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Can you appeal an exchange notice to the IRS?

A company may understand the rationale for keeping good records regarding its payroll taxes. Under federal law, any withholdings from employee paychecks should be kept separate, and not spent on other company expenses, before they are submitted to the IRS.

Unfortunately, there is a new employment tax fear on the horizon. According to a recent article, some companies may be at risk for receiving an exchange notice from the health insurance marketplace. This notice would allege that a company affected by the Affordable Care Act has not complied with the reporting requirements.

Companies with more than 50 full-time workers, defined by the ACA as applicable large employers, must offer affordable health care coverage to their full-time employees. If even one of the company’s full-time workers purchased individual coverage on the marketplace, the company may be liable to the IRS for an employer shared responsibility payment. That payment would be in addition to any penalties imposed by the IRS for the non-compliance with the ACA.

Like other IRS tax notices, fortunately, an exchange notice may also be appealed. However, our tax law firm recommends consulting with an attorney before initiating this process.

In general, a company is given the opportunity to submit evidence that it offered health care insurance coverage to its eligible employees. The evidence should also include monthly reporting of the full- or part-time status of the company's employees. The timeline for requesting the appeal is generally 90 days from the date of the notice. Our Connecticut law firm can represent you through this process.

Source: Accounting Today, “How to successfully appeal an exchange notice from the health insurance marketplace,” Joanna H. Kim-Brunetti, April 7, 2017

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