Penalties under Sections 6721 and 6722 of the Internal Revenue Code
The struggles even a decade after the Affordable Care Act (ACA) went into effect
More than a decade after the Affordable Care Act (ACA) went into effect, organizations are still struggling to keep up with their many responsibilities because of it. One of which: employers are required to distribute 1095-C forms to employees and to file 1094-C and 1095-C forms with the federal tax agency. Late 2018, brought with it IRS issued penalties for those companies who failed to do so. In fact, any required information on these forms that is not furnished or incorrectly reported will bring hefty penalties including if the form is not given to payees by the required date. By 2026, the IRS is expected to issue close to $228 billion in penalties due to noncompliance. That’s no small drop in the bucket.
So what should you do if you are in receipt of notice of penalties under IRC 6721 or 6722? The worst thing is to wait or ignore the letter. Once you get the notice, chances are that you are well behind the deadline for filing, and that always poses a significant problem. Your best bet is to seek assistance with our experts at Dallo Law Group. Our expert San Diego-based tax attorneys and accountants have extensive knowledge to help respond to the failure to file and/or failure to furnish any information returns. We fight for tax penalty abatements and have tremendous success with having these penalties eliminated.
Responding to the IRS
The first step to replying to ACA penalties under IRC 6721 and 6722 is to respond to the notice in a timely fashion. Disregarding the letter is a surefire bet that you will land in a whole lot of hot water. The task of getting straight with the IRS will be that much more difficult.
Secondly, in order to reach the point where you are issued penalties, you must have received IRS Letter 5699, which informs the organization that you failed to file information returns. Basically, this notice requests the organization to verify its name used when filing, along with its EIN and the date it filed. It is important to have the ACA filing receipt handy to prove that your organization did what it was supposed to for compliance.
Last, it is imperative to gather all supporting documentation surrounding your filing and any and all receipts. In addition, if efforts were made to correct information, all documentation should be in good order because everything can be used to help your case.
We Are Committed to Your Compliance
There are ways that can contribute to mitigating factors that can help alleviate some or all of these penalties issued under IRC 6721 and 6722. Dallo Law Group can assist you with this area, as we are well versed with Section 6724 which provides for a waiver of these penalties due to reasonable cause. We can review your documentation and determine if you may qualify. The IRS statutes can be convoluted, but if you acted without willful neglect and responsibly submitted information, we can certainly fight on your behalf.
Our attorneys at Dallo Law Group have a long history of positive outcomes with the IRS tax appeals. We can assist you in forming the basis of your reasonable cause, especially if incorrect information was furnished to you which you relied on in good faith and request a waiver that can be the start of alleviating your penalties. We understand IRS penalties can be dicey. There is no reason for you to be acting alone. Reach out to us for a free consultation sooner rather than later with this or any other tax-related matters. We are here to help.