H&W: ACA Reporting Penalties Increased!

Form 1094/1095 Penalties Significantly increased

On June 29, 2015, President Obama signed H.R. 1295 Trade Preferences Extension Act of 2015. This bill included significant increases in the penalties incurred due to failure to file various tax reporting forms. This includes the penalties relating to Form 1094/1095 reporting.

The penalty for failure to file an information return with the IRS will increase from $100 per return to $250 per return.  The maximum limit on the total amount of penalties for failing to file an information return with the IRS will increase from $1,500,000 to $3,000,000.  If the failure is caused by intentional disregard, the penalty is doubled to $500 and no maximum limit will apply for that calendar year.

In addition, if an employer fails to provide the employee statement, as well as the filing with the IRS, the penalty is doubled.

Penalties are reduced if a corrected return is filed within 30 days of the required filing date or by a lesser amount if filed by August 1 following the required filing date.

These new penalty amounts become effective for the 2015 filings which are due in 2016.  However, the IRS’s enforcement policy for the first year of ACA filing remains unchanged.  This means that as long as employer can show a good faith effort to comply with the reporting requirements, penalties will not be enforced.  If a good faith effort cannot be shown, then these new penalties will apply.

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