New guidance released by the IRS affirms that ACA reporting requirements will be enforced this tax year. While your organization should not be surprised by this news, it is nonetheless critical to understand the implications of this messaging from the IRS. ADP's Eye on Washington highlights the full details of the release from the IRS, and here we review the most relevant information for finance leaders:
"On November 2, 2017, new guidance was released by the Internal Revenue Service (IRS) concerning Employer Shared Responsibility assessments under the Affordable Care Act (ACA), also known as the Section 4980H Employer Mandate penalty. Among other things, the guidance indicates that the IRS plans to issue ACA employer assessments in the next few weeks covering tax year 2015. This new guidance from the IRS is significant because it advises that, for the first time, the IRS will be issuing ACA employer assessments since mandatory ACA reporting for Applicable Large Employers (ALEs) began."
"New "Frequently Asked Questions" (FAQs) include a statement that "for the 2015 calendar year, the IRS plans to issue Letter 226J informing ALEs of their potential liability for an employer shared responsibility payment, if any, in late 2017." Thus, ALEs should prepare to receive and respond to potential IRS assessments for 2015. ALEs will have 30 days to respond to such notices.
The Letter will also explain the actions that the employer can take, and will include an Employer Response Form (Form 14764, ESRP Response), which will be due by the response date shown on Letter 226J (generally 30 days from the date of the IRS letter).
ALEs should respond to Letter 226J if there is any disagreement as to the proposed assessment. For example, it is possible that some employees listed may actually not have been full-time employees, or may have actually qualified for an affordability safe harbor. The IRS will acknowledge any response to Letter 226J with a Letter 227, and will offer further instructions if the ALE disagrees with the proposed or revised assessment. Employers may request a pre-assessment conference and, following such a conference with the IRS, may also ask the IRS Office of Appeals to review the case."
To learn more about this new guidance from the IRS and what your organization needs to know to remain compliant, click here for the full details in ADP's latest "Eye On Washington."
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