IRS Commences New Round of Form 1094/1095 Penalty Notices

Many school districts are receiving IRS notices of penalties in excess of $750,000 for failure to timely or correctly file the Form 1094/1095 series with the IRS or failure to timely or correctly furnish the Form 1095 series to employees as required by the Affordable Care Act.  Some school districts also are receiving IRS penalty notices for failure to offer affordable health insurance coverage to the appropriate number of full-time employees.

Prior to receiving a penalty notice for failure to timely file, a district may receive an IRS Letter 5699 or other communication providing an opportunity to review proposed penalties and identify any errors in employer name, EIN, or filing date that may have caused the IRS to fail to link timely filings to the employer profile.  If the proposed penalty is not resolved at the Letter 5699 stage, a formal penalty notice will be sent, likely in the form of Letter 5005-A/Form 886-A or Notice 972-GC, with a notice of right to appeal within a 45-day window.

These penalties may be reduced or waived if, based on the facts, an appeal can be made due to error in IRS calculation, good faith efforts at compliance, or reasonable cause, as defined in IRS audit guidelines.

Should your district receive an IRS penalty notice, IRS Letter 5699, or other communication about these penalties, you may contact Barbara Erickson or Heather Brickman of our firm with any questions or for assistance in navigating the appeal.

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