ACA Penalty Assessments: What Should You Expect for Your Business?
If you've been paying attention to the news, you may have noticed a lot of chatter recently about the employer ACA penalty assessments that are being enforced starting with the 2017 tax year. But what are they, what kind of penalties are involved and what other issues should you be aware of? Here's a quick look at what you can expect.
The ACA employer mandate requires companies with 50 or more full-time employees provide health insurance. With statements by President Trump suggesting repealing the Affordable Care Act, many employers waited to see what would happen with the employer mandate. However, friction in Congress has prevented replacement bills or repeal bills from making it through the legislature. This has left the ACA employer mandate in effect for this year.
The initial letter that goes out is 226J, and it explains the basics of the procedures. Penalties to date are estimated to be between $10,000 and $6 million. Fortunately, if your company applied for and was accepted for an affordability safe harbor or another type of relief, you may be in the clear. The letter will also include details about exactly which employees were to be covered if you did not receive relief from the requirement.
If you do receive an ACA Penalty Assessment letter, you'll find a response form 14764 in there to reply as well as details of what will happen if you fail to respond to the IRS in a particular period of time, generally 30 days. Once it is received by the IRS, another letter is sent with a calculated total. If you choose to dispute the total, you'll need to do so at that time. If you don't, demand for payment will follow fairly quickly.
By knowing what to expect from ACA penalty assessments, you're in a better position to plan for your business' financial needs. However, with the complexity of the ACA's requirements, many business owners are turning to professional accountants to help ensure they're meeting the letter of the law. Where does your company stand? If you need help figuring out what to do with an ACA penalty assessment or are not sure whether you're in compliance or not, please feel free to contact the professionals at AccountRely today to learn more.