PLEASE PAY ATTENTION TO ACA
The ACA (Affordable Care Act) also known as Obamacare has been in effect since 2015.
It requires individual businesses and commonly owned businesses with over 50 employees to file forms for each employee reporting the status of whether covered or not by employer health insurance.
Individual businesses and commonly owned businesses with over 30 full-time employees must, in addition, offer health insurance to its full-time employees.
The ACA created its own giant bureaucracy with complex and unique rules and filing requirements. Experts had to learn new rules for measuring periods, methods of counting employees, obscure rules for combining businesses, obtaining and tracking new information on employees and forms filing.
And the law, for the first time, forced owners to coordinate with insurance agents, payroll companies, accountants and tax professionals to comply.
This became a huge burden for restaurant owners. Individual stores with over 50 employees is relatively rare but multiple stores with common ownership and over 50 employees is much more common.
In fact, many owners were caught due to the fact that they did not know they had to combine stores under this law.
The new Inflation Reduction Act (see separate article in this issue) and the hiring of an army of new IRS agents, I believe, will put increased compliance pressure on restaurant owners.
So far, my experience with the ACA is that the IRS is not auditing the inner workings of your calculations or even if you provided health insurance or not but they are going after restaurants that have not filed the proper forms.
The penalties are severe. $560 for each 1095 and 1094 form late, incorrect or not filed. The IRS will assume all W-2 employees should have received the forms so if you have 80 W-2’s at the end of the year the penalty would be $44,800. That is for one year and they could assess you for multiple years.
A penalty like that could bankrupt a restaurant and these penalties are being assessed. There is an appeal procedure but no real guidelines and few experts on the subject so you are in a very bad position if you get assessed these penalties.
Kallas goes through its client list each year to determine which restaurants might be liable. But if you have any doubts or you would like to know more, give George or Jordan a call at Kallas.
