We don’t blame you for hearing that whenever someone warns of employer mandate taxes coming your way. Nevertheless, we’re donning the chicken suit once again to keep you aware. This time, we’ll keep it short and mainly quote the government.
26 U.S.C. § 4980H(d)(1) – “Any assessable payment provided by this section shall be paid upon notice and demand by the Secretary, and shall be assessed and collected in the same manner as an assessable penalty under subchapter B of chapter 68.”
Section 4980H is better known as the ACA “employer mandate.”
(b) Preliminary notice requirement
(1) In general
No penalty shall be imposed under subsection (a) unless the Secretary notifies the taxpayer in writing by mail to an address as determined under section 6212(b) or in person that the taxpayer shall be subject to an assessment of such penalty.
(2) Timing of notice
The mailing of the notice described in paragraph (1) (or, in the case of such a notice delivered in person, such delivery) shall precede any notice and demand of any penalty under subsection (a) by at least 60 days.
(3) Statute of limitations
If a notice described in paragraph (1) with respect to any penalty is mailed or delivered in person before the expiration of the period provided by section 6501 for the assessment of such penalty (determined without regard to this paragraph), the period provided by such section for the assessment of such penalty shall not expire before the later of—
(A) the date 90 days after the date on which such notice was mailed or delivered in person, or
(B) if there is a timely protest of the proposed assessment, the date 30 days after the Secretary makes a final administrative determination with respect to such protest.
Section 6051 tells you how long the IRS can wait after tax accrual to assess the tax.
Except as otherwise provided in this section, the amount of any tax imposed by this title shall be assessed within 3 years after the return was filed (whether or not such return was filed on or after the date prescribed) or, if the tax is payable by stamp, at any time after such tax became due and before the expiration of 3 years after the date on which any part of such tax was paid, and no proceeding in court without assessment for the collection of such tax shall be begun after the expiration of such period. For purposes of this chapter, the term “return” means the return required to be filed by the taxpayer (and does not include a return of any person from whom the taxpayer has received an item of income, gain, loss, deduction, or credit).
Still, there are lots of open questions about the process that will lead to an assessment, and your right to raise assessment errors. The latest IRS guidance (below) is aging ungracefully.
“Questions and Answers on Employer Shared Responsibility Provisions Under the Affordable Care Act” (April 20, 2017)
56. When does the IRS expect to begin notifying employers that filed Forms 1094-C and 1095-C of potential employer shared responsibility payments?
The IRS expects that the letters informing ALEs that filed Forms 1094-C and 1095-C of their potential liability for an employer shared responsibility payment for the 2015 calendar year (with reporting in 2016) will be issued in 2017.
The IRS expects it will begin issuing letters informing ALEs that filed Forms 1094-C and 1095-C of their potential liability for an employer shared responsibility payment, if any, in the latter part of each calendar year in which reporting was due (for example, in late 2018 for reporting in 2018 for coverage in 2017).
57. Does the IRS expect to publish more information about the employer shared responsibility payment procedures?
Yes. The IRS expects to publish guidance of general applicability describing the employer shared responsibility payment procedures in the Internal Revenue Bulletin before sending any letters to ALEs regarding the 2015 calendar year. In addition, the IRS expects to supplement that guidance in several different ways, widely distributing the information to ensure that ALEs are properly informed of when and how the IRS will be contacting them.
58. How does an employer make an employer shared responsibility payment?
If it is determined that an ALE is liable for an employer shared responsibility payment after correspondence between the ALE and the IRS, the IRS will send a notice and demand for payment. That notice will instruct the ALE on how to make the payment. ALEs will not be required to include the employer shared responsibility payment on any tax return that they file.
The Internal Revenue Bulletin is published each Monday. Through Monday, August 14, 2017, no employer shared responsibility payment process guidance had been included. Employer mandate taxes that accrued in January 2015 must be assessed by January 2018, absent an applicable exception. The promised notices, if mailed at least 60 days in advance of January 1, 2018, must be in the mail by November 2, 2017, just eleven Mondays from now. Keep your eyes on the skies.