How to file Late 1094-C but without Letter 5699

[Benefits Vet]

Client discovers that 1094's have not been filed since 2016. They want to come forward and file and pay any penalties, but hopefully negotiate them down if possible. (We estimate that if the IRS actually imposes the full penalty, the number will be in the low 6 figures.) 

Any thoughts on how to do this? Just file the forms and wait to see what happens? Or try to do some type of "submission"? Where would you even submit it? 

All ideas welcome!! Thanks in advance. 

[Brian Gilmore]

@chibenefits  For some reason this guidance didn't appear again in the annual ACA reporting delay notice for 2019, but it was in the 2018 notice and all prior years:

 

IRS Notice 2018-06:

https://www.irs.gov/pub/irs-drop/n-18-06.pdf

Employers or other coverage providers that do not comply with the due dates for furnishing Forms 1095-B and 1095-C (as extended under the rules described above) or for filing Forms 1094-B, 1095-B, 1094-C, or 1095-C are subject to penalties under section 6722 or 6721 for failure to timely furnish and file, respectively. However, employers and other coverage providers that do not meet the relevant due dates should still furnish and file. The Service will take such furnishing and filing into consideration when determining whether to abate penalties for reasonable cause.

I take that to mean you have a better chance of avoiding the $270/form penalties if you come forward and file late than wait for the IRS Letter 5699 upon IRS discovery.

I have seen clients receive the IRS Letter 972CG imposing the full potential penalties for late filings.  So it definitely doesn't always work.

Worst case scenario is they may be a good candidate for a reasonable cause reduction.  Good summary in IRS Publication 1586: https://www.irs.gov/pub/irs-pdf/p1586.pdf

[Benefits Vet]

Thanks!  I had the same thoughts. 

[Ryan Moulder]

A little late to the game here but I agree that filing them as soon as you learn of error is the best course of action.  It is likely that you will receive a Notice 972CG after you file the Forms 1094-C and 1095-C late.  As Brian stated above,  there is a way for employers to dispute the proposed penalties in a Notice 972CG.  An employer should frame its response using the Treasury Regulations at 301.6724-1.  I have had a lot of success completely abating the penalty for clients although the IRS may be more stringent moving forward.  Each case is very fact specific.  I wrote an article that explains the Notice 972CG that may be informative - https://accord-aca.com/articles/notice-972cg .  Please don't hesitate to reach out if you need assistance.