By JT Kim, Guest Columnist
ACA Compliance Expert
First Capitol Consulting
After spending countless hours in talks with our broker partners and prospective clients about ACA compliance and having done tons of research on the various solutions out there, I feel like I'm Noah preparing for a coming flood that nobody else seems to be aware of. Why? Because a good majority of employers are still not aware of or concerned with the flood of ACA compliance-related penalties that will overwhelm them in the years to come.
Furthermore, the few that are concerned and have commissioned the services of the various ACA compliance solutions are missing the mark. They settle for services that simply track and report without asking a fundamentally important question: "Will this service stand behind its work by handling exchange appeals and provide audit representation?"
Let's face it, all of this tracking and reporting that you're doing is ultimately to avoid penalties. However, by simply tracking and reporting to fulfill the IRS 6055/6056 requirements doesn't mean you're secure from them. With the myriad of potential problems that many solutions do not address (e.g. controlled group/common ownership, high variable hour workforce, multiple payroll systems with varying data points, etc.), are you certain the work that is being accomplished is accurate? Ultimately, who cares if a solution has a bunch of pretty bells and whistles if they cannot stand behind their work and provide you with protection?
Now before you say that I'm being an alarmist, take a look at the facts:
1. The IRS is budgeted to hire 483 new full-time employees in 2016 in order to fulfill the "new audit requirements related to the shared employer responsibility payment."*
2. The Congressional Budget Office projects that the federal government will generate $9 billion in ACA compliance penalties from employers alone in 2016. That number will continue to increase year to year and jump to $22 billion in 2025; a total of $167 billion dollars will be paid out by employers for non-compliance in 10 years.**
3. Most of the ACA compliance vendors (payroll, HRMS/HRIS, benadmin systems etc.) that promise to fulfill the IRS 6055/6056 tracking and reporting requirements do not handle exchange appeals nor do they provide audit representation.
Therefore, if you're in the market for an ACA compliance solution, make sure you don't get distracted by fancy tools, pretty reports, and "user-friendly" interfaces. Get to the meat of the issue and ask if they'll stand behind their work. Again, the best way to do this is to see if they'll handle the exchange appeals and represent you in an audit.
All in all, the rain of ACA compliance has already started trickling down since the reporting requirements started January 1st of this year. The flood is coming and we built an ark to protect our people. At First Capitol Consulting, our clients never have to worry about paying extra for exchange appeals or audit representation because it's all included in our service. In fact, our entire ACA compliance program was developed with exchange appeals and audits in mind.
I encourage others to do the same. Stand behind your work and let's protect our clients from the coming flood.
For more info and a breakdown of potential penalties, please contact me at jtkim@fcci.us.com.
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*Source: Page 67 of US Treasury Department's 2016 Budget in Brief - http://www.treasury.gov/about/budget-performance/budget-in-brief/Documents/FY_2016_BiB_complete.pdf.
**Source: CBO website - http://www.cbo.gov/sites/default/files/cbofiles/attachments/43900-2015-03-ACAtables.pdf.itemprop="url"