When the Trade Preferences Extension Act came into law on June 29, 2015, many overlooked a small provision to amend Internal Revenue Code sections 6721 and 6722. As it turns out, this provision will double per-employee penalties, starting in 2016, for applicable large employers who fail to properly file Affordable Care Act (ACA) information returns with the IRS or fail to provide employees with payee statements regarding their healthcare coverage. Penalties will apply to Forms W-2 and 1099-series as well as ACA-required employer shared responsibility and minimum essential coverage reporting forms.
Additionally, certain requirements will apply to all employers, regardless of size, who provide health coverage to their employees.
As a result of these amendments:
The basic penalty for failure to file, or furnish a correct information return or payee statement, will more than double from $100 to $250.
The standard annual penalty cap will double from $1.5 million to $3 million.
If the failure relates to both an information return and a payee statement, the penalties are doubled to $500 per statement with a $6 million cap.
The reporting requirements are effective for the 2015 calendar year, with reports due early in 2016.
Basically, it’s going to take more effort, stronger recordkeeping and commitment to excellence to ensure that all the returns and statements are completed on time and correctly per employee – in order to avoid being fined.
Why Streamlined, Outsourced HR fits Applicable Large Employer needs?
If the ACA applies to you, and you don’t have a process or the framework in place to fulfill all the requirements and remain in good standing with the reporting requirements by early 2016, now is the time to act. Planning ahead of time is crucial in avoiding penalties. For example, not filing form 1095-C with the IRS and also failing to provide the same form to your employee will result in two separate fines at $250 each, or $500 total per employee. This can amount to over $50,000.
Discover how HR outsourcing can help you solve some of your biggest HR challenges.
Human Resources is no longer a one-stop shop for all employer needs. As such, many top organizations are outsourcing all or part of their HR needs. There are a whole lot of regulations out there, and outsourcing to an expert improves compliance. Outsourcing to a professional will allow you to focus on what’s important – your core competencies. Outsourcing gives your organization the opportunity to become more focused, adaptive and more profitable.
CJC Human Resource Services monitors ever-changing legislative developments and helps you maintain compliance. CJC can provide you with utmost security that all your objectives are met. CJC will handle all the ACA recordkeeping and recording requirements so that you don’t have to. Staying informed and ahead of the game should be top priority to avoid having to pay high penalties. This actually may be worth the time to do the research and learn about what HR outsourcing can provide for your organization.