When it comes to ACA compliance, some Applicable Large Employers (ALEs) may be tempted to skip filing Forms 1094-C and 1095-C—especially if they already know they don’t meet the 95% offer threshold. After all, if you’re going to be penalized under ACA §4980H anyway, why bother filing the forms? 

Here’s the catch: skipping filing doesn’t protect you. In fact, it could leave you exposed to two separate IRS penalties—like striking out twice in the same inning. 

Understanding the Penalty Pitch 

There are two very different penalty “balls” in play: 

1. Failure to File/Furnish Penalties (IRC §§6721 & 6722) 

• These apply when an ALE fails to file or furnish Forms 1094-C/1095-C. 

• The IRS usually starts this process with Letter 5699, which asks why forms weren’t filed, followed by CP220, which proposes the actual penalty amount. 

2. Employer Shared Responsibility Penalties (IRC §4980H(a) & (b)) 

• These apply when coverage isn’t offered to at least 95% of full-time employees (§4980H(a)), or when coverage is unaffordable or doesn’t meet minimum value (§4980H(b)). 

• Penalties are typically issued via Letter 226J after the IRS reviews ACA filings against premium tax credit data. 

Can the IRS Assess Both? 

Yes. While these penalties are triggered by different processes, an ALE can be hit with both. 

Here’s how it typically plays out: 

• If you don’t file, the IRS may not immediately have the data to assess §4980H penalties. 

• But the story doesn’t end there. If you file late—maybe in an attempt to request abatement or reduce your failure-to-file penalty—the IRS can then use that data to issue a 226J. 

Translation: paying the CP220 doesn’t close the door. The IRS could still knock later with a 4980H assessment. 

It’s a bit like ignoring a parking ticket—you might think paying the smaller fine upfront solves the problem, but months later you could still find a boot on your car. 

Why Filing Still Matters 

Even if you know penalties may apply, filing your ACA forms is the smarter long-term play. Filing—even late—can: 

• Strengthen your case for penalty abatement or reduction. 

• Prevent “intentional disregard” penalties, which are often higher. 

• Show good faith compliance, which the IRS tends to view favorably. 

Skipping forms altogether may feel like the path of least resistance, but it’s really just leaving the door unlocked for more penalties down the line. 

Bottom Line 

Don’t assume that not filing will shield you from 4980H penalties. The IRS can (and does) assess both failure-to-file and employer shared responsibility penalties. Think of it as a doubleheader you don’t want to play. 

Recommendation: Always file your ACA forms—even if it’s after the deadline. Doing so puts you in a stronger position to minimize penalties, demonstrate compliance, and avoid costly surprises. 

Want to dive deeper into ACA compliance strategies and penalty avoidance?  Check out our Back to the Basics webinar series where our experts break down real-world scenarios and help you step up to the ACA compliance plate with confidence.