HR Compliance Tracker

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Big changes are happening in the realm of workplace compliance issues and labor laws in the United States. Noncompliance with government regulations can have serious consequences—and can cost your business big time. Keep up with what's happening between the government and the workplace with the HR Compliance Tracker: your go-to place to stay updated on some major workforce compliance issues.

 

IRS issues the next step of the ACA penalty process

In effort to enforce full-time employee coverage requirements under the Affordable Care Act (ACA), the IRS began assessing excise tax penalties against Applicable Large Employers (ALEs) that didn’t comply in 2015. For those who failed to comply, the IRS sent Letter 226-J to alert companies that the IRS determined an employer shared responsibility payment (ESRP) was owed.

To put it more simply: if you were suspected for a violation with the employer mandate of the ACA, you might’ve received a letter telling you how much money you owe. It’s up to you to respond with an appeal by the deadline (a 30-day period) or pay the fine.

Now, the IRS will send out one of the five versions of Letter 227 in response to companies who answered:

  • Letter 227-J  is used if the ALE agreed to the proposed ESRP liability in its response to the Letter 226-J. No further action is required, besides paying the ESRP liability bill.
  • Letter 227-K is used if the ALE provided additional information in response to Letter 226-J to inform that it should not owe an ESRP payment.
  • Letter 227-L is used if the ALE provided additional information in response to Letter 226-J and the IRS responds in with its proposed assessment. The ALE can agree with the assessment or request an appeal.
  • Letter 227-M is similar to Letter 227-L, but the IRS didn’t revise its proposed assessment.
  • Letter 227-N is used to inform the ALE of the IRS’s decision following an appeals discussion. No further action is required, besides paying the ESRP liability bill.
As the rounds of 2015 ESRP enforcement cycle is coming to a close with Letter 227, employers may expect a 2016 ESRP enforcement to begin soon. But it’s important to note that the IRS hasn’t indicated its completion of review for the 2015 reporting, so employers could still receive letter 226-J. If you’re still unsure if your company is ACA compliant, request a complimentary assessment from one of our ACA specialists to help get on track with the right tools you need.

Topics: ACA, ACA Compliance, Regulations