The IRS recently announced it is suspending certain mailings of automated collections and various other notices in an effort to get through its current backlog.
As such, the agency will no longer be sending out select mail notifications, including CP501, CP503, and CP504 notices. The last notice has previously been used to inform taxpayers of an inability to pay an ACA penalty assessment.
Employers should note that this means the IRS will not be sending out automated mail when you make tax-related payments. Consequently, be sure to keep an ongoing record of any payments, penalty explanations, and any other tax-related correspondence.
If you thought the IRS had forgotten, forgiven, or otherwise dismissed any outstanding tax obligations, however, think again. The agency has most certainly not done so and it’s merely reallocating resources elsewhere to make headway on the historic backlog.
This also means that the agency will continue to issue ACA penalty assessments as planned.
If you receive a notice from the IRS
Review it carefully. If you believe the information stated in the notice is accurate, take action to rectify the situation. Penalties and interest can still accrue on outstanding responsibilities and owed balances.
If you receive an ACA penalty notice contact us to learn about our penalty reduction services. We’ve helped our clients prevent over $1 billion in ACA penalties. We can assist in reducing or eliminating any ACA penalty assessment and will handle all communications timely and accurately so you can continue running your business.
Here’s how you should handle upcoming ACA filings
For ACA returns due in the near term, be sure to submit your filings ahead of time. It’s important to also record details relating to your filings, including the day you submitted your returns, if you had any assistance preparing the ACA returns, and any other information pertinent to the filings.
Best practices encourage electronically filing your ACA returns for the 2021 tax year. This will provide you with more time to file with the IRS, create an automatic receipt of your filings, and confirm that your filings were received timely and in the correct format.
If this is your first year using the electronic method for ACA filing, consider partnering with an ACA compliance expert who has an established and secure network for transmitting ACA returns to the tax agency. Given the current strain on IRS staff, electing to work with a reliable ACA compliance expert like Trusaic will most certainly help ensure a successful and efficient ACA filing process.
Background
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Since COVID-19 hit the U.S. in March of 2020, the IRS has been facing a number of new challenges, from office closures across the country to an entirely new set of tax credits and incentives to process. As a result, the agency has been inundated by a massive backlog of unprocessed taxpayer documents.
Members of Congress and tax consultants have both criticized the IRS for its inability to deal with the backlog of unprocessed correspondence and mailings.
The reason for their criticism is that the agency is mailing out automated notices informing taxpayers of outstanding filings, penalties, and other related tax information – but the inquiries could very well be in the massive backlog of unprocessed mail documents.
The move to suspend the automatic notices is a new effort to help resolve the backlog. Earlier this year the agency announced the reassignment of over 1,200 employees to more efficiently handle the crisis.
As the agency continues to work its way through the backlog, employers should focus on completing their ACA filings accurately and on time. The agency has previously indicated that it would be increasing enforcement efforts for ACA non-compliance.
Download the Employer’s Guide to Coding ACA Form 1095-C to see real-world examples of how to code health coverage on the IRS forms accurately and file with confidence.
To understand your organization’s current level of ACA penalty risk, get your ACA Vitals score. The eight-question quiz can you help identify areas within your business that can complicate the ACA compliance process.
