IRS Penalties can happen for a number 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.
Filers run the risk of being fined for issuing or submitting the wrong 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 usually followed with letter 226-J, or the letter with the penalty amount and other information.
Employers may also receive a Letter 1865C notice if they submit a filing in which some or all of the forms within a filing can’t be processed.
If you’re required to file ACA 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 – $340 per form, maximum of $4,098,500.
- Failure to furnish recipient forms – $340 per form, maximum of $4,098,500.
- Failure to file electronically, when required to do so – $340 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.
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 50 forms the business should have filed.
What are the annually adjusted IRS ESRP penalties for ACA forms?
Applicable Large Employers (ALEs) are subject to Employer Shared Responsibly Provisions. This is part of the ACA in which ALEs are required to offer MEC that is afordable and provides minimum value to their full-time employees and their dependents. If they fail to do so, they could be subject to an Employer Shared Responsibility Payment to the IRS. This is sometimes referred to as “The Employer Mandate.”
The ESRP 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.
| Year | First Type of ESRP Payment | Second 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 |
| 2024 | $2,970 | $4,460 |
| 2025 | $2,900 | $4,350 |
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:
- $60 per information return if you correctly file within 30;
- Maximum penalty $683,000 per year.
- $130 per information return if you correctly file more than 30 days after the due date but by August 1;
- Maximum penalty $2,049,000 per year.
- $330 per information return if you file after August 1 or you do not file required information returns;
- Maximum penalty $4,098,500 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.
Filing Tips
We have a ton of resources to help you stay up-to-date on the latest news. Review out our Essential Guides to get refreshed on all of your filing requirements, and stay ahead of filing deadlines to avoid penalties!
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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