The IRS has started to issue a new set of ACA penalty notices for failing to distribute 1095-C forms to employees and for failing to file 1094-C and 1095-C forms with the federal tax agency by required deadlines under IRC Section 6721/6722, as required by the Affordable Care Act.
Prior to receiving of IRS Letter 5005A, employers are receiving Letter 5699 from the IRS seeking information to determine if employers fall under the ACA's Employer Mandate regulations and if they filed ACA information returns to the IRS.
How employers respond to Letter 5699 can determine if they will receive an IRS penalty assessment for failing to comply with the ACA.
In order to avoid a penalty assessment, employers should respond to Letter 5699 to demonstrate that they either are not subject to the ACA or that they have filed the required information with the IRS. First Capitol has a demonstrated success in helping employers avoid receiving ACA penalties by successfully responding to Letter 5699. We are prepared to mobilize quickly to help organizations respond to IRS Letter 5699 to avoid the penalty assessments contained in IRS Letter 5005A. First Capitol will verify your ACA filings and submit them with accuracy to avoid unnecessary penalty assessments.
If employers do receive an IRS penalty notice, First Capitol can help them reduce or eliminate their ACA penalties.
These ACA penalty assessments in Letter 5005A are calculated by the IRS using the employer’s W-2 count for the tax year as a proxy for the full-time employee count because the employer failed to file the 1094-C and 1095-C forms. For a large majority of employers, the IRS penalty calculation process will dramatically overestimate the full-time employee count and, in turn, the penalty owed to the IRS.
If employers do receive Letter 5005A and want to reduce the penalty assessment, they must move quickly to accurately determine their full-time employee count for the tax year and generate the correct 1094-C and 1095-C tax schedules. It is VERY important that the full-time employee counts be calculated accurately because the IRS can also issue penalties under IRC Section 6721/6722 for inaccurate filings.
Our ACA Letter 5699/5005A Penalty Resolution Service is a solution that payroll and software vendors don’t provide.
First Capitol works with employers directly or in concert with their insurance brokers, CPAs or law firms.