The Internal Revenue Service (IRS) has updated its Questions and Answers website in regards to the Employer Mandate, and it appears they have started to send initial notices to employers who are subject to a penalty for the 2015 year (generally, this will be employers with 100 or more employees since transition relief was available in 2015 to employers with 50-99 employees).

The Treasury Inspector General for Tax Administration (TIGTA) issued a report dated April 7th and entitled “Affordable Care Act: Assessment of Efforts to Implement the Employer Shared Responsibility Provision.” In other words, TIGTA issued a report about the efforts of the Internal Revenue Service (IRS) to collect Employer Mandate penalties.

The only way for an employer to provide certain benefits tax-free to its employees, such as health, dental or vision insurance, is through a Cafeteria Plan, as defined under Section 125 of the Internal Revenue Code. The only way for an employer to have a Cafeteria Plan is by preparing a written plan document which meets the requirements of Code Section 125. Failure to have a written document, or failure to operate a Cafeteria Plan in accordance with the terms of Code Section 125, disqualifies the plan as a Cafeteria Plan and results in gross income to the participants. In other words, any participant in the plan will lose the tax favorable status of the benefits that he or should would have otherwise received.