Last year, Congress passed the Federal Civil Penalties Inflation Adjustment Act as part of the Bipartisan Budget Act. In accordance with the provisions of that Act, various Federal agencies have announced increased penalties.
The new law requires Federal agencies to determine the last time penalties were increased and to publish updated penalties to adjust for inflation since that time. In some cases, the increases in penalties are quite significant. After this initial adjustment, agencies will be required to adjust penalties annually for inflation.
The new amounts apply to penalties assessed after August 1, 2016 for violations occurring after November 2, 2015. Some of the new penalties are:
- Failure to file a Form 5500: $2,063 per day, up from $1,100 per day.
- Failure of a multiple employer welfare arrangement to file a report: $1,502 per day, up from $1,100 per day.
- Failure to furnish information requested by the Secretary of Labor: $147 per day, up from $110 per day.
- Failure by an employer to inform employees of Children’s Health Insurance Program coverage opportunities: each employee a separate violation, $110 per day, up from $100 per day.
- Failure by any group health plan sponsor in connection with the Genetic Information Nondiscrimination Act (GINA): $110 per day, up from $100 per day.
- Minimum penalty for de minimis failures to meet genetic information requirements not corrected prior to notice from the Secretary of Labor: $2,745, up from $2,500.
- Minimum penalty for failures to meet genetic information requirements which are not corrected prior to notice from the Secretary of Labor and are not de minimis: $16,473, up from $15,000.
- Cap on unintentional failures to meet genetic information requirements: $549,095, up from $500,000.
- Failure to provide Summary of Benefits and Coverage: $1,087 per failure, up from $1,000 per failure.
- Willful violation of FMLA posting requirements: $163, up from $110.
- Minimum wage and overtime violations under the Fair Labor Standards Act: $1,894 per violation, up from $1,100 per violation.
- Violations of the notice posting requirements in Title VII of the Civil Rights Act, the Americans with Disabilities Act and GINA: $525, up from $210.
- Child labor violations: $12,080, up from $11,000.
- Serious Occupational Safety and Health Administration (OSHA) violations: $12,471 per violation, up from $7,000.
- Failure to abate OSHA violations: $12,471 per day beyond abatement date, up from $7,000 per day beyond abatement date.
- Willful/repeated OSHA violations: $124,709 per violation, up from $70,000 per violation.
The IRS previously announced increased penalties for 2016 and 2017:
| Large Businesses with Gross Receipts of More Than $5 Million and Governmental Entities | |||
| Time returns filed/furnished | Returns due 01/01/2011 thru 12/31/2015 | Returns due 01/01/16 thru 12/31/2016 | Returns due 01/01/17 thru 12/31/2017 |
| Not more than 30 days late (by March 30 if the due date is February 28) |
$30 per return/ $250,000 maximum |
$50 per return/ $529,500* maximum |
$50 per return/ $532,000* maximum |
| 31 days late – August 1 | $60 per return/ $500,000 maximum |
$100 per return/ $1,589,000* maximum |
$100 per return/ $1,596,500* maximum |
| After August 1 or Not At All | $100 per return/ $1,500,000 maximum |
$260* per return/ $3,178,500* maximum |
$260 per return/ $3,193,000* maximum |
| Intentional Disregard | $250 per return/ No limitation |
$520* per return/ No limitation |
$530* per return/ No limitation |
| Small Businesses with Gross Receipts $5 Million or Less | |||
| Time returns filed/furnished | Returns due 01/01/2011 thru 12/31/2015 | Returns due 01/01/16 thru 12/31/2016 | Returns due 01/01/17 thru 12/31/2017 |
| Not more than 30 days late (by March 30 if the due date is February 28) |
$30 per return/ $75,000 maximum |
$50 per return/ $185,000* maximum |
$50 per return/ $186,000* maximum |
| 31 days late – August 1 | $60 per return/ $200,000 maximum |
$100 per return/ $529,500* maximum |
$100 per return/ $532,000* maximum |
| After August 1 or Not At All | $100 per return/ $500,000 maximum |
$260* per return/ $1,059,500* maximum |
$260 per return/ $1,064,000* maximum |
| Intentional Disregard | $250 per return/ No limitation |
$520* per return/ No limitation |
$530* per return/ No limitation |
On a brighter note, the Internal Revenue Service has announced that it will not impose penalties on employers who failed to make timely filings of Form 1094-C and accompanying 1095-Cs, as long as employers made legitimate efforts to register and they submit the forms as soon as possible. It is not clear what constitutes a legitimate effort or how soon forms must be filed. Employers who have not filed should do so as soon as possible.
