Employers Seek COVID-related ACA Compliance Relief from Treasury, IRS

Today, the Partnership for Employer-Sponsored Coverage sent a letter to Treasury Secretary Steven Mnuchin and Internal Revenue Service (IRS) Commissioner Charles Rettig requesting COVID-related compliance safe harbor relief under the Affordable Care Act’s reporting requirements and employer shared responsibility provision.

P4ESC noted to Secretary Mnuchin and Commissioner Rettig that with the current pandemic, the compliance complexities and tracking requirements under the IRS ACA requirements are further exacerbated because employers are managing closures, decreased demand, work from home policies, furloughs, reduced hours, temporary layoffs and more. Employers of all sizes and their employees are continuing to face an unprecedented amount of uncertainty as a result of the COVID-19 pandemic and will do so for months and years to come.

The letter requests the following relief and is a follow-up to the Coalition’s initial COVID letter to the Administration and Congress on May 11, 2020. The full letter can be found HERE.

“With regards to compliance with the ACA reporting requirements (Sections 6055 and 6056) and employer shared responsibility (Section 4980H), we respectfully request that you:

  1. Grant employers safe harbors and flexibility during this crisis and do not penalize businesses for unforeseen closures or rapid staffing changes and transitions that are out of their control. The affordability test is particularly complicated during the pandemic with many businesses experiencing unstable workforces and economic volatility. A workforce is likely to look dramatically different throughout the year than in the first two months of 2020 and thus, we ask that affordability safe harbor compliance measures be implemented to account for these unprecedented times;

  2. Require the IRS to review an employer’s reported filings to data match against an individual’s tax return before issuing a 226-J letter;

  3. Provide employers with 90 days, rather than 30 days, to appeal a 226-J tax penalty letter for any tax compliance year; and

  4. Provide employers that have to pay a tax penalty with a deferral similar to that offered for other tax-related payments and filings to help with liquidity burdens.”