The Affordable Care Act (ACA) requires some employers to file annual information returns with the Internal Revenue Service (IRS) by certain deadlines. These employers also must provide their employees with certain forms related to insurance coverage by a deadline. Failure to meet these deadlines can result in double penalties – one for failure to file an information return and one for failing to provide employees with the required forms. Omitted or incorrect information on the forms also can lead to penalties.
Beginning in 2024, applicable to 2023 filings, filers who must file for more than ten information reporting returns must file all information returns electronically. Failing to file electronically as required also can lead to penalties for employers.
Forms 1094/1095-B and 1094/1095-C
The Affordable Care Act (ACA) requires an applicable large employer (ALE) to file annual information returns with the Internal Revenue Service (IRS) on Forms 1094/1095-B and 1094/1095-C. An ALE is an employer that employs an average of at least 50 full-time employees, including full-time equivalent employees, on business days during the previous calendar year. The deadline for submitting these forms on paper was February 28, 2024, whereas the deadline for submitting these forms electronically is April 1, 2024, since March 31, 2024, falls on a Sunday.
Employers can request a 30-day extension to file these forms by submitting Form 8809, Application for Extension of Time to File Information Returns, on or before the due date of the filing of the information returns.
This information filing provides the IRS data about whether the ALE offers minimum essential insurance coverage as required by the ACA to at least 95% of full-time employees. The required insurance coverage must be of minimum value and affordable.
Forms 1095 B/C
ALEs must also furnish Forms 1095 B/C to their employees on time to document their employer-provided insurance coverage, as the ACA requires. The deadline for providing these forms to employees is March 1, 2024.
Penalties for Failure to Properly and Timely File and Furnish Forms
For 2023 information returns and forms, the penalty for failing to file electronically when required to do so is $310 per return, to a maximum of $3,783,000, or $1,261,000 for filers with gross receipts of $5 million or less for the past three tax years. Taking corrective action within 30 days of the due date reduces penalties to $60 per return or statement, not to exceed $630,500, or $220,500 for filers with gross receipts of $5 million or less for the past three tax years.
On the other hand, taking corrective action by August 1, 2024, reduces penalties to $120 per return or statement, not to exceed 1,891,500, or $630,500 for filers with gross receipts of $5 million or less for the past three years. Intentional disregard of these filing requirements can lead to the assessment of additional IRS penalties.
HBL has experience in all areas of benefits and employment law, offering a comprehensive solution to all your business benefits and HR/employment needs. We help ensure you are in compliance with the complex requirements of ERISA and the IRS code, as well as those laws that impact you and your employees. Together, we reduce your exposure to potential legal or financial penalties.
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