IRS Sending Out 2015 ACA Tax Penalty Assessment Letters

In mid-November, a number of employers across the country and here in Massachusetts began receiving letters from the IRS notifying them that they owed significant tax penalties for calendar year 2015 due to non-compliance with the Affordable Care Act (ACA).  The letters include calculations of what the IRS has determined the employer owes in an Employer Shared Responsibility Payment (ESRP). 

Under the ACA, if an employer has at least 50 full-time employees (including full-time equivalents) during the prior year, the employer is subject to the employer shared responsibility provisions and reporting requirements.  For years, the employer mandate was not enforced, until now.  

Unfortunately, the timing of this coincides with the state’s pending launch of its own new employer health care tax, through an increase in the Employer Medical Assistance Contribution Supplement (EMAC), set to take effect on January 1.  The EMAC Supplement is an additional tax on employers whose non-disabled employees obtain health insurance either from Medicaid/MassHealth or subsidized coverage through the MA Health Connector, and is $750 per employee per year. 

Over the course of the year, we have been working with Governor Baker’s Administration to mitigate the impact of the EMAC and all involved were under the assumption that the federal penalties would continue to go unenforced.  Given the recent IRS actions, we are working now with the state to determine how best to proceed forward, continuing to argue that employers who make an offer of affordable, qualifying coverage to employees, but whose employees decline that coverage and still go to MassHealth or the Connector, should not be liable for the EMAC Supplement.  This would ensure that employers would not be subject to both an ESRP and the EMAC Supplement.

If you have received one of these letters from the IRS, we would like to work to assist you.  Please respond to this confidential Survey Monkey.  Your feedback also will help us in our communications with the Administration.

Thank you in advance for your assistance.

* 1. Contact Information (optional):

* 2. Type of Retailer

* 3. Number of locations

* 4. Number of Employees

* 5. Did you receive an IRS 2015 ACA assessment notice in recent weeks?

* 6. What was the amount of the assessment?

* 7. Was the penalty for

* 8. If you answered B penalty in Question 7, how many employees triggered the penalty?

* 9. Did you offer Minimum Essential Coverage to at least 70% of your full time employees (and their dependents)? 

* 10. Given questions on legality of the ACA assessments, and the potential for double taxation under a state tax plan, would you be willing to talk with the press?

* 11. Would you be willing to serve as a plaintiff in potential employer group action against government agencies for not properly following notice laws under the ACA?

* 12. Any additional comments you wish you make?