ALE Determination
- Free of Charge – If data is provided in a usable, table-based format
- ALE Status Determination – For a given year is determined by the previous year’s data
- Exception Handling – For Newly formed employers, mergers, acquisitions, divestitures
- Detailed Analysis – Following the IRS Guidelines
Example (From IRS Website)
- Company Y has 40 full-time employees for each calendar month during 2018.
- Company Y also has 20 part-time employees for each calendar month during 2018, each of whom has 60 hours of service per month.
- When combined, the hours of service of the part-time employees for a month total 1,200 [20 x 60 = 1,200].
- Dividing the combined hours of service of the part-time employees by 120 equals 10 [1,200 / 120 = 10]. This number, 10, represents the number of Company Y’s full-time equivalent employees for each month during 2018.
- Employer Y adds up the total number of full-time employees for each calendar month of 2018, which is 480 [40 x 12 = 480].
- Employer Y adds up the total number of full-time equivalent employees for each calendar month of 2018, which is 120 [10 x 12 = 120].
- Employer Y adds those two numbers together and divides the total by 12, which equals 50 [(480 + 120 = 600)/12 = 50].
- So, although Company Y only has 40 full-time employees, it is an ALE for 2019 due to the hours of service of its full-time equivalent employees.
Typical Timeline for a given tax season. This is example of when we would collect data for filing for the 2024 tax season:
- Q3 & Q4 of 2024: Collect Employer Level Info and Implementation Form Answer to Questions
- Late Dec 2024 / Early Jan 2025: Collect all data needed for processing including Census and Enrollment Information.
- Late Jan 2025 / Early Feb 2025: Finalize Filing for Review and Sign Off by Group.
- Mar 2: IRS Employee Form Distribution Deadline
- Mar 24: E-File all Groups – we wait until then, so we have any last corrections to names, addresses, etc.
- Mar 30: Notify all groups E-file is successful, ask for any SSN/Name corrections as specified by IRS acknowledgment
- Mar 31: IRS E-File Deadline
- Apr 30: Collect and submit all E-File Corrections
- Through-out Year: We handle back filings for those employers that may have not filed in the past and handle IRS letter responses (typically new clients that did not file or have a penalty).
Penalties:
I.R.C. §4980H(a) Employer shared responsibility payment for failure to offer minimum essential coverage “Sledgehammer” •Failed to offer MEC health plan to 95% of Full-Time employees •Calculated monthly per EIN •Based on the total number of Full-Time employees (minus 30) regardless of individual compliance •Triggered automatically when the MEC indicator is left blank on the 1094 form or at least one employee receives a PTC •$247.50/mo. up to $2,970 (an increase of $90 from 2023) federalregister.gov/d/2014-03082/p-647I.R.C. §4980H(b) “Tack hammer” •Failed to offer MV or unaffordable health plan to Full-Time Employee(s) •Calculated monthly per applicable employee •Based on each employee who received a PTC and any other employees who could have qualified •Triggered when at least one employee receives a premium tax credit •$372/mo. up to $4,460 (an increase of $140 from 2023)
Notice 972CG In addition to the penalties for non-compliance with the ACA’s Employer Mandate, the IRS is enforcing 6721/6722 penalties. Additional Penalties •Failure to file a correct return with the IRS is $310 per form •Failure to provide a correct payee statement is $310 per form •Failure to file electronically with IRS, if required, may be $310 per form •After August 1st, 2025, if the employer neglects their filing obligations altogether, the penalty increases to $630 per return