Applicable Large Employers (ALEs) are defined as employers with 50 full-time employees for the current calendar year, including full-time equivalent employees, on average during the prior year. They must provide medical insurance and submit ACA Reports annually to employees and the IRS to avoid penalties. Employers who fail to comply with ACA may find themselves receiving a penalty letter from the IRS, which could include 226J, 227M, 5698, or 5699. To find out what the various letters include, please reference https://www.hrserviceinc.com/aca-reporting.
When receiving an IRS ACA letter, you will need to respond quickly. ALEs have the burden of proof to the IRS that they offered Minimum Essential Coverage to 95% of their full-time employees. Determining a full-time employee count can be difficult. There are two methods available for determining full-time employee status – the monthly measurement method and the look-back measurement method. The monthly measurement method involves a month-to-month analysis of service hours. In contrast, in the look-back method, an employer “looks back” to previous service hours to determine full-time status for a future period.
When facing the IRS, employers hold the burden of proof. Documentation is essential, and you need to know your rights. Every employer has a set of rights called “The Taxpayer Bill of Rights” they should be aware of when dealing with the IRS. Employers have the legal right to:
• Raise objections.
• Provide additional documentation in response to formal or proposed IRS actions.
• Expect them to consider their objections timely.
• Have them consider any supporting documentation.
• Receive a response if they disagree with their position.
The IRS states you have the right to:
Taxpayers have the right to know what is needed to be compliant with tax laws.
Taxpayers have the right to receive prompt, courteous, and professional assistance in their dealings with the IRS. https://www.irs.gov/newsroom/taxpayer-bill-of-rights-2
Pay No More than the Correct Amount of Tax
Taxpayers have the right to pay only the amount of tax legally due, including interest and penalties. https://www.irs.gov/newsroom/taxpayer-bill-of-rights-3
Appeal an IRS Decision in an Independent Forum
Taxpayers are entitled to a fair and impartial administrative appeal of most IRS decisions, including many penalties. https://www.taxpayeradvocate.irs.gov/get-help/taxpayer-rights
A Fair and Just Tax System
Taxpayers have the right to expect the tax system to consider facts and circumstances that might affect their underlying liabilities, ability to pay, or ability to provide information timely. https://www.taxpayeradvocate.irs.gov/get-help/taxpayer-rights
The Right to Retain Representation
Taxpayers have the right to retain an authorized representative of their choice to represent them in their dealings with the IRS. https://www.taxpayeradvocate.irs.gov/get-help/taxpayer-rights
The Right to Finality
The right to know the maximum amount of time they must challenge the IRS’s position and the maximum amount of time the IRS has to audit a particular tax year or collect a tax debt. https://www.irs.gov/newsroom/taxpayer-bill-of-rights-6.
The Taxpayer Advocate Service
or TAS is an independent organization within the IRS that protects taxpayer rights under the Taxpayer Bill of Rights, helps taxpayers resolve problems with the IRS, and recommends changes to prevent future problems. TAS case acceptance criteria fall into four main categories.
1. Economic Burden
2. Systemic Burden
3. Best Interest of the Taxpayer
4. Public Policy
ACA reporting codes are complicated and, if done incorrectly, can result in fines to your organization. We make sure everything is 100% accurate, eliminate the hassles of doing it yourself, are reasonably priced, and guarantee on-time completion. If adjustments are needed, we can make needed corrections.