Trade Preferences Extension Act of 2015 Increases Penalties for ACA Reporting

By Larry Grudzien
Attorney-At-Law

July 6, 2015
 
A reporting entity that fails to comply with the Code § 6055 or 6056 reporting requirements may be subject to the general reporting penalties for failure to file correct information returns and failure to furnish correct payee statements.

Two different sections of the Internal Revenue Code discuss the penalties for not complying with Code Sections 6055 and 6056 reporting:

Code Section 6721 provides a penalty for failing to send correct returns to the IRS.

?The basic penalty is $100 for each incorrect return.

?The total fine during any calendar year will not exceed $1,500,000.

Code Section 6722  provides a penalty for failing to provide employee statements.

?The penalty is the same as above ($100) but applies for not providing individual statements.

?The total fine during any calendar year will not exceed $1,500,000.
 
Section 806 of the recently enacted Trade Preferences Extension Act of 2015 increases these statutory amounts to $250 and $3 million for returns required to be filed after December 31, 2015.
 
The penalty is reduced to $30 and capped at $250,000 ($50 and capped at $500,000 for returns required to be filed after 2015) if corrected within 30 days and to $60 and capped at $500,000 ($100 and capped at $1.5 million for returns required to be filed after 2015) if corrected after 30 days but by August 1 of the year in which the return is due. The penalty may be reduced for de minimis failures. The maximum amount due is reduced if gross receipts are less than $5 million.
 
The penalty increases to $250, or $500 for returns required to be filed after 2015, for each return with no maximum penalty if the failure is due to intentional disregard. These dollar amounts may be adjusted for inflation for returns required to be filed in a calendar year beginning after 2014.
 
For returns filed in 2016 to report offers of coverage in 2015, Code Section 6724 provides that ALE members that can show they made good faith efforts to comply with the information reporting requirements will not have to pay a penalty for incorrect or incomplete information reported on the return, including social security numbers. Similar relief is not available for ALE members that do not timely file the information return. Nonetheless, those ALE members may be eligible for waiver or abatement of penalties for reasonable cause.
 
For a copy of the Trade Preferences Extension Act, please click on the link below:

https://www.govtrack.us/congress/bills/114/hr1295/text 

If you have any comments or questions regarding any of the above information, please do not hesitate to call me at (708) 717-9638 or e-mail me at larry@larrygrudzien.com