For the first time, the IRS has begun enforcement of the employer mandate under the Affordable Care Act — a surprise move in light of broadly held expectations that the Trump administration would not enforce this component of the Obama-era law. The mandate requires "large employers" (those averaging 50 or more full-time employees in the prior calendar year) to provide affordable insurance to full-time employees and dependents. It is applicable to many NBOA-member independent schools, and "the complicating factor is that even if they are in compliance, they could receive a letter and penalty for even one instance of non-compliance since the ACA took effect," explained Jennifer Osland Hillen, NBOA's director of accounting and tax programs.
Letters from the IRS are expected to reach thousands of employers over the next several weeks. (The letters begin: "We have made a preliminary calculation of the Employer Shared Responsibility Payment (ESRP) that you owe.") Assessments could be sent for any number of reasons, including simple ACA reporting errors, according to Jennifer Berman, an ACA expert who often works with NBOA and is now senior vice president of compliance for KELLY Benefit Strategies. "The magnitude of assessment could vary dramatically based on any number of complex regulations underlying the employer mandate rules themselves," Berman wrote in a compliance alert. The alert also provides guidance on how employers should respond if they receive an IRS assessment letter.
Under IRS assessment procedures, employers must either pay the assessment or file a formal response within 30 days of the date on the initial IRS letter.
Download a compliance alert from Kelly Benefit Strategies.
