IRS to Seize Properties to Settle ACA Penalties

If your business has gotten IRS penalty notices for Affordable Care Act (ACA, or Obamacare) violations, you may soon get what’s called a Letter 5005A — which means pay up or the agency will levy your bank accounts or property to make good on what’s owed.

IRS-announces-cola-adjustmentsLetter 5005A is sent to employers who did not file their ACA forms 1094-C and 1095-C with the federal tax agency under IRC Section 6721 and/or failed to distribute Form 1095-C to employees under IRC Section 6722.

The agency is currently issuing penalty assessments for the 2017 tax year to businesses that failed to meet their obligations under the ACA’s Employer Shared Responsibility provision. When a business fails to fully meet its obligation to provide employees with health insurance, the IRS will send what’s called Letter 226J.

Letter 226J starts the process of potential penalties. These ACA coverage penalties are known as Employer Shared Responsibility Payments (ESRPs). When a company is informed by the IRS that a penalty is being assessed, it has 30 days to challenge the ruling. If it fails to do so, the IRS will demand payment within 15 days.

So far, at least 30,000 companies have been issued penalty claims totaling at least $4.3 billion.


NOTE: The details in this blog are provided for informational purposes only. All answers are general in nature and do not constitute legal advice. If legal advice or other expert assistance is required, the services of a competent professional should be sought. The author specifically disclaims any and all liability arising directly or indirectly from the reliance on or use of this blog.
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