The IRS has begun sending warnings to employers that they may owe tens of thousands of dollars or more in penalties under the Affordable Care Act, but it appears few, if any, local businesses have been targeted.
Neither the Louisiana chapter of the National Federation of Independent Business, the Baton Rouge Area Chamber nor GNO Inc. have gotten complaints from members about the penalty letters. The Louisiana Restaurant Association could not be reached for comment.
Brandin Lagarde, a director at Postlethwaite & Netterville, said the accounting and consulting company has spent the past two years preparing clients for that eventuality.
"Really as far as how to respond to this, hopefully you've done your homework before," Lagarde said. "If you have not, it's going to be a matter of creating that information and that's going to be more difficult."
Under the Affordable Care Act, companies that employ more than 50 people full time are required to offer health insurance that is affordable and provides a minimum value.
The IRS has begun sending out penalty assessments to those employers if one or more of their workers bought coverage through the ACA marketplace — Healthcare.gov in Louisiana — and got a subsidy in 2015.
So far none of Postlethwaite & Netterville's clients have gotten penalty letters, which cover the 2015 tax year, Lagarde said.
Brian Carnie, a partner in Kean Miller's Shreveport office, said as far as he knows, none of the law firm's clients in Louisiana have gotten a penalty letter.
But he is warning clients to expect the worst.
"Don't wait until you get the notice, because the timing really sucks, for lack of a better word," Carnie said.
The penalty letters started arriving during the holiday season and could easily have been overlooked, he said. Employers should make sure they designate an administrative worker to watch for the letter.
That's important because employers have just 30 days to respond to the IRS, he said. The person who normally picks up the mail may not realize the significance of an Employer Shared Responsibility Payment letter. If they forward the letter to the firm's accountants, valuable response time may be lost.
The second thing employers should do is compile their reports from 2015, he said. Employers should already have those records out and backup data available. That way, if a penalty letter comes in, the company can compare what it filed with what the IRS says. The company can then challenge IRS errors or know whether additional research is necessary.
Carnie said a lot of companies decided there was no way they could offer health insurance to everyone, and those companies knew they would pay a penalty.
His fear is that those companies could see proposed penalties that are far higher than expected. And the IRS is putting the burden on employers to prove they don't owe the penalty.
"They just need to know that there are lots of mistakes that are going to be made," Carnie said. "Employers will have to get the information for each individual listed (in the penalty letter) to dispute those mistakes."
Timothy Rodrigue, spokesman for BancorpSouth Insurance Services, said only a few clients in the firm's eight-state service area got what are jokingly referred to as "Christmas presents that you don't want." One client's proposed penalty was more than $1 million.
Happily, for BancorpSouth's clients, each situation involved the IRS being confused about items the clients reported, he said. In each case, BancorpSouth successfully defended the clients from penalties.
Dawn Starns, Louisiana director for NFIB, said one of the issues her members have with the coverage mandate is that even though they have tried to comply, neither the IRS nor the federal government tells employers whether they are doing so correctly.
"We're concerned that a lot of small-business owners could get blindsided by this," Starns said.
Starns said NFIB also disagrees with the IRS about the ease of compliance.
The federal agency says compliance should take about four hours, Starns said, but the process is much more cumbersome and time-consuming.
Employers have to calculate and compare affordability formulas using premiums and information from W-2s. Employers also have to go back and retroactively report and distribute forms to employees and former employees.
All of that work will create additional costs and headaches for small-business owners in the coming year, Starns said.