IRS Letter 226J: Employer ACA Penalty Assessments and IRS Enforcement
Over the past year, the Patient Protection and Affordable Care Act (the “ACA”) has been the center of fierce political debate. Caught in the crosshairs has been the fate of the employer shared responsibility provisions, which provide that employers with more than 50 full-time employees (including full-time equivalent employees) may be subject to significant Federal tax penalties for (1) failing to offer minimal essential coverage to substantially all full-time employees and their dependents (the “A Penalty”), or (2) offering coverage that is either “unaffordable” or does not provide “minimum value” (the “B Penalty”) (referred to collectively as the “ACA Penalties”). The ACA Penalties for an employer are triggered by a full-time employee enrolling in the Health Insurance Marketplace (the “Exchange”) and receiving a Premium Tax Credit. Despite numerous attempts by Congress to repeal or change the ACA, the ACA provisions remain the law – and the IRS has made it clear that it will enforce the ACA Penalties.
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