ACA News: Noncompliant ALEs to Begin Receiving IRS Letters
from Carr, Riggs & Ingram
If There’s Something Strange in Your Neighborhood (Such as Your Mailbox), and It Doesn’t Look Good…
The IRS is taking steps to enforce the Affordable Care Act’s (ACA’s) employer shared responsibility provision by sending penalty letters to allegedly noncompliant applicable large employers (ALEs). Under the ACA’s employer shared responsibility provisions, an ALE is an employer with 50 or more full-time employees (including full-time equivalent employees) in the previous year. These employers must either offer minimum essential coverage that’s “affordable” and provides “minimum value” to full-time employees (and their dependents) or potentially face a financial penalty.
Don’t Be Afraid of No…Penalties
The IRS has announced that, in late 2017, it plans to send out a letter informing ALEs of their potential liability for an employer shared responsibility payment, if any, for the 2015 calendar year. For further information on the announcement, visit the IRS website.
The IRS plans to issue this letter to an ALE if it determines that, for at least one month in the year, one or more of the ALE’s full-time employees were enrolled in a qualified health plan for which a premium tax credit was allowed—and the ALE didn’t qualify for an affordability safe harbor or other relief for the employee.
Before the IRS Comes Through your Door
ALEs will have an opportunity to respond to the letter before any employer shared responsibility liability is assessed, and notice and demand for payment is made. The letter provides written instructions on how the ALE should respond (either agreeing with the proposed employer shared responsibility payment or disagreeing with part or all of the proposed amount).
The IRS will assess the employer shared responsibility payment and issue a notice and demand for payment if—after correspondence between the ALE and the IRS, or a conference with the IRS Office of Appeals—the IRS or IRS Office of Appeals determines that the ALE is liable for the employer shared responsibility payment.
If You’re All Alone, Pick up the Phone
…and call CRI. Receiving one of these letters may be a little scary, but it’s nothing that can’t be contained. We are here to help you assess your potential penalty and develop a plan of action for responding. We advise that you do not just assume this assessed potential penalty is correct because you are unsure of what to do – and definitely do not ignore this letter. Let us help you analyze your potential penalty, see if there are any ways to reduce the potential liability, and develop a strategy to help ensure future compliance with the ACA’s employer shared responsibility provision.