What Do Employers Do, as the Deadline Is Nearly Here?
With the due date of the first mandatory rounds of ACA IRS reporting for Forms 1094/95 already here, employers are reminded that the IRS Q&A’s indicated that the IRS “…will not impose penalties under sections 6721 and 6722 [IRC sections allowing for penalties on information returns and payee statements] on ALE members that can show that they have made good faith efforts to comply with the information reporting requirements. Specifically, relief is provided from penalties … for returns and statements filed and furnished in 2016 to report offers of coverage in 2015 for incorrect or incomplete information reported on the return or statement.”

The penalties for missing or incorrect names/TINs depend on how long it takes to correct the incorrect information. In any event, it is recommended that employers file in a timely manner, even if the information is incorrect, in order to avail themselves of the good faith effort for relief from the penalties. Filers may then subsequently correct any failures with the IRS after first filing timely incorrect forms where filing correct forms is administratively impossible. If there is a good faith showing of attempting to file correct returns, and then incorrect returns were filed on time, then the IRS will not penalize for the initial inaccurate or incomplete forms.

Corrections

  • Filed within 30 days following electronic reporting (in this case, July 30, 2016), the penalty is $50 per information return. The penalty amount goes up for failures taking longer to correct; please see the box below for further details on this matter.

For more information, see: IRS Publication 1586 and IRS presentation.

Returns due on or after 1/1/2016 Within 30 Days of Due Date (July 30 for 2016*) By Aug 1 (Nov 1 for 2016) After Aug 1 (Nov 1 for 2016) Intentional Disregard
Penalty Amount Per Information Return $50 $100 $260 $520
Maximum Penalty Per Year $529,500 $1,589,000 $3,178,500 None
Maximum Small Business Penalty Per Year $185,000 $529,500 $1,059,500 None
*Paper filing due date is May 31, so within 30 days is June 30

NOTICE OF DISCLAIMER

The information herein is intended to be educational only and is based on information that is generally available. HUB International makes no representation or warranty as to its accuracy and is not obligated to update the information should it change in the future. The information is not intended to be legal or tax advice. Consult your attorney and/or professional advisor as to your organization’s specific circumstances and legal, tax or other requirements.