By: Cyndi Moore
With all the heated rhetoric surrounding the Affordable Care Act (“ACA”), including the President’s Executive Order issued on January 20, 2017 and the recent efforts to repeal and replace the law, employers and individuals may believe that they are no longer required to comply with the shared responsibility rules of the ACA, and that the IRS will not enforce tax penalties against them. The IRS recently confirmed in several information letters that this is not the case, and that the IRS intends to enforce the ACA tax penalties.
Under Section 4980H of the Internal Revenue Code, an applicable large employer may be subject to a tax penalty if it fails to offer health coverage to substantially all of its full-time employees, or offers coverage that is not affordable or fails to provide minimum value. The IRS reminds employers that the January 20, 2017 Executive Order did not change the law; the legislative provisions of the ACA are still in force until changed by Congress and taxpayers remain required to follow the law and pay what they owe. There is no provision in Code Section 4980H for a waiver of the tax penalty for financial or religious reasons. IRS Information Letter 2017-0010; IRS Information Letter 2017-0013.
Further, ACA reporting remains in effect and employers should ensure that they have the necessary processes in place to prepare and file Forms 1094-C and 1095-C.
Similarly, individuals must maintain minimum essential coverage during the year, qualify for an exemption, or pay a tax penalty when filing their federal income tax return. The Executive Order does not change the law. IRS Information Letter 2017-0011; IRS Information Letter 2017-0017.
If you have any questions about the Affordable Care Act, please contact Cyndi Moore (Member and Practice Department Manager: Domestic Relations, Employee Benefits, Estate Planning, Gaming and Immigration, Troy) at 248-433-7295 or contact any other member of Dickinson Wright’s Employee Benefits Team.