Robert J. Fedor, Esq., L.L.C.

Is your company at risk for an Affordable Care Act related audit?

Although the future of the Affordable Care Act may be uncertain, the bulk of the law’s new reporting requirements are still in effect. What’s more, even a modification or partial repeal of the ACA would likely not have retroactive effect. That means that companies may have valid fears about an ACA-related tax audit, at least for the foreseeable short-term.

To be fair, any audit would be preceded by an exchange notice from the health insurance marketplace, informing a company of its non-compliance one or more of the ACA’s rules. If a deficiency is confirmed, a company might be facing stiff penalties, amounting to potentially thousands of dollars.

As background, the ACA applies to an applicable large employer, defined under the act as a company that employs over 50 full-time workers. An ALE must either offer health care coverage that is affordable and provides minimum value, or make a payment to the IRS if one or more of its employees purchased individual coverage on the exchange and received a corresponding premium tax credit.

There is also a paperwork burden, involving monthly reporting and analysis of the company’s payroll records and employee attendance. Those records serve as monthly evidence of the full- or part-time nature of the company’s workers.

Of course, this requirement is on top of a company’s obligation to make regular payroll taxes for its employees, and keep corresponding documentation. Among other reasons, these records substantiate whether the money that was withheld from an employee’s paycheck was properly kept separate before being submitted to the IRS. If you have questions in this area, our tax law firm's website describes our practice in greater detail.

Source: Accounting Today, “How to successfully appeal an exchange notice from the health insurance marketplace,” Joanna H. Kim-Brunetti, April 7, 2017

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