations that did not comply with the ACA in tax year 2015. Letter 226J is a notice to applicable large employers (ALEs) that they might be liable for an Employer Shared Responsibility Payment. The agency will likely continue and expand this practice to cover the 2016 filing year and beyond.