Your Healthy Business Could Be In Big IRS Trouble
If you have 50+ employees and do not offer your workers health insurance, you could be getting a letter from the IRS that could affect the health of your business.
According to a recent New York Times article, “thousands of businesses — many of them small or midsize — will soon receive a letter saying that they owe the government money because they failed to offer their workers qualifying health insurance.”
Maybe you already received a letter. As the article states, “The first round of notices, which the I.R.S. began sending late last month, are being mailed to companies that have at least 100 full-time employees and ran afoul of the law in 2015, the year that the mandate took effect.”
What It Could Cost Your Company
According to the way the IRS sees it, a large company employees more than 50 workers. The IRS’s term for these companies is Applicable Large Employers or ALEs). And the fines are stiff if companies fail to comply and they get caught.
In fact, the Shared Responsibility Provision rules are pretty complex, however as the Times reported, “businesses will generally incur fines of around $2,000 per employee (excluding the first 30) if they do not offer qualifying coverage to nearly all of those who work an average of 30 or more hours a week.” Additionally the fine increases each year. The Times gave the following example. “A company with 100 workers that ignored the law this year would owe a penalty of more than $158,000.”
The Underdog – Small to Midsize Business
The Shared Responsibility Provision will likely not be an issue for large corporations with teams of lawyers at their beck and call. These businesses are accustomed to having back and forth conversations with the IRS. However, for the small to mid-size companies, which are the ones that will most likely owe penalties, it could be devastating without someone who knows the ins and outs of dealing with the IRS. This rule applies to all businesses, even tax-exempt organizations and government entities.
Most large companies offer some health benefits, but the mid-size companies are hard-pressed to offer benefits. That is a fact the Kaiser Family Foundation verifies saying, “While nearly all large firms (200 or more workers) offer health benefits to at least some employees, small firms (3-199 workers) are significantly less likely to do so. As we reported last year, there has been a long-term decline in the offer and coverage rates for employer-provided coverage, particularly among smaller firms.”
If you receive a letter telling you that your company is not in compliance with the shared responsibility provision and you disagree with its penalty notifications, you must contact the IRS within 30 days to document their dispute. And don’t think for a moment that you can plead confusion or financial hardship. That simply doesn’t work with the IRS. Seek the counsel of a firm that is accustomed to working with the IRS on a daily basis. If you are in Alabama or Florida, give our office a call.