The Treasury Inspector General for Tax Administration (TIGTA) recently announced the delay of the ACA Compliance Validation (ACV) System, which is now expected to be implemented in May 2017. Employers should be aware that this delay does not impact their reporting obligations and potential liabilities for penalties. The ACV system’s purpose is to determine compliance with the Employer Mandate’s substantive provisions, rather than to measure reporting compliance.
Once the ACV system is functional, the IRS plans to identify all noncompliant employers from tax years 2015 and 2016 in order to assess marketplace penalties. That said, the current lack of noncompliance penalties does not indicate the IRS will opt not to enforce the employer mandate and reporting requirements. On the contrary, it signifies the IRS fully intends to carry out its ACA audit process for past and current years.
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