The Affordable Care Act requires Applicable Large Employers to file and furnish information to IRS and employees every year. In case, if the employers fail to comply with ACA requirements, they may be subjected to significant IRS penalty assessments. To comply with the ACA Employer mandate, employers should meet the following deadlines.
Mark the following dates of your calendar
February 28, 2021
Mark February 28, 2021 to file the Form 1094-C and 1095-C with IRS for the year 2020. Make sure to not become late than this date.
March 2, 2021
Make sure to furnish Form 1095-C to your full-time employees up till March 2, 2021. The last date was originally 31, 2021 but the IRS has extended it.
March 31, 2021
Employers need to file the 2020 forms 1094-C and 1095-C electronically with the IRS before 31 March. (The employers from California also need to submit Pay Data Reporting before this deadline.)
If the employers fail to meet these deadlines, they may face penalties under IRC 6721/6722. The IRS issues this penalty through Letter 972CG. The employers only have 45 days to respond to the penalty notice after its issue date. The employers that failed to comply with IRC 6721/6722 in the last three years had to face the following penalties:
If employers fail to file and furnish correct information on time
If the employers don’t file ACA information returns with the IRS for 30 days after the deadline, they can be subjected to penalties. They'll have to pay a $50 penalty per return not filed and will not exceed an annual maximum of $556,500. But if they become 31 days or more days late up to August 1, 2021, the penalty will increase. They'll then have to pay $110 per return not filed but not to exceed an annual maximum of $1,669,500. The penalty amount after 1st August will steepen to $270 per return but will not exceed an annual maximum of $3,339,000. In case, if the employer misses the deadline willfully, the penalty will be $550 per return with no annual maximum limit. The employers with less than $5 million gross receipts in the last three years will have to pay the same penalty. But it is not applicable to cases of intentional disregard (missing the deadline willfully).
The penalties for failing to file or furnish deadlines were not enough. IRS also issues penalties for failing to comply with ACA Employer Mandate. The employers with 50 or more full-time employees have to pay Minimum Essential Coverage (MEC) to at least 95% of their full-time workforce. Only those employers are in conjunction with Employer Shared Responsibility Payment, the ACA’s Employer Mandate, and ALEs need to do so. Otherwise, they'll be subjected to the Internal Revenue Code (IRC) 4980H penalties issued through IRS Letter 226J.
Employers should consider a cost-free ACA penalty risk assessment to discover the potential exposure. Before submitting their filing to the IRS, employers need to look for the penalty risks.
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