The IRS has set new penalties associated with the Affordable Care Act (ACA), commonly referred to as Obamacare. They have been increased for failure to file information returns, which includes Forms W-2, 1094-C and 1095-C. The penalties are reduced if the forms are filed late.
The changes apply to 2015 forms filed in 2016. Here is a rundown of the new penalties and other pertinent information.
Failure to file required forms:
- Per form penalty of $250 (formerly $100)
- Calendar year penalty limit of $3 million (formerly $1.5 million)
- For businesses with gross receipts up to $5 million, the maximum calendar year limit is $1 million
There are lower penalties if forms are submitted after the deadline:
- Submitted within 30 days of deadline — $50 penalty (formerly $30)
- Maximum calendar year limit — $500,000 (formerly $250,000)
- For businesses with gross receipts up to $5 million, the max calendar year limit is $175,000
- Submitted on or before August 1st — $100 penalty (formerly $60)
- Maximum calendar year limit — $1,500,000 (formerly $500,000)
- For businesses with gross receipts up to $5 million, the max calendar year limit is $500,000
If the IRS identifies that failure of filing the required information returns is due to intentional disregard, the per form penalty has increased to $500 (formerly $250).
This information is especially important for our clients who are Applicable Large Employers (greater than 50 full-time equivalent positions). If they do not file the required Form 1094-C and 1095-C’s in 2016 for tax year 2015, they will be subject to the above penalties.
The IRS has stated that if a good faith effort is made to file the returns on time for the tax year 2015 filed in 2016, there will not be penalties for errors made on the forms.
If you have questions about how ACA penalties could impact your organization or would like referrals for experts who assist with filing the required forms, please call Beth McGraw at (317) 613-7862 or email [email protected].