Levins Tax Law
Schedule your initial consultation:

Experienced and Trusted
Representation From A Tax
Attorney And Former IRS Agent
And "BIG 4" Tax Partner

Photo of Attorney Gerard J. Levins

ACA compliance issues may lead to an IRS audit

On Behalf of | Apr 10, 2017 | Tax Controversies

The Affordable Care Act does not appear to be going anywhere this year. More failure to comply exchange notices are being sent from health insurance marketplaces to companies.

Fail to act on these notices, and an IRS compliance audit could be on the horizon with thousands of dollars in corresponding penalties. What are the ACA employer-contribution rules? How should a company respond?


A health coverage application

Companies with more than 50 full-time employees need to offer “affordable” health coverage that offers at least “minimal value” to full-time employees. If a full-time employee at the company receives a premium tax credit to purchase individual coverage from the marketplace, an employer needs to make an employer-shared responsibility payment to the IRS.

So, when an employee who works for the company applies for health coverage through the marketplace, an exchange notice will be sent.

Appeal with additional information

In many cases, it is necessary to go through the appeal process to determine employee eligibility. An appeal will need to include:

  • Summary of the health plan’s benefits and coverage
  • Enrollment/waiver form
  • Analysis of full-time/part-time employee status, including attendance and payroll records to demonstrate status in applicable months (130 hours per month is the threshold for full-time).

After submitting the appeal packet it may take months to hear back. Often, a response is a request for additional information. Usually this type of request allows 30 days to send more details.

Why go through all this effort? Using the appeals process can head off a potentially costly and lengthy IRS audit. Detailed and accurate record keeping is important to a successful appeal. If this has been overlooked in a rush to scale, it is time to do a deeper analysis to ensure processes and practices are where they need to be.


FindLaw Network