2023 IRS Penalties for ACA, 1099, & W-2 Forms (TY2022)

IRS Penalties can happen for a variety of reasons, including forgetting to file, not filing by the deadline, not furnishing forms, or not offering coverage for ACA filing.

IRS Penalties for ACA Forms

Both types of ACA filings (B-series and C-series) require that the filer submit a return to the IRS, any applicable states, and to the recipients. If any of these requirements are not met, then the filer or employer, may be subject to fines and penalties.

Employers run the risk of being penalized for issuing or submitting the incorrect forms to the IRS and recipients. Employers can expect penalty letters if requirements have not been met by the IRS standards. The first letter the IRS sends is letter 5699 which serves as a “warning” letter. If no action is taken, then it is typically followed up with letter 226-J which contains the penalty amount and other information.

Employers may also receive a Letter 1865C notice if they submit a filing in which some or all forms cannot be processed.

If you are required to file these information returns and fail to file or fail to furnish forms by the due date, then you may be subject to the following IRS Penalties:

  • Failure to file correct forms – $290 per form, maximum of $3,532,500.
  • Failure to furnish recipient forms – $290 per form, maximum of $3,532,500.
  • Failure to file electronically, when required to do so – $290 per form.

Special rules apply that increase the per-return and per-statement and total penalties if there is intentional disregard of the requirement to file the returns and furnish the required statements.

2022 Instructions for Forms 1094-C and 1095-C

Check out the graphic below to see how quickly filing penalties for ACA forms can accumulate based on a sample size of 250 forms the business should have filed.

Failure to file 1095c TY2022
IRS Potential Filing Penalties for ACA Forms

What are the annually adjusted filing penalties for ACA forms?

The filing penalties for ACA forms are adjusted annually to account for inflation. The applicable per-employee dollar amounts increase based on the premium adjustment percentage for the year rounded to the next lowest multiple of $10.

YearFirst Type of ESRP PaymentSecond Type of ESRP Payment
Unadjusted Amount$2,000$3,000
2015$2,080$3,120
2016$2,160$3,240
2017$2,260$3,390
2018$2,320$3,480
2019$2,500$3,750
2020$2,570$3,860
2021$2,700$4,060
2022$2,750$4,120
2023$2,880$4,320
Annually Adjusted ESRP Payment Amounts

IRS Penalties for 1099 & W-2 Forms

If you are required to file these information returns and fail to file by the Form 1099 due date or Form W-2 due date, then you may be subject to the following IRS penalties:

  • $50 per information return if you correctly file within 30;
    • Maximum penalty $588,500 per year.
  • $110 per information return if you correctly file more than 30 days after the due date but by August 1;
    • Maximum penalty $1,766,000 per year.
  • $290 per information return if you file after August 1 or you do not file required information returns;
    • Maximum penalty $3,532,500 per year.

IRS General Instructions for Certain Information Returns

There are some exceptions to the penalty, though. More information regarding exceptions can be found in the IRS instructions.

Fines can accumulate pretty quickly! Check out our graphic below to see what this can look like for a small business with only 10 forms to send out.

IRS Failure to File Graph
IRS Failure to File Fine Amounts

Other Resources

We have a plethora of resources to ensure that you’re up-to-date on the latest tax news. Check out our Essential Guides to master all of your filing requirements or review our step-by-step guides for more information on preparing your filings.

BoomTax, The Boom Post, and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors prior to engaging in any transaction.

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