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ACA Reporting - Are Late Filing Penalties Being Imposed?

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Does anyone know if the IRS is actually assessing late filing or failure to file penalties on an ALE if the ALE 1) timely responds to the Letter 5699 indicating they will file within 90 days, and 2) files 1095-Cs and 1094-C within the 90 days?  

I know they may assess penalties in this situation, but am trying to find out if they are actually doing so if the employer comes into compliance.  Has anyone seen this?  

 

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Yes. I can confirm that the IRS sends out 5699 for failure of an ALE to file. If that is ignored, they will send a Notice CP-220J. This informs the company that the IRS has charged an ESRP. (All noticed in the 5699 and 226J refer to proposed penalties).

Benjamin Davis  NAHU - Benefits Technology Certification

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Thank you. But what if the employer timely responds to the 5699 and files the forms within 90 days. 

The forms are filed now, but were 2 years late. The failure to file was an oversight due to poor vendor management. Are late penalties actually being assessed in that situation? 

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I have helped clients respond to IRS Forms 226J and have not seen the IRS pursue penalties (late or otherwise) in any of those cases, although in certain cases they were arguably merited.  This is a relatively small sample size, however, so others' experiences may differ.

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Chaz, the issue is different here.

ACA reporting done incorrectly will get a 226J. (Or if it is done correctly, but an employee goes on the exchange and received a PTC).

When you do not respond to the 226J, you get a CP220J, which the IRS demands payment.

This situation is in regards to late filing. Kmhaab was asking "Since we got a 5699, and responded - we have filed the ACA information late... and we know there is a penalty for late filing, so can I expect a penalty"

It has been my experience, that even though you respond to a 5699 by submitting a late ACA filing - doing so will not result in penalty. At least, I have not seen any yet.

If you ignore the 5699, you get a 5698, asking for a response in 15 days. If you ignore this as well, you get a a CP215, which is a notice where the IRS demands payment.

I hope this has provided clarity.

 

Thanks

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Good grief! That was a wonderful, lucid and clear response, but I can't help thinking this blizzard of form numbers sounds like a M*A*S*H episode. "Sign this form to show that you initialed the other form instead of signing."

Reminds me somehow of many, many years ago when we refinanced a mortgage. Sitting in the lawyer's office, we spent, actually, 20 minutes doing nothing but signing and initializing forms. The best part was that after all of this, we had to sign an affidavit saying that we were who we said we were when we signed all the other forms! Like if we lied on all the other forms that we would hesitate to lie on the affidavit... 

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The latest trend is for the IRS to send employers who received a Letter 5699 (usually back in 2018) a Notice 972CG.  The Notice 972CG is proposing penalties for filing the Forms 1094-C and 1095-C with the IRS.  For 2017 the proposed penalty for 2017 is typically $260 per late Form.  So if an employer filed 100 Forms 1095-C late, the proposed penalty would be $26,000.  It appears the IRS gave employers a free pass on filing late in 2015 and 2016.  However, if the employer received a Letter 5699 for the 2016 tax year sometime in 2018 and then filed the Forms 1094-C and 1095-C for the 2015, 2016, and 2017 tax year, I have seen the Notice 972CG sent to the employer for the 2017 tax year late filing.  Here is an article summarizing the issue - https://accord-aca.com/articles/notice-972cg 

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