We were founded by CPAs & Enrolled Agents, and we have licensed staff in benefits. We also are experienced certified SHRM HR professionals with dedicated ACA Specialists.
We are a team of dedicated experts. With 65+ years of experience, we focus on addressing the nuances of payroll and HR that we know will impact your business and make day-to-day integrations as easy as possible.
We will bring your business compliant with the IRS, and comb through your payroll data to determine who you need to file for among your employees.
We file your past-due 1094 and 1095-C forms while helping reduce penalties and fees owed to the IRS.
The Affordable Care Act, or ACA as it is commonly referred to, was put in place to provide affordable health care to working Americans. There has been a lot of confusion about what this means for businesses. The rules are not straightforward, and many companies have not been able to properly follow them and have become non-compliant.
The general understanding of the rules is that all companies that have over 50 full-time employees are required to provide health insurance to their employees. These companies are called Applicable Large Employers, or ALEs. However, the small details of these requirements can be hard to understand, and even harder to put into practice. The misunderstanding of these requirements has led to some of our clients getting into some hot water with the IRS.
We have been getting calls from our clients about letters they have been receiving saying that they are not compliant with the rules and now owe very hefty fines to the IRS. This letter is called IRS Letter 226J. Basically what this letter states is that your company has not properly followed the rules and is now responsible for paying Employer Shared Responsibility Payments, or “ESRP” which is effectively a punitive tax imposed under the Affordable Care Act.
The rules governing who constitutes an ALE can be difficult to understand. Another confusing part is that the mandate requires only that an “offer” of coverage be made to 95% of full-time employees. The health care plan does not need to be accepted by every employee, just offered to them. The mandate also requires that the health plans offered provide minimum coverage and minimum value. Arguably the most difficult rule for employers to follow, the coverage offered must be “affordable” to the employees. We all know the term “affordable” is subjective and varies depending on who you ask.
So, as you can see, this has been a difficult process to navigate. As the IRS is ramping up their enforcement of these rules, more and more businesses are receiving letters saying they are non-compliant and now owe a large amount of money for not following the rules.
If you have received the IRS Letter 226J, don’t get too alarmed or take any immediate action. We are here to help. We have been working with our clients to determine where they can make changes to become more compliant and reduce the amount of the ESRP that the IRS says you owe. We have successfully worked with several clients to reduce this amount and get them set up for success moving forward.
If you have received this notice and would like to get more information or set up a consultation, please do not hesitate to contact us. We know how confusing and scary this can be for business owners and we are here to help!
ACA penalties only kick in if the employer fails to meet the coverage requirements and at least one full-time employee receives the premium tax credit for securing individual coverage through the Health Insurance Marketplace. The ACA provides for two types of penalties: one for failing to provide coverage to at least 95% of their full-time employees, and one for failing to meet the minimum requirements for coverage.
We can track all your employees’ hours and let you know if you fall out of compliance with the ACA rules.
ALEs have obligations to report about their healthcare coverage to their employees and the IRS per IRS Section 6055 and 6056. Section 6056 requires ALEs to provide minimum essential coverage to full-time employees. Section 6055 requires that they report that coverage to the IRS and give a copy of the return to employees.
For the IRS, to comply with the ACA, Form 1095-B (self-funded plans) or 1095-C need to be filed electronically by March 31 each year. To complete the form accurately the following information is required:
- Covered individual or employee’s data like name and date of birth
- Covered Dependent names and social security numbers (self-insured plans only)
- Plan provider’s data like name and address
- When the employee was offered coverage
- The employee’s coverage status for each month of the previous year
- Proof the plan was affordable, typically using Safe Harbor methods to calculate
Letter 5699, Missing Information Return Form 1094/1095-C, is a notice sent from the IRS to make initial contact with an organization that the agency believes was an Applicable Large Employer (ALE) for an identified tax year. In the eyes of the IRS officers, the organization needed to file information returns under the ACA’s Employer Mandate but failed to do so. Letter 5699 is therefore the first step towards the IRS imposing an ACA penalty assessment on an employer.
Letter 226-J is the initial letter issued to Applicable Large Employers (ALEs) to notify them that they may be liable for an Employer Shared Responsibility Payment (ESRP). The determination of whether an ALE may be liable for an ESRP and the amount of the proposed ESRP in Letter 226-J are based on information from Forms 1094-C and 1095-C filed by the ALE and the individual income tax returns filed by the ALE’s employees.