New Law Boosts Penalties for ACA Reporting Errors

New Law Boosts Penalties for ACA Reporting Errors

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New Law Boosts Penalties for ACA Reporting Errors
Calendar08 July 2015

A new law could subject employers to increased penalties for failures (whether failing to furnish or file or providing incorrect or incomplete information) relating to ACA employer shared-responsibility and minimum essential coverage (MEC) reports first due to individuals and IRS in 2016 for the 2015 calendar year.

The Trade Preferences Extension Act of 2015, enacted June 29, increases the penalties for failures to file correct information returns and individual statements, including ACA Forms 1094 and 1095 as well as W-2 and W-3 reporting. The new penalties are potentially steep: $250 for each return that’s inaccurate or not filed (capped at $3 million), plus another $250 for each individual statement that’s missing or incorrect (also capped at $3 million). Uncapped penalties of $500 per return or statement can apply in cases of intentional disregard.

However, IRS can waive penalties for reasonable cause and reduce penalties if failures and errors are corrected within certain time frames. Further, IRS said in the preamble to the ESR and MEC reporting regulations that it won’t impose penalties in 2016 for incomplete or incorrect 2015 reports, as long as the employer has made a good-faith effort to comply with the ACA reporting requirements. This relief generally won’t apply to an employer that fails to furnish individual statements or file information returns on time.

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