IRS Issues Penalty Notice 972CG to Employers for Late ACA Reporting

The article covers the following points:

  • Penalty Notice 972CG Explained!
  • How to Respond to the Notice 972CG
  • Penalties for Failure to Comply with the IRS

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IRS Issues the Penalty Notice 972CG to Employers for Late ACA Reporting - An Overview

- Updated september 14, 2020 - 8.00 AM - Admin, ACAwise

The IRS issues the Notice 972CG as a final warning to employers who have not met the mandated ACA reporting requirements.

The Notice addresses the late filing of 1094/1095 Forms for Tax Year 2017. Employers may also receive this penalty notice for unresolved TIN validation errors or failing to file their ACA returns electronically when required.

Penalty Notice 972CG Explained

Employers who have filed their ACA Forms 1094/1095 late, or filed using the incorrect method, or filed with incorrect TIN/Name will receive the Penalty Notice 972CG under IRC Section 6721.

What does this notice contain?

Notice 972CG is comprised of the following:

  • The explanation for the proposed penalty and how to respond to the notice.
  • The notice will include each submission considered in the total penalty, including the form type, date received (if not filed on time), whether the returns were original or corrected, the transmitter control code (for electronic filers), and the type of penalty that applies such as late, incorrect TINs, etc.
  • A list of ACA returns filed with missing or incorrect name/TIN combinations.
  • A record of every submission considered in the total penalty.
  • Summary of the proposed penalty imposed under IRS Section 6721.
  • The notice will have a response page and payment/correspondence slip.

Have you received the IRS Notice 972CG?

Contact ACAwise at (704)-954-8420 or email your concerns along with the notice you have received to support@acawise.com. We offer a free assessment of your options and instructions to proceed further.

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How to Respond to the Notice 972CG?

Note

  • Employers who received Notice 972CG from the IRS must respond within 45 calendar days from the notice date. Foreign filers can file within 60 days.
  • If you need more time, submit a written request to the address listed on the notice. The request must be sent before the end of the 45 or 60 day period.

Basic ACA Reporting Services

  • Employers must send in a portion of the payment or correspondence slip (response) that is appropriate to them. Employers must sign and submit the payment, whether they fully or partially agree with the proposed penalty.

Seeking Waiver

  • Employers seeking a waiver of the proposed penalty must submit a written statement.
  • The statement should state the specific provision under which the waiver is being requested. For example: An event that is beyond the filer's control.
  • The written statement must contain the signature of the person required to file the return, and the declaration made under penalties of perjury.

Letter 1948C

  • To get an additional explanation or information, the IRS may issue Letter 1948C to support the request to waive the proposed penalty.
  • If the given explanation was accepted, the IRS would issue Letter 1948C as a note of acceptance, and the applicable penalty will not be charged.
  • The IRS will reject the waiver request if the employer doesn’t respond by the time indicated in the notice.

Penalty, and the Balance Due Notice

  • A penalty will be charged if the written statement does not have a reasonable cause or partially establish a reasonable cause.
  • The IRS will send Letter 854C explaining the reason for denial and the filer’s rights to appeal. The assessment will result in a balance due notice (CP15 or CP215).
  • The IRS will charge the full amount of the penalty if there is no response to the Notice 972CG within 45 days. They will issue a balance due notice (CP15 or CP215).

Note: Interest on balance due from the date of CP15/CP215 notice continues to accrue until the balance is paid in full.

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Penalties for Failure to Comply with the IRS

Under IRC 6721(a) and IRC 6722(a), the IRS can impose a penalty for each return that fails to comply with the information return filing requirements.

Penalty under IRC 6721

Under IRC 6721, the IRS will impose the penalty from $50 to $260 for each information return that doesn’t meet the filing criteria.

For any single return that has more than one error, the IRS will impose the highest penalty amount for the return.

  • For example: If a 1095-B or 1095-C was filed 30 days late with an incorrect TIN, then the penalty will be $260 for the return.

If the reasonable cause was accepted for TIN failure, the late filing penalty of $50 is still applicable.

Penalty under IRC 6722

In addition, the IRS might also impose a penalty for not providing the correct statement to the payee under the IRC section 6722.

Visit https://www.acawise.com/what-employers-need-to-know-about-aca-penalties/ to learn more about information return penalty rates.

Additional information about Notice 972CG is available under Publication 1586.

Switch to ACAwise for Accurate ACA Reporting for the 2020 Tax Year. Learn More about our Services

Have you received a Notice 972CG?

We are here to help. Contact ACAwise at (704)-954-8420 or email your concern with the Notice you received to support@acawise.com. We perform an assessment to inform you of your options and provide clear instructions to proceed further.

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  • Our solution prevents your business from unnecessary IRS penalties by helping you to e-file your ACA Forms accurately and on-time.
  • ACAwise validates your data using various processes. For example, we use TIN Matching to increase the accuracy of your forms and prevent unnecessary penalties.

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