The CP256V proposes an Employer Shared Responsibility Payment under IRC Section 4980H. If your business is an Applicable Large Employer (50 or more full-time equivalent employees), you're required to offer affordable, minimum-value health coverage to full-time employees. If you didn't, the IRS is proposing a penalty.
The Two Penalties
Section 4980H(a) applies when you didn't offer coverage to at least 95% of full-time employees and at least one employee received a Premium Tax Credit through the marketplace. The penalty is approximately $2,970 per full-time employee (minus the first 30), annually. For a company with 100 full-time employees, that's roughly $207,900 per year.
Section 4980H(b) applies when you offered coverage that was either unaffordable or didn't provide minimum value, and at least one employee received a Premium Tax Credit. The penalty is approximately $4,460 per employee who received a PTC.
How to Respond
You have the right to respond before the penalty is assessed. The CP256V is a proposed assessment, not a final one. Review the IRS's determination against your records. Common errors include the IRS using incorrect employee counts, not accounting for coverage you did offer, or applying the wrong measurement period.
Respond with documentation showing your Forms 1094-C and 1095-C were correct, that you offered qualifying coverage, or that the IRS's employee count is wrong. Include copies of plan documents, enrollment records, and any corrected information returns.
If You Didn't File 1094-C/1095-C
Failing to file the required ACA information returns makes it nearly impossible to contest the penalty because the IRS has no record of the coverage you offered. File the delinquent forms immediately and include them with your response to the CP256V.
The Stakes
ACA employer penalties can reach six or seven figures for large employers. This is not a notice to put in a drawer. Respond by the deadline with complete documentation. If the amounts are significant, professional representation is essential.
If you've received a CP256V, call us at (813) 229-7100. These penalties require immediate attention.