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Service Partners_Lookback Report Features/Functionality Review
For those of you unable to attend the Lookback Report webinar, you can access the recording below:
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ACA Penalty Letters Lost in the Mailroom? A cautionary tale worth reading.
The IRS has completed the final stage of the Affordable Care Act (ACA) penalty notices for the 2016 tax year and has begun issuing penalty notices for the 2017 tax year. “More than 30,000 notices have been issued since June 2018 representing $4.4 billion in penalty assessments” according to the ACA Times. Hopefully, your organization has completed the ACA filing requirements appropriately and are not on the IRS’ mailing list. However, as a precautionary measure, now is the time to alert your mail room to be on the lookout for anything addressed from the IRS and ensure any notice received reaches your desk in a timely manner. With only 30-days to respond, including requesting an extension, it is vital the notice is forwarded to the appropriate personnel upon receipt.
Unforgiving & Costly Timelines
In recent months, a number of employers have been surprised to find an ACA penalty notice has arrived in the mail but was directed to the wrong recipient. By the time the notice landed on the right desk, the deadline for responding had already passed, or was only days away. Employers are inundated with information on “what to do” if they receive an IRS penalty notice, but how can an employer respond timely if the notice gets lost in their mail room?
IRS penalty notices are sent by US mail which leaves your mail room as the first line of defense. Since IRS penalty notices are addressed to the person named on Form 1094-C for a specified tax year, it begs the question: what happens if there has been a staffing change? Changes and delivery errors can cause an IRS penalty notice to fall short of reaching its proper recipient. It is important that the “mail gatekeeper” is advised to be on the lookout for official IRS notices and that “time is of the essence” when it comes to responding to an IRS notice.
What is an IRS Penalty Notice and Why do They Warrant This Call to Action?Penalty notices are issued by the IRS to employers they believe have failed to comply with the ACA’s Employer Mandate for a specified tax year. The estimated amount of the proposed Employer Shared Responsibility Payments (ESRPs) range from as low as a couple thousand to multi-million dollars penalties.
The most common notice is the IRS Letter 226-J. The penalty notice is issued to Applicable Larger Employers (ALEs) who are believed to have failed to comply with the ACA’s Employer Mandate. Under the ACA’s Employer Mandate, organizations with 50 or more full-time employees, and full-time equivalent employees (FTE), ALEs are required to offer Minimum Essential Coverage (MEC) to at least 95% of their full-time workforce (and their dependents). The coverage offered must meet the Minimum Value (MV) standard and must be affordable for the employee or be subject to IRS 4980H penalties. The annual penalty of $2,260 (or $188.33 per month) per full-time employee applies to the 31st full-time employee and above; the first 30 employees are exempt from the penalty. Recently the IRS implemented a halt to lengthy extensions, now limiting employers that receive an IRS Letter 226-J penalty notice to one 30-day extension request. That 30-day extension policy applies to each IRS notice received in the penalty process.
Other Common Penalty NoticesOther IRS penalty notices are finding their way into mail rooms; among them are the Letter 5699 and Letter 5005-A with Form 886A. The Letter 5699 penalty notice is being sent to ALEs who have not filed the required annual information returns (i.e. Forms 1094-C and 1095-C). Letter 5005-A with Form 886-A is a new notice as of January 2019. These notices are sent to ALEs who have fail to respond to the IRS Letter 5699, or the follow-up Letter 5698 regarding whether it may be liable for filing required forms 1094-C/1095-C.
The IRS determines if penalty assessments are warranted by cross referencing the number of W-2’s employers filed with the IRS with their 1094-C and 1095-C forms. Inconsistencies can lead to the IRS issuing a penalty notice. An employer’s response to Letter 5699 (or any IRS notice) is vital to help prevent a formal ACA penalty assessment.
Time to Examine the "Snail-Mail" Distribution Process
The IRS penalty notices are time sensitive and can be devastating to an organization’s bottom line if not addressed. Take a moment to examine how official “snail mail” is handled within your organization and most importantly how ACA related staffing changes are addressed in your office. Ensure the mail room staff knows to whom the IRS notices must be delivered. This small step will work to preserve the organization’s ability to respond to IRS notices and can assist in avoiding devastating penalty assessments from the IRS.
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IRS Announces Form Deadline Extension
On November 29, 2018, the Internal Revenue Service (IRS) released an advance version of Notice 2018-94 which extends the due date of certain 2018 information-reporting requirements. Specifically, this notice extends the due date for furnishing to individuals the 2018 Form 1095-C, Employer-Provided Health Insurance Offer and Coverage, from January 31, 2019 to March 4, 2019. The extension is automatic. Employers don't have to request it.
