Trade Act Increases ACA Penalties

On June 29, 2015, President Obama signed into law the Trade Preferences Extension Act of 2015, which increases potential penalties for failing to comply with health care reform reporting. The increased penalties also apply to other IRS filings, such as Form W-2. 

• The general penalty for failing to file a required information return with the IRS increases to $250 per return. The prior penalty was $100.
• The cap on total penalties for all failures during a calendar year increases to $3,000,000.
• If a failure applies to both an information return (Form 1094-C) and a form required to be provided to an individual (Form 1095-C), the penalties double.
• If a failure to file is caused by intentional disregard, the penalty is increased to $500, with no cap. 

While the IRS will not enforce penalties against employers who make a good faith effort to comply with the law, the good faith exemption applies for one year, only. Penalties are steep and employers should be gearing up to make sure they are ready for health care reform filings.