Reasonable cause relief for ACA reporting penalties.
The IRS may remove or reduce an information return penalty when an employer acted in good faith and can show reasonable cause. Relief is never guaranteed.
What the IRS says.
What the IRS Says
The IRS states it may remove or reduce a penalty if you acted in good faith and can show reasonable cause. It names two tests: acting responsibly before and after the failure, and having significant reasons or circumstances beyond your control.
Notice 972CG Timing
If you receive Notice 972CG and have reasonable cause, the IRS says to respond within 45 days, or 60 days for a foreign filer, before it assesses the penalty.
Not for the Mandate Payment
The IRS manual states that reasonable cause does not apply to the employer shared responsibility payment itself, which is a separate penalty from the information return penalties.
Three steps for the employer.
Document What Happened
Write down the facts, dates and who was responsible. A clear timeline is the base of any request.
Fix the Failure Promptly
Acting responsibly after the failure is one of the IRS tests, so file the missing returns and statements quickly.
Write a Clear Response
Explain what happened and what you did, and attach support. Follow the instructions on the notice.
Three questions to settle first.
What Was the Reason for the Failure?
Ask yourself and your provider what actually went wrong and when it was discovered.
What Did We Do Next?
Ask what steps were taken, and how quickly, once the problem was known.
Who Is Writing the Response?
Ask whether a professional should prepare the request.
Send us your renewal.
We’ll tell you whether it looks competitive, where we see opportunity, and the five questions we’d put to your carrier. No cost, and no obligation to move anything.
The renewal letter
Your current plan summary
Contribution split by tier
Enrolled counts by tier
Four documents — two more if your group is 50 or more. Nothing else; every extra one is a reason to postpone.
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