ACA Information Reporting Penalties Will Increase in 2016

employee-happy-01As part of a new law, the penalty amounts that may apply to employers subject to the Affordable Care Act’s information reporting requirements will increase next year. These employers must report certain details regarding health care coverage and other information to the IRS and to covered individuals for the first time in early 2016 for calendar year 2015.

Information Reporting Penalties

Large employers with 50 or more full-time employees (including full-time equivalents) and self-insuring employers that provide minimum essential health coverage (regardless of size) that do not comply with the information reporting requirements may be subject to the general reporting penalties under the Internal Revenue Code for failure to file correct information returns and failure to furnish correct payee statements.

In general, the penalties—including increases under the new law—are as follows:

  • The penalty for failure to file an information return is $100 (increased to $250) for each return for which such failure occurs. The total penalty imposed for all failures during a calendar year cannot exceed $1,500,000 (increased to $3,000,000).
  • The penalty for failure to provide a correct payee statement is $100 (increased to $250) for each statement with respect to which such failure occurs, with the total penalty for a calendar year not to exceed $1,500,000 (increased to $3,000,000).

The law will apply with respect to returns and statements required to be filed after December 31, 2015; however, the IRS has stated that it will generally not impose penalties for 2015 returns and statements filed and furnished in 2016 on reporting entities that can show that they have made good faith efforts to comply.

Other Resources
Additional details on the information reporting requirements for self-insuring employers are available in IRS Questions and Answers. More information about the information reporting requirements for large employers subject to “pay or play” is available in separate IRS Questions and Answers.

Be sure to check out our Information Reporting section for more on these requirements.

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