IRS Fines Employers $520 Per Employee For Late ACA Filings

Written by Joanna Morrow

Joanna Morrow, Principal and Founder of Employer Benefits & Advice, is an employer consultant and advocate who has worked in the employee benefits industry for over two decades. She works diligently to help employers overcome obstacles in their business by sharing her expertise in Human Resources, Benefits & Compensation, Process Mapping, Risk Management and ERISA/DOL/IRS compliance. She is a licensed life and health insurance professional in the State of Arizona and is an active member of the National Association of Health Underwriters (NAHU).

IRS Fines Employers $520 Per Employee For Late ACA Filings

Each year at this time I like to revisit for employers the deadlines around ACA reporting. The fines for missing the IRS deadlines are hefty so it’s important that companies ensure they’re on track early in January.

It’s also a good time to review the forms, their purpose, and most importantly, how to keep it all straight!

Read on for important information regarding changes in this year’s ACA reporting deadlines and answers to some of the most frequently asked questions in order to avoid penalties.

1. What is the difference between the 1095-B and 1095-C forms?

If the 1095 B and 1095 C forms continue to be a point of confusion for you think of it as a W2 that reports on health insurance coverage for the prior year. Try this little trick for remembering which is which.

1095-B:

Think of “B” as standing for “Bought health insurance”. This is the form that insurance companies send to individuals so those individuals can prove to the IRS they BOUGHT health insurance in the prior year. In many cases it will be the insurance companies furnishing the B forms to individuals and to the IRS. The only exception occurs with small, self-funded employers. (See the table below for explanation).

1095-C:

Think of “C” as standing for “Compliments of the employer”. The “C” forms are forms large employers use to prove to the IRS that they OFFERED health insurance to all full-time employees in the prior tax year.

The chart below clarifies which forms are furnished by whom depending on the circumstance.

2. What are the deadlines for furnishing the forms?

2018 ACA Information Reporting Deadlines

3. What are the penalties for failing to file by the deadline?

The fine for failing to furnish forms to employees by the deadline is $260.00 per return.

The fine for failing to file forms with the IRS by the deadline is also $260.00 per return.

Failure to adhere to both deadlines will cost an employer $520.00 per return. Example, in the case of 100 employees, failure to file returns by the deadline will cost an employer $52,000.00.

4. What are the penalties for forms containing errors?

For 2017 the IRS has extended the “good-faith” relief that applied to filings in 2015 to 2016. This relief applies to missing and inaccurate taxpayer identification numbers and dates of birth, as well as other information required on the return or statement.

To show good faith efforts to qualify for this relief, filers must meet all applicable deadlines as shown above.

5. Can an employer apply for an extension on the deadlines for filing with the IRS?

Employers can still take advantage of an automatic 30-day extension of the IRS filing deadline by submitting Form 8809 before the relevant due date. Click here to download Form 8809.

6. Can I file my returns by paper regardless of how many I am filing?

No. Employers filing 250 or more returns are required to file electronically.

7. Can employees file their tax returns without the 1095B, 1095C forms?

Yes. In view of the fact the deadline for furnishing 1095B and 1095C forms has been extended to March 2nd, 2018 and the W2 deadline remains January 31st, 2018, many employees may be ready to file their tax returns prior to receiving their 1095B and 1095C forms. The IRS does not penalize individuals who file their tax returns in the absence of a 1095B or 1095C form.

For questions please contact me at [email protected] or 602-903-4047.