ACA ESR Penalty Abatement

[Renafesq]

I have a client ALE who has not offered coverage to any of its FTEs or FTE equivalent.  Of course they have now received a 226-J letter for 2016 because 8 ees have received a PTC on the Exchange.  Their argument is that they could not afford to offer coverage because 2018 is the first year they turned a profit (they took over a company in 2015 and never offered coverage).  I'm just curious to know if anyone has successfully made a hardship argument on behalf of a client who has never offered coverage to their employees.  Of course I am requesting W2s from the client to make sure the IRS did not mistakenly offer the PTC to these employees, but I'm afraid that they are going to get hit with penalties for the past 3 years and likely go out of business.  Thank you!

[pr2222]

I have not heard of any hardship exception.  Seems to me to be too subjective.  Where do you draw the line if such an exception was allowed.

[Ryan Moulder]

I have a few clients that are arguing they should not owe any penalty because they never received a section 1411 notice so therefore they cannot be penalized under section 4980H because the requirements of the provision have not been fulfilled.  This is your best avenue in my opinion.  Here is an insightful article on the 1411 notice written by ERIC - https://www.eric.org/eric-sends-irs-letter-on-aca-penalties/. Email me if you want to discuss this in more detail rmoulder@accord-aca.com