When filing ACA forms with the IRS, it is extremely important to ensure that you have the correct employee names and TINs on your filings. Incorrect information can lead to penalties when filing your ACA returns. If you are on Advantage’s ACA Service, your ACA team member has contacted you regarding data validation if needed.
Internal Revenue Code (IRC) section 6721, Failure to File Correct Information Returns, imposes a penalty per return for each of the following infractions related to information returns:
- Filed with a missing/incorrect TIN (or other incorrect information),
- Filed untimely,
- Filed on paper when filing electronically was required,
- Filed in an incorrect format, or
- Any combination of the above.
Any penalties assessed may be reduced if the error or omission is corrected within 30 days of the required filing date or if the error or omission is corrected after the 30 day period, but by August 1 of the year the return is required to be filed. The maximum penalty that may be imposed for one person for all such failure in a calendar year depends on the tax year of the return. There are no maximum penalty limitations for failures that are due to intentional disregard. The penalty is not imposed for a de minimis number of failures if the returns are corrected on or before the deadline of the filing year. De minimis criteria apply to the greater of: ten information returns or one half of 1% of the total number of all information returns required to be filed during the year. The penalty may be waived by showing that failure(s) was due to reasonable cause and not due to willful neglect. Please see below for a table which includes penalties associated with ACA filing for the 2015 filing period. In order to show you have taken action and the missing information is due to reasonable cause, filers must establish that they acted in a responsible manner both before and after the failure occurred and that there were significant mitigating factors or the failure was due to events beyond the filer’s control. Acting in a responsible manner generally includes making an initial solicitation for the employee’s name and TIN, and if required, an annual solicitation.