The Affordable Care Act (ACA) requires Applicable Large Employers (ALE) to provide their full time employees with form 1095-C. Additionally, they are required to file 1094-C and 1095-C with the IRS. Failure to furnish and file these forms, as well as late filings, can lead to hefty penalties of up to $560 per employee and all the way up to $3,392,000 per employer, per calendar year. In our experience, many eligible employers are not aware of this and could be exposing their business to huge liabilities.
Your business is considered an ALE if you have 50 or more full time employees, including full time equivalent employees, during the prior calendar year. In other words, if you had more than 50 FTE during 2019, the IRS considers you an ALE, thus requiring you to furnish your employees with form 1095-C and file forms 1094-C and 1095-C with your 2020 taxes.
Follow this link for more information.
If your business is an ALE and you have not provided the IRS with the reporting requirements, you may receive an IRS letter 5699. Employers have 30 days to respond.
The deadline is March 1st, 2021. If you believe you are out of compliance, it is important you act promptly to reduce the penalties you are liable for. If corrected within 30 days of the due date, the penalty (per employee) is $50 and capped at $565,000. Remember that failure to furnish the forms to your employees and failure to file the reports to the IRS constitute two separate penalties, bringing the total to $100 per applicable employee.
General Rule (§ 6721(a)(1))
$280 penalty per return capped at $3,392,000 per calendar year
Corrected within 30 days of the required filing date (§ 6721(b)(1))
$50 penalty per return capped at $565,000 per calendar year
Corrected after 30 days of the required filing date but on or before August 1 (§ 6721(b)(2))
$110 penalty per return capped at $1,696,000 per calendar year
At Colony West, our priority is your compliance. Armed with the right knowledge and tools,
our team of experts carries the heavy workload to help you stay on top of complex
laws and regulations and avoid exposing your business to liabilities than can
be easily avoided.