With the numerous changes to the Consolidated Omnibus Budget Reconciliation Act (COBRA) subsidy and the subsidy’s various notice requirements, it would not be surprising for an employer to make a mistake in complying with COBRA. Failures to comply with COBRA (including obligations unrelated to the subsidy) can lead to excise taxes under the federal tax code and trigger an obligation to file a Form 8928 with the Internal Revenue Service (IRS). For employers, this excise tax is $100-$200 per day and can reach up to $500,000.
Employers that monitor COBRA compliance regularly and fix any failures within 30 days can typically avoid imposition of the excise tax. An employer that willfully neglects its COBRA obligations or fails to reasonably monitor its compliance with such obligations will not be entitled to such relief. In addition, if the IRS finds a COBRA failure upon audit, it must impose an excise tax on the employer.
The IRS Form 8928 and its instructions can be found here.