IRS Letter 5699 is an important notice from the Internal Revenue Service (IRS) that requires prompt attention. Known formally as a Missing Information Return Notice, Letter 5699 indicates an organization may be considered an Applicable Large Employer (ALE) under the Affordable Care Act (ACA) but has failed to submit required IRS filings. Handling Letter 5699 appropriately is crucial to avoiding potential penalties down the road. This article will overview what triggers Letter 5699, the steps to take when you receive it, whether ignoring it can lead to penalties, and how to stay compliant going forward.
What Is IRS Letter 5699?
IRS Letter 5699, or Missing Information Return Notice, is used by the IRS to initiate contact with an organization they believe should have filed health coverage information returns under the Affordable Care Act (ACA) but has failed to do so.
Specifically, the notice indicates an organization did not submit Forms 1094-C and 1095-C. Form 1094-C is the Authoritative Transmittal for Employer-Provided Health Insurance Offer and Coverage. Form 1095-C collects month-by-month information on healthcare coverage offered to full-time employees.
Applicable Large Employers (ALEs), defined as having 50 or more full-time employees including full-time equivalents, must file these ACA information returns each year to report on the healthcare coverage they offered employees. Failure to file can result in penalties.
Letter 5699 will include basic information such as the tax year in question, the taxpayer identification number, and an IRS contact for questions. This establishes the IRS has flagged your organization as potentially being an ALE that should have filed ACA returns for the year indicated.
Steps to Take When You Receive Letter 5699
When you receive IRS Letter 5699, you have a few potential courses of action:
- File the missing forms as soon as possible along with an explanation for the late filing. You have 30 days to respond to the IRS. If you simply failed to meet the deadline, submitting Forms 1094-C and 1095-C now is your best path forward.
- Indicate you filed under a different EIN. Provide the IRS with the EIN you used, as well as the filing date and business name if your organization submitted forms already but under a different identification number.
- Explain why you weren't required to file. If you do not meet the criteria of an ALE, respond explaining why your organization did not need to submit these ACA forms for the year in question. Support your explanation with relevant details.
Note any other circumstances. If you had a valid, alternative reason for not filing the required returns, communicate this to the IRS along with any related documentation.
The key is responding promptly with a clear explanation tailored to your particular situation. Ask for guidance from a professional if unsure exactly how to proceed. Do not ignore IRS Letter 5699.
Can You Get Penalties for Ignoring Letter 5699?
Yes, ignoring IRS Letter 5699 can potentially lead to penalties for your organization. Here is an overview of how the process works and associated risks.
The first notice from the IRS will typically be Letter 5699 itself, asking for an explanation on missing forms or submission of past due filings. If you fail to respond, the IRS may next send Letter 5698 as a reminder notice.
From there, if the issue remains unresolved, the IRS can begin asserting penalties for failure to file correct information returns like Forms 1094/1095-C.
For ALEs, penalties for late filing can be severe. Depending on how late your filings are, you can face fees ranging from $50 to hundreds of dollars per employee. On top of these penalties for failure to file, ALEs can also face separate fees if found to be noncompliant with ACA coverage requirements. Fines for failing to offer coverage that meets MEC, MV, and Affordability requirements to at least 95% of full-time employees are thousands per employee beyond the first 30.
Lacking an appropriate response to IRS Letter 5699 opens the door for your organization to incur substantial financial penalties from multiple angles. Don't let it get to that point. Work promptly to address any issues or explain why your circumstances exempt you from required health coverage reporting.
Navigate ACA Compliance with Ease
Avoiding IRS Letter 5699 comes down to remaining attentive and compliant with ACA regulations. This includes submitting required forms and information returns fully and on time each year.
For organizations unsure of their status, filing obligations, or how to respond if they've received an IRS notice, enlisting expert help is advised. The intricacies of health coverage reporting and IRS enforcement procedures can be complex. Working with vendors experienced in ACA compliance helps avoid easily preventable mistakes.
ACA Reporter software from Points North is designed to simplify ACA compliance, especially for ALEs. As a leading ACA reporting solution, ACA Reporter provides robust tracking tools and access to dedicated experts so employers can easily remain compliant.
IRS Letter 5699 warrants serious attention to avoid steeper consequences down the road. With the right knowledge, resources, and tools like ACA Reporter, organizations can efficiently navigate requirements and resolve any IRS inquiries. If you need help with IRS letter 5699 or ACA reporting compliance, don't hesitate to reach out today so you can focus on serving clients rather than worrying about managing health coverage reporting.