Originally published on July 18, 2017 in “Compliance Week”
As healthcare reform sputters along in Congress, companies still face filing deadlines under the Affordable Care Act, and the Internal Revenue Service is signaling no plans to let up on enforcement.
“Reporting and compliance marches on,” says Joanna Kim-Brunetti, vice president of regulatory affairs at Trusaic. “Regardless of whatever is going to happen legislatively, even if ACA provisions are repealed, it’s highly unlikely to be immediately effective.”
An early 2016 survey on ACA compliance suggested even then that roughly half of companies were not entirely confident in their ability to comply with the reporting requirements under ACA, also known as Obamacare, which was signed into law in 2010. As of mid 2017, there’s no hard data to suggest to what extent companies have or have not complied with their reporting obligations.
Some experts sense many companies are assessing their risks and deciding to forego compliance, betting the law will change.
“I’ve certainly heard that batted around,” says Kim-Brunetti. “It’s shocking to me, but I do think it’s a sizable percentage.” Larger, more sophisticated companies are keeping up, she says, but she believes a “sizable number of employers” are simply ignoring ACA filing requirements in the hopes the law will soon go away. “If they haven’t gotten a notice, they think they’re fine.”
That’s not necessarily a smart gamble, in the view of Ashley Gillihan, counsel at Alston & Bird’s employee benefits and executive compensation group. “We just don’t know whether reform will go through or not,” he says. “Obviously there are hurdles. Employers would be ill advised to take a wait-and-see approach. Reporting will continue in large part.”
In response to Trump administration calls for regulatory relaxation, the IRS recently issued a notice identifying eight tax regulations that would be candidates for streamlining or repeal. The eight issues involve controversial related-party debt rules enacted late last year, along with tax-exempt bonds for political subdivisions; property transfers for certain investment companies and real-estate investment trusts; estate and gift taxes; partnership rules; property transfers to foreign corporations; and others.
Nowhere on the list does the IRS suggest relaxation of filing requirements under ACA, notes Kim-Brunetti. In fact, the IRS is developing a tool to automate the tracking and penalties associated with the employer mandate, she says. While its implementation has been delayed, the ,IRS has indicated its intention to use to tool to catch up on 2015 violations that have not yet been called out.
With a three-year statute of limitations on information returns that employers are required to file under ACA, the IRS still has plenty of time to sniff out instances of noncompliance and assess penalties. The service gave some indications in late 2016 it was working on checking compliance manually as it developed the tool, sending letters to a number of taxpayers who looked like they should have been subject to the ACA filing requirement but did not furnish the required schedules.
If the automation tool comes online anytime soon, that will make the process even faster and easier. And because ACA-related payments and penalties generate revenue for federal coffers, it’s not likely to fall off the IRS radar, even if Congress were to repeal the entire law, says Kim-Brunetti.
In fact, repeal itself is not even a safe bet, says Gillihan. “The bill under consideration now is a reconciliation bill, not a full repeal-and-replace bill. There’s a whole section of ACA that frankly won’t be touched at all by this bill.” He’s referring to the health insurance reforms added by ACA—like many of the provisions that require employers to offer at least a minimal level of affordable coverage to employees. “This will not go away if reform passes.”
