Sarah Borders, CEBS July 28, 2021 4 min read

Hot Topic: Failure to Pay PCORI Fee

"An employer did not pay or file their PCORI fee last year. What should an employer do if they didn’t file?"

There is no specific penalty for failure to report or pay the PCORI fee. However, since this fee is considered an excise tax, any related penalty and interest for failure to file a return or pay a tax would seem to apply. In some cases, penalties may be waived if the plan sponsor has reasonable cause and the failure was not due to willful neglect.

No formal guidance has been provided by the IRS for those who have failed to pay the PCORI fee, so the recommendation is that employers should file a Form 720 for the applicable year (or Form 720X for an amendment) sooner rather than later for any missed fees and pay any associated fines or penalties.

On the IRS PCORI Fee Questions and Answers webpage, it states under Q16 that: “A plan sponsor or policy issuer should make corrections to a previously filed Form 720 by filing a Form 720-X, Amended Quarterly Federal Excise Tax Return, including adjustments that result in an overpayment. Form 720-X may be filed anytime within the applicable limitation period. Form 720-X is available on IRS.gov.”

Therefore, if the PCORI fee is paid late, plan sponsors may have to file a Form 720 for the applicable year, and possibly a Form 720-X and add excise tax to it as a late penalty. However, employers should consult with their tax advisor or CPA on these details before making any adjusted payments.

Sarah Borders, CEBS

Principal, Benefits Compliance Solutions. Sarah has spent the last 15 years in the employee benefits industry, has numerous designations and serves on NAHU’s Employer Working Group Subcommittee and is an active board member of Austin AHU. She recently stepped down as Vice President of Benefits Compliance at one of the nation's largest brokerage firms to start her own compliance consulting practice. Her designations include an active license with the Texas Department of Insurance, CEBS (Certified Employee Benefits Specialist), Certified Health Care Reform Professional, HIPAA certification and Health Care Service Associate. She holds an MBA from Texas A&M Corpus Christi and a BA from University of Incarnate Word. Her consulting firm, Benefits Compliance Solutions, partners with employers to identify unknown risks and avoid hundreds of thousands of dollars in fines and lawsuits from failure to comply with their healthplan obligations.