The notice also extends good-faith transition relief from section 6721 and 6722 penalties to the 2018 information reporting requirements under section 6055 and 6056. No deadline extension for filing the 2018 information returns with the IRS was included.
2019 ACA Reporting Deadlines:- February 28, 2019: Paper IRS Filing Deadline
- March 4, 2019: 1095-C Form to Recipients/Employees
- April 1, 2019: E-Filing with IRS
Selerix will continue to monitor developments over the coming weeks and months, and provide you with updates as they become available.
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RE: Avoiding the Pitfalls of ACA
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Avoiding the Pitfalls of ACA
As your partner in the ACA process, we are committed to assisting in understanding the complexities of ACA compliance.
As part of that commitment, we have outlined some important and valuable information to assist employers in the ACA reporting process.
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ACA Reporting - What's Next? Finalized 1094/1095 Forms & Instructions
The IRS has released the final Instructions and Forms 1094/1095 for the 2018 tax year (for filing in early 2019).
2019 ACA Reporting Deadlines:
- IRS 1095-C Form post-mark Deadline: January 31st
- IRS Paper Form Filing Deadline: February 28th
- IRS Electronic Form Filing Deadline: April 1st, March 31st falls on a Sunday
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ACA Newsletter_August 2018
As your partner in the ACA process, we are committed to assisting in understanding the complexities of ACA compliance.
As part of that commitment, our ACA Newsletter offers The Latest ACA News to help provide additional resources and valuable information.
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ACA Newsletter_June 2018
As your partner in the ACA process, we are committed to assisting in understanding the complexities of ACA compliance.
As part of that commitment, our ACA Newsletter offers The Latest ACA News to help provide additional resources and valuable information.
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2018 ACA Summary Report Enhancements
Effective immediately, the enhanced ACA Summary for 2018 is now available.
In our ongoing efforts to provide Selerix ACA Clients & Service Providers updates on tools used as part of the ACA Service component we would like to take this opportunity to highlight a few enhancements.ACA Summary for 2018 – What you need to know
- Report Name Change: ACA Summary 2018 Tax Year
- The 2018 ACA Summary is not retro compatible; the 2018 ACA Summary will pull data for 2018 only – not any prior reporting period.
- The functionality to produce a prior year ACA Summary report still exists for data pertaining to those reporting years
ACA Summary for 2018 – Enhancements
- Report parameters and information now included within report
- Affordability Method: No longer set with default of “Poverty Line”. Warning added if no method is selected
- 1094/1095B tabs no longer included within the generated report. Special Situations: “include 1094B and 1095B data” parameter is an optional feature used to now include the 1094/1095B tabs.
- Task description will now automatically include the EIN selected under General Parameters when report is distributed
- New Warnings now identify: (1) Missing Values under Line 15, if required (2) Blanks under Line 16 if codes are present under Line 14 in corresponding month(s) or All 12
We encourage a review of the enhanced 2018 ACA Summary report at your earliest convenience. In addition, we have created an on-demand video outlining the reports enhanced report parameters.
You can access the on-demand video by clicking the image below:
2018 ACA Summary – Critical Updates
If you have any questions, please contact our dedicated ACA Support Team.
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Reviewing Your ACA Summary Report 1095-C Data
At Selerix, we support a proactive vs a reactive approach to ACA Management which has resulted in the distribution of the ACA Summary report(s) to employers on a quarterly basis.
The goal of distributing the ACA Summary report(s) during the calendar year is:
- Allows employers to review the data contained within the report specifically focusing on the data found under Line 14, Line 15 and Line 16 which represent the Part II of the 1095-C Form provided to employees.
- Allows employers to have more control over their data by reviewing the information on a more frequent basis.
- Allows employers to capture any errors and/or make any employee record updates/changes earlier in the calendar year vs at year-end.
Timely review & feedback of the quarterly ACA Summary report(s) now is vital to ensure any code anomalies or errors you identify can be solved. To aid in the process, we have created a brief on-demand tutorial which is available to assist you in the review of the data contained within the report. To date, the IRS has not released any extensions to the form or filing process or provided a “good-faith efforts” standard. Therefore, timeliness and accuracy are essential when completing the forms and filings to avoid potential penalties. Don’t Wait! Take this opportunity to review the ACA Summary and provide feedback as soon as possible.
ACA Summary – 1095-C Tab Review
ACA Summary – 1094-C Tab Review
If you have any questions, please contact our dedicated ACA Support Team.
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