What are the penalties for failure to comply with the ACA filing requirements?
336 views | Last modified 10/17/2022 5:32:03 AM EST | Added by ACAwise Team

The IRS mandates that employers who provide Minimum Essential Coverage to their employees must accurately submit their ACA forms and furnish employee copies on time under sections 6055 & 6056.

If an employer fails to comply with the ACA filing requirements, the IRS issues penalty letters 5699, 5005-A, and 972CG with potential penalties under sections 6721 and 6722.

Penalty under section IRC 6721

This penalty is for employers who,

  • Submit their ACA Forms 1094/1095 late
  • Filed using the incorrect method
  • Filed with incorrect TIN/Name

Under IRC 6721, the IRS will impose a penalty from $50 to $260 for each information return that doesn’t meet the filing criteria. On the other hand, if any return submitted by the employer has more than one error, the IRS will impose the highest penalty amount for the return.

For example: If a 1095-B or 1095-C return was filed 30 days late with an incorrect TIN, then the penalty will be $260 for the employer. In case reasonable cause was accepted for TIN failure, the late filing penalty of $50 is still applicable for the employer.

Penalty under section IRC 6722

This penalty is for employers who fail to furnish accurate payee statements timely.

Under IRC 6722, the IRS will penalize $50 to a maximum of $500,000 per year to an employer for each return. 

If you have received penalty letters 5699, 5005-A, and 972CG with potential penalties under sections 6721 and 6722, you must respond to it within 45 calendar days from the date of the notice to avoid increasing penalties from the IRS. 

You can also contact ACAwise if you are unsure how to respond to it. Our experienced ACA professionals perform an assessment to inform you of your options and provide clear instructions to proceed further to avoid unwanted penalties from the IRS.

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