Increased Filing Penalties

By J. Smith Lanier

You are probably aware from all of the press coverage that Congress and the president reached agreement on trade issues; what some called the “fast-track” trade bill. There were actually two separate bills in the package, one being The Trade Preferences Extension Bill of 2015 (H.R. 1295). As with many pieces of legislation, there is a section that explains how all this is going to be paid for. H.R. 1295 is no exception. We found buried therein a sharp, dramatic increase in penalty fees for failure to properly file required IRS reporting forms as one of the revenue-raising provisions.

Filing penalties are the purview of IRS Code §6721. A “failure” subject to the imposition of penalties is defined therein as (i) a failure to file by the required filing date or (ii) failure to include all the information required or providing inaccurate information. Here are some of the highlights of these draconian fee increases:

  • The penalty imposed is increased 150 percent from $100 per form to $250.
  • The maximum assessment IRS can levy is doubled from $1.5 million to $3 million.
  • The penalty under §6721 is reduced if the situation is corrected within 30 days of the required filing date. That penalty is ratcheted up 66% from $30 to $50; and the cap on these corrective penalties is bumped 100% from $250,000 to $500,000.
  • There is also a lesser penalty if the problem is fixed after 30 days but before Aug. 1. That penalty intensifies by 40 percent to $100; and the cap triples from $500 k to $1.5 million.

This information is important to know because ACA employer reporting requirements (1095-C, et al) are covered by §6721 penalties.

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