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Report on ACA Employer Mandate Enforcement

On April 7, 2017, the Treasury Inspector General for Tax Administration (TIGTA) published a report on the "Assessment of Efforts to Implement the Employer Shared Responsibility Provisions." This report provides clues to the Affordable Care Act (ACA) enforcement initiatives with regard to the employer mandate. 

The report stressed that the IRS' systems to enforce the employer mandate portion of the Affordable Care Act have been delayed - not cancelled - and could be up and running as early as May 2017.

The report follows an audit of the Internal Revenue Service's process for enforcing ACA's tax penalties on large employers. The report concluded that the IRS' enforcement of the employer mandate has been delayed by multiple issues associated with processing the data reported by employers on the annual Form 1095-C.

The report went on to state that: 

"The IRS is developing new systems that will use employer-reported information returns as well as other tax data to identify employers that are not compliant with the Employer Shared Responsibility Provision and may be subject to the Employer Shared Responsibility Payment. For example, the IRS is developing the ACA Compliance Validation (ACV) system, which will be used to identify potentially noncompliant Applicable Large Employers and calculate the proposed Employer Shared Responsibility Payments....However, the implementation of the ACV system has been delayed to May 17."

While the report does not state whether implementation of the ACV system in May will result in immediate enforcement activity, at the very least, this report suggests that employer mandate enforcement has not been shelved or postponed indefinitely. 

In other words, TIGTA's report indicates that the IRS is still in the process of developing and implementing key systems needed to identify noncompliant employers subject to the Employer Mandate but that the IRS will be ready sometime after March or May 2017. 

For employers, this means that the initial lack of IRS notices for noncompliance with the Employer Mandate does not imply that the IRS does not intend to enforce the Employer Mandate. What it does mean is that the IRS ACA audit process for 2015 reporting and 2016 reporting is merely getting a late start. 

A copy of the YIGTA report can be found by following the link below: 

https://www.treasury.gov/tigta/auditreports/2017reports/201743027fr.pdf

Source: HR Workplace Services