President-signed trade bill increases ACA return penalties

The President on June 29 signed legislation, the Trade Preferences Extension Act (HR 1295 (P.L. 114-27)), which contains several revenue offsets, including future increases in the Affordable Health Care (ACA) (P.L. 111-148) information return and payee statement penalties.
Generally, a penalty may be imposed for filing information returns and/or furnishing payee statements after the due date or filing returns and or furnishing payee statements without all required or corrected information, among other reasons. Penalties may be reduced if the failure is corrected within certain timeframes. The law revises the penalty structure, effective for information returns and payee statements required to be filed or furnished after 2015.
The penalty for filing information returns or payee statements (Code Sec. 6721(a) and Code Sec. 6722(a)) will increase from $100 to $250. The maximum penalty for all failures during a calendar year will increase from $1.5 million to $3 million.

If the failure is corrected within 30 days (Code Sec. 6721(b)(1) and Code Sec. 6722(b)(1)) of the required filing date; the penalties will increase from $30 to $50; from $100 to $250; and from $250,000 to $500,000, respectively.

Where the failures are corrected prior to August 1 of the year (Code Sec. 6721(b)(2) and Code Sec. 6722(b)(2)); the penalties will increase from $60 to $100; from $100 to $250; and from $500,000 to $1.5 million, respectively.

Where the failures to properly file a correct information return or furnish a payee statement are due to intentional disregard (Code Sec. 6721(e) and Code Sec. 6722(e)); the penalties will increase from $250 to $500.

The maximum penalty for all failures during a calendar year will increase from $1.5 million to $3 million.

The lower limitations (Code Sec. 6721(d)(1) and Code Sec. 6722(d)(1)) for persons with gross receipts of $5 million or less will also increase.
The penalties do not apply to certain inconsequential errors, de minimis failures, or failures due to reasonable cause.

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