Employer groups call for suspension of ACA tax penalties, repeal of employer mandate

The assessment of tax penalties under the Affordable Care Act’s employer mandate should be suspended until the mandate is repealed given the ongoing cost, complexity and confusion surrounding compliance with the recordkeeping and reporting requirements. That’s according to the ERISA Industry Committee (ERIC) and a number of employer trade associations that submitted a letter to the U.S. Department of the Treasury, the Department of Health and Human Services, and the Internal Revenue Service. The letter also states the Administration is denying employers’ due process rights by failing to satisfy the mandated notice and appeals requirements under ACA Sec. 1411.
Notice from Exchange. The IRC, the ACA and implementing regulations expressly provide that, before the employer mandate assessment process can begin, employers must have received, within a reasonable timeframe, notice from an ACA Exchange (1) certifying that an employee has enrolled in a health plan sold through the Exchange and has been determined eligible for a premium tax credit or cost-sharing reduction, (2) stating that the employer may as a result be liable for a tax assessment, and (3) explaining that the employer has the right to appeal such eligibility determinations.
However, no such notices were ever furnished for calendar year 2015 by the Exchange for which HHS had responsibility, according to the letter. ERIC and the trade associations also assert that no notices have been issued by any ACA Exchanges for calendar years 2017 or 2018. Instead, the IRS has been sending 226J letters, which assert that the letter constitutes a notice under ACA Sec. 1411.
“Nowhere does ACA section 1411 refer to the IRS, much less direct or authorize that agency to issue notices under that section of the law. The final HHS Exchange regulations expressly rejected any notion that the IRS could satisfy the section 1411 notice requirement,” the ERIC letter states.
Right to appeal. In addition, ACA section 1411(e)(4)(C) provides that employers receiving an Exchange notice must be informed of their right to appeal eligibility determinations. ERIC and the trade associations state that “a key reason for the notice and appeals process is to give employers a chance to resolve health coverage issues before having to face the IRS.”
Therefore, a 226J letter may be a certification by the IRS, but it is not the Sec. 1411 notice, which is essential to protecting employers’ due process right to “two bites of the apple” before tax penalties can be assessed.
“If the Administration can’t follow the law in enforcing the Affordable Care Act, enforcement must be suspended immediately,” said James Gelfand, Senior Vice President of Health Policy, ERIC. “ERIC will continue to work with employer groups, regulators, and the Administration on fully repealing the employer mandate.”

SOURCE: eric.org
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