On June 29, 2015 the penalties under Code section 6721 and 6722 for failures relating to the filing of information returns required by numerous sections of the Code, including the ACA's new reporting for health coverage providers and applicable large employers, were significantly increased. The new penalties apply to returns and statements required after December 31, 2015. This means the new penalties will apply to the 2015 Forms W-2, 1099-R, 1099-MISC, 1094-B, 1095-B, 1094-C and 1095-C that are due in early 2016.
| Penalty | Old Amount | New Amount |
| Failure to file/furnish
generally Annual cap on penalties |
$100/return $1.5 million annual cap |
$250/return $3 million annual cap |
| Failure to file/furnish generally lesser annual cap for employer gross receipts not more than $5 million | $100/return $500,000 annual cap |
$250/return $1 million annual cap |
| Failure to file/furnish when corrected within 30 days of the required filing date; Annual cap | $30/return $250,000 annual cap |
$50/return $500,000 annual cap |
| Failure to file/furnish when corrected within 30 days of the required filing date; lesser annual cap for employer gross receipts not more than $5 million | $30 return $75,000 annual cap |
$50 return $175,000 annual cap |
| Failure to file/furnish when corrected by August 1 of the year in which required filing date occurs; Annual cap | $60/return $500,000 annual cap |
$100/return $1.5 million annual cap |
| Failure to file/furnish when corrected by August of the year in which required filing date occurs; lesser annual cap for employer gross receipts not more than $5 million | $60/return $200,000 annual cap |
$100/return $500,000 annual cap |
| Penalty per filing in the case of intentional disregard; No annual cap | $250/return No annual cap |
$500/return No annual cap |
| Adjustment for inflation | Every 5 years beginning in 2017 | Every 5 years beginning in 2017 applied using the new amounts as the base |
The reasonable cause exception to these penalties remains unchanged.
Because these penalties apply separately with respect to the returns filed with the IRS and the payee, there can be a double impact on the employer. The IRS previously announced limited relief from penalties for Form 1094 and Form 1095 (the new ACA required forms to report health coverage) filed and furnished in 2016. These increased penalties provide additional incentive for applicable large employers to attempt to satisfy the good faith standard for complying with the 2015 reporting obligation.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
