On April 7, 2017, the Treasury Inspector General for Tax Administration (TIGTA) released the results of its audit to assess the Internal Revenue Service’s (IRS) preparations for ensuring compliance with the employer shared responsibility rules and related reporting requirements under the Affordable Care Act (ACA).

The TIGTA audit revealed a number of major system and operational problems that have hindered or delayed the IRS’ enforcement of these provisions. As a result, the IRS has been unable to identify the employers potentially subject to an employer shared responsibility penalty or to assess any penalties.

Although no penalties have been assessed under the employer shared responsibility rules at this time, the TIGTA report emphasized that the IRS’ systems could be up and running as early as May 2017.

To enforce these rules going forward, the IRS plans to mail a letter to Applicable Large Employers (ALE’s) informing them of their potential liability for a penalty. These letters will:

• Include the names of the employees who received a subsidy for the applicable tax year; and
• Provide ALEs with an opportunity to respond before any penalty liability is assessed or notice and demand for payment is made.

These letters are separate from the Section 1411 Certification sent by the Department of Health and Human Services (HHS) that employers began receiving in 2016. The Section 1411 Certifications are sent to all employers with employees who receive a subsidy to purchase coverage through an Exchange (including both ALEs and non-ALEs). Section 1411 Certifications do not trigger or assess any penalties for any employers.

Refer to the attached compliance bulletin for additional detail, and contact your NEEBCo representative with any questions you may have.

Pay or Play Enforcement Issues