Information Reporting Penalties (IRP) Frequently Asked Question (FAQ)

  1. What are IRPs?

    The State is subject to the Information Reporting Penalties (IRPs) when a retroactive change is processed in the Affordable Care Act System (ACAS) that cause a change of benefit status data reported on the Form 1095-C to the Internal Revenue Service (IRS) and the employee through the State Controller’s Office (SCO) correction process. 

    1. What is changing?

      The IRS has provided penalty relief for several years since the enactment of the ACA. This relief is not available beginning with the 2021 reporting year. 

      1. How often are IRPs assessed?

        The State of California will be assessed penalties for all corrected 1095-Cs once the State Controller's Office submits corrections to the IRS. 

        1. Why is the State assessed IRPs?

          If a large employer fails to comply with the ACA information reporting requirements, they may be subject to IRPs imposed under Internal Revenue Code (IRC) sections 6721 and 6722. 

          Under IRC section 6721, a penalty may be imposed on employers for each failure to file a correct information return (1095-C) with the IRS.  

          Under IRC section 6722, a penalty may be imposed on employers for each failure to provide a correct information return (1095-C) to employees.  

          The IRS has continually increased penalty amounts under IRC sections 6721 and 6722 on an annual basis.  

          The IRS has provided penalty relief for several years since the enactment of the ACA. This relief is not available beginning with the 2021 reporting year.

          1. How do IRPs impact my department/campus/District Agricultural Association (DAA)?

            HR offices are responsible for maintaining accurate and timely information in the ACAS. IRPs will be passed down to the HR office at fault. IRPs compound over time. IRPs may result in significant financial penalties, putting a strain on departmental, campus, and DAA budgets.

            1. What can I do to reduce the number of IRPs for my HR office?

              HR offices can proactively avoid IRPs by ensuring accurate and timely reporting of ACA data by incorporating ACAS updates into regular processing cycles and allocating sufficient resources to monitor compliance. It is critical for HR offices to prioritize ACA compliance to avoid potential penalties. This can be achieved by:  

              • Integrating ACA processes into the daily workflow  
              • Ensuring that staff attend regular training  
              • Utilizing the ACA Helpdesk for accurate data entry assistance 
              • Allocating appropriate staff to key ACA transactions timely  
              • Monitoring and making appropriate updates in ACAS for monthly and quarterly compliance reports, along with regular compliance communications by CalHR

               

              Following these steps will minimize IRPs.

              1. What IRP tools and resources are available to me?
                • Access ACA tools and resources available on the SCO ACA Training webpage. 
                • IRP Webpage 
                • ACA Help Desk 
                • IRP Help Desk 
                • Safe Harbor Reports from CalHR 
                • CSU Reports provided by CSU 
                • Utilize the monthly and quarterly compliance reports on Mobius View or View Direct to correct errors. Some helpful compliance reports are listed below: 
                  • Monthly:  
                    • PDA2050B: “Employees Permanently Separated Without a Health Benefit Cancellation ACA Code 6A” 
                    • PDA2050C: “Employees Without ACA Status Code” 
                    • PDA2050L: “Active Employees with Separation Code” 
                    • PDA2056M: “Employee with 350 Deduction Code Without a 3A, 3B, or with a 6A” 
                  • Quarterly:
                    • PDQ20701B: “Employees Permanently Separated Without Health Benefit Cancellation” 
                    • PDQ2701C: “Employee Without ACA Status Code” 
                    • PDQ2701L: “Active Employee with Separation Code” 
                    • PDQ2056M: “Employee With 350 Deduction Without 3A, 3B, Or With 6A” 
                  • Departments heavy with Permanent Intermittent (PI) employees should utilize the compliance report: PDA2065 “PI Employee Reflected As Not Eligible” (Monthly) and PDQ2701H “PI Employee Reflected As Not Eligible” (Quarterly) 
                1. Will there be training provided for the IRP process?

                  **Coming Soon** 

                  1. How will IRPs be assessed to my HR office?

                    IRPs will be directly assessed to the department/campus/DAA that are making any retroactive corrections to employee’s ACAS dating back to reporting year 2021. 

                    ***More Information Coming Soon*** 

                    1. Who do I contact for more information about IRPs?
                      1. What if I disagree with an IRP assessed to my organization?

                        If there are any disagreements to an IRP that is assessed to your HR office, please complete the IRP Appeal Form (coming soon), and submit supporting documentation based on your research and analysis of penalties that may have been incorrectly assessed.

                        1. What are the benefits of the Phased Approach for IRPs?
                          • Gives HR offices additional time to prioritize their ACA workload 
                          • Provides additional time for HR offices to reduce future penalty costs and increase ACA compliance 
                          • Allows HR offices to pay reduced penalty amounts for reporting years 2021 and 2022