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On December 1, 2020, the IRS announced updates to the services it will be processing as a part of its mission-critical functions. Among the processes are ACA employer mandate penalty assessments.
Employers should note that because of the COVID-19 pandemic, the Internal Revenue Service (IRS) reduced its operations for a period of time and as a result has accrued a backlog of mailing notices. “In an effort to save time and money, we didn’t generate new ones and many notices were mailed with past due payment or response dates,” the agency said regarding bills and notices.
Regarding processing times of responses to various letters and notices, the agency states that it is doing so in the order in which they are received and is opening mail within 40 days of arrival. In addition, the IRS has stated that the current delay for processing responses provided to the IRS is more than 60 days.
In order to remedy the timing issue, the IRS included a Notice 1052 with any bills, letters or notices that allows employers more time to respond or make a payment. Regarding instructions on how to proceed with any potentially late penalty assessments, letters, or notices, the agency states the following:
- Review the last page of the insert to determine if there is a new due date
- Do nothing with the notice if you’ve already taken steps to resolve the issue
- Contact us using the phone number on the notice if you have questions. Keep in mind that phone lines are extremely busy as the IRS resumes operations
Employers interested in learning more about mission-critical functions and related details should click here.
The IRS first began resuming mission-critical functions in April 2020 and is continuing to process a backlog of requests. Regarding ACA penalty assessments, the IRS is currently issuing Letters 226J for the 2018 tax year to employers identified as having failed to comply with the ACA’s Employer Mandate. You can learn more about the IRS’s penalty assessment process here.
As a reminder to employers in conjunction with the Employer Shared Responsibility Payment (ESRP), the ACA’s Employer Mandate, Applicable Large Employers (ALEs), organizations with 50 or more full-time employees and full-time equivalent employees, are required to offer Minimum Essential Coverage (MEC) to at least 95% of their full-time workforce (and their dependents) whereby such coverage meets Minimum Value (MV) and is affordable for the employee, or be subject to Internal Revenue Code (IRC) 4980H penalties.
Employers that are unsure of their ACA compliance status and are worried about receiving an IRS penalty assessment should contact us to learn about our ACA Penalty Risk Assessment service.
If your organization has received a Letter 226J, or a different penalty notice from the agency, timing is of the essence. With other end-of-the-year functions also requiring an immediate attention, employers should contact us to learn about ACA Complete. This full-service solution addresses ACA penalty responses, ensures 100% ACA compliance, and handles Forms 1094-C and 1095-C reporting.
