ACA Penalties on the Way, IRS Letter 5699 Requests Missing Reporting

Sample Letter 226J

Recently, the IRS began sending Letter 5699 to request missing 2015 Affordable Care Act (ACA) reporting from Applicable Large Employers (ALEs).  A sample of this letter is available here.

In the Letter 5699, titled “Request for Employer Reporting of Offers of Health Insurance Coverage (Forms 1094-C and 1095-C)”, a tax compliance officer is notifying the recipient employer that it is non-compliant with Internal Revenue Code (IRC) Section 6056 because the IRS has not received 2015 returns.   The 5699 Letter states that IRC Section 6056 requires ALEs to file ACA information returns with the IRS and provide statements to full-time employees relating to the health insurance coverage, if any, that was offered to full-time employees.

The IRS requires one of the following responses within 30 days from the date of the letter:

  • I was an ALE for calendar year 2015 and already filed Form 1094-C and Forms 1095-C with the IRS using <name> and <employer identification number> on <date>.
  • I was an ALE for calendar year 2015 and my Form 1094-C and Forms 1095-C are included with this letter.
  • I was an ALE for calendar year 2015 and will file my Form 1094-C and Forms 1095-C with the IRS using <name> and <employer identification number> by <date>. (If more than 90 days from the letter, the response must explain why.)
  • I was not an ALE for calendar year 2015.
  • Other (must explain)

If ALEs do not comply with IRC Section 6056, they can be assessed penalties under IRC Section 6721, including:

ACA penalties associated with IRS Letter 5699

What does this mean for employers?

  • The IRS is preparing to assess fines. It is clear that the IRS is monitoring non-compliance and has dedicated caseworkers (tax compliance officers) handling this process.  The ball is rolling toward penalty assessment.
  • Now is the time to file for tax year 2015 if you have not done so. If your organization did not file 2015 ACA forms with the IRS, you still can do so.  While you may incur a penalty for filing late, it may be possible to reduce your penalty from $530 per form to $260 per form for those not already filed.
  • It is important to prepare and file your 2016 returns properly. Regardless of what one reads in the headlines, the 2016 ACA regulations are still in place.  Employers must file with the IRS by March 31 to avoid penalties.

If your organization needs support in filing forms 1095-C and 1094-C with the IRS for the 2015 or 2016 tax years, Equifax can help. Visit our website to learn more about our ACA compliance management solutions, or contact an Equifax ACA team member at ACAcompliance@equifax.com today.