Calendar Year 2020 ACA Reporting And Penalties For Applicable Large Employers

As we enter the last quarter of this unprecedented year, applicable large employers (ALEs) are starting to prepare for annual ACA reporting. Generally, an ALE is an employer that had, on average, 50 or more full-time employees (including full-time equivalents) during the preceding calendar year, according to ACA’s specific calculation rules.

Recently on July 13, 2020, the IRS released drafts of the 2020 Form 1094-C and Form 1095-C. ALEs will provide a completed Form 1095-C to each full-time employee and file the final versions of these forms in early 2021 to report ACA compliance during the 2020 calendar year.

Please note the following deadlines:

• January 29, 2021 –  Provide IRS Form 1095-C that you plan to file with IRS to each full-time employees (as that term is defined under the ACA) (Statement);
• February 26, 2021 – Last Day to Mail Form 1094-C and Forms 1095-C to the IRS;
• March 31, 2021 –Last Day to E-file Form 1094-C and Forms 1095-C to the IRS.

Note: ALEs filing 250 or more returns must file electronically.

Employers who fail to provide Statements to full-time employees or fail to file correct Forms are subject to the following penalties:

• Failure to provide Statement to Employee – $270 for each failure (maximum annual penalty of $3,275,500); and
• Failure to file correct Form – $270 for each failure (maximum annual penalty of $3,275,500).

ALEs should plan ahead to ensure these deadlines are met to avoid penalties.  ALEs working with a vendor on the filings should double-check the Forms to ensure that the vendor is completing them correctly, as the IRS will still penalize the ALE (not the vendor) for incorrect forms and failure to timely file.