By now, employers have become all too familiar with the Patient with the Protection and Affordable Care Act (ACA). What they still haven’t completely grasped, though, is the set of consequences that arise from non-compliance when it comes to reporting requirements.
Full of complexities and legalities, the ACA reporting requirements can make anyone confused and at loss, which increases a business’ or an organization’s risk of making mistakes. This reason alone has prompted many employers to outsource their ACA reporting responsibilities. However, there are many other reasons to invest in such services, like the following:
Avoiding the tax consequences of non-compliance
Inability to remain compliant with the Act’s reporting requirements gives rise to heavy penalties and fines. Although it depends on the size of the organization, a large employer can face a penalty of as much as over $3 million. This can happen due to a failure of filing mandatory information returns (according to Internal Revenue Code Section 6722). An employer can also face a separate penalty of the same amount for failure to provide correct payee statements.
Both are extremely huge fines that can result in major losses.
Shifting and changing regulatory standards make reporting more complex
Current regulations, referred to by the IRS as “Interim Guidance,” cover a myriad of already-complex topics, such as protection for multi-employer plans, filing extension requests, and Consolidated Omnibus Budget Reconciliation Act (COBRA) continuation coverage reporting. However, the world of ACA reporting continues to evolve. With this evolution comes changes that make it even more difficult for employers. The shifting standards require more extensive monitoring, which many employers can easily overlook.
These are only some of the many reasons why more employers now opt to outsource their reporting requirements, and why you should too.