Obamacare: The IRS is intensifying ACA enforcement efforts - The IRS has started issuing Letter 226J penalty notices for the 2017 tax year

Accountants may see some of their business clients getting caught up this summer in IRS activities to enforce the Affordable Care Act.

The IRS has started issuing Letter 226J penalty notices for the 2017 tax year, along with other penalty assessments related to ACA enforcement. Agency staff are spending more time reviewing potential ACA violations, and putting the onus on employers to prove they have complied with the law.

Here are some signs that the IRS is becoming more assertive in efforts to enforce the ACA:

The IRS has started issuing Letter 226J penalty notices for ACA noncompliance under IRC Section 4980H for the 2017 tax year. The tax agency just completed sending its Letter 226J penalty notices in June to employers that it believes failed to comply with the ACA in the 2016 tax year. This is the quickest we have seen the tax agency transition from issuing penalty notices from one tax year to the next, a sign that IRS ACA enforcement activities are escalating.

The IRS has indicated it is now limiting extension requests to one 30-day extension for each IRS notice received in the penalty process, requiring employers to act with even more urgency in responding to a penalty notice.

IRS staff is paying greater attention to the methodology and data used in employers’ determination of full-time employees in ACA filings for the 2017 tax year. This is a deeper level of review than undertaken for previous tax years. ACA penalties are often triggered by employers providing inaccurate information on the number of full-time workers they employ.

The IRS is asking individual taxpayers to obtain documents from their employers to prove they were entitled to receive premium tax credits to offset health insurance purchased through government exchanges.
Employers are being required to provide proof that they filed ACA information with



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