The Applicable Large Employers (ALEs) that fail to comply with the requirements of the Employer Mandate Provisions under the Affordable Care Act (ACA) are liable to pay some penalties to the IRS. These penalties are charged if the taxpayer fails to pay the federal taxes on time. However, the IRS also provides several options to reduce or abate the penalty for people who qualify under the IRS’s first-time abatement penalty waiver (FTA).


The IRS charges penalties to encourage the taxpayer to follow the rules and regulations as well as to remain in compliance with the law. While the IRS doesn’t abate the vast majority of penalties, there are some strategies and best practices that can be used to eliminate or at least reduce the penalties.

If you are one of those taxpayers that has received a letter from the IRS to pay penalties for non-compliance with its rules and regulations, then contact the professionals of the ACA Compliance Solution Services, Inc. for the IRS penalty reduction services. With only 30 days to respond, the ACA compliance experts will prepare you for a highly effective response while addressing the operational or data gaps that led the IRS to send you the penalty notice. Let’s look at the things related to IRS penalties.
Common IRS penalties
There are almost 150 penalties in the Internal Revenue Code, including penalties for late filing, late payment, return errors, and other non-compliance activities. However, the most common collection penalties include:

• The failure to file your tax return within the due date: 5% of the unpaid taxes for each month or part of a month that won't exceed 25% of your unpaid taxes.
• The failure to pay tax return on time: 0.5% of the unpaid taxes for each month; up to a maximum of 25% of your unpaid taxes.
• Penalties related to accuracy: 20% of the portion of the underpayment of tax that happened because of negligence or disregard.
• Failure to deposit penalties:
 For 1-5 days: 2% of your unpaid deposit
 For 6-15 days: 5% of your unpaid deposit
 More than 15 calendar days: 10% of your unpaid deposit
 More than 10 calendar days after the date of your first notice or letter: 15% of your unpaid deposit


What is a Penalty Abatement?

The IRS may consider a first-time penalty abatement (FTA) waiver on the grounds of administrative waiver to relieve taxpayers from failure-to-file, failure-to-pay, and failure-to-deposit penalties but only in extraordinary circumstances. The criteria behind the penalty abatement procedure are to consider your genuine effort to comply with the requirements of the law but were unable to meet your tax obligations due to circumstances beyond your control. The IRS may also consider certain cases such as the death of a family member, serious illness, fire, natural disaster, etc. To qualify for the First Time Penalty waiver, a taxpayer must fulfill the following conditions, which apply only to a single tax period:

• Filing compliance: The taxpayer must have filed all current due returns or filed a valid extension from the IRS to file the returns.
• Payment compliance: The taxpayer must have paid or arranged to pay all tax due.
• Clean penalty history: The taxpayer didn’t previously have to file a return or should not have any prior penalties for the preceding three tax years.

Role of ACA compliance experts

At ACA Compliance Solution Services, Inc., our ACA compliance experts have been providing the most beneficial IRS penalty reduction services to provide tax relief to our clients. Our professionals have an exhaustive understanding of IRS procedure that helps them easily identify and maximize your chance of reducing penalties from the IRS. Rest assured, with our professional team, you will be able to overcome the hefty penalties imposed by the IRS. Contact us today!