Client Overview
The client is a Kentucky-based payroll organization that serves as the parent company for several mid-sized businesses. Together, these entities support a workforce of more than 20,000 employees across multiple benefit plans. Accurate reporting and regulatory clarity were critical, as errors at the parent level had wide-reaching implications across the organization.
The Challenge
The client received an IRS penalty notice citing noncompliance with the Affordable Care Act, with an assessed fine of $32 million. The notice came with a 30-day response deadline and required the review of hundreds of enrollment records and IRS filings. The HR and benefits teams were under immediate pressure, unsure how the penalty had been calculated or where errors might exist. Without a clear path forward, the organization faced significant financial risk and an intense administrative burden during a short response window.
The Strategy
Lumelight began by carefully reviewing the IRS penalty letter to understand how the assessment was generated and where reporting issues occurred. A dedicated consultant worked directly with the client to explain the findings, outline the response process, and gather the information needed to act quickly and accurately. Lumelight prepared and submitted a preliminary response that corrected key company-level filing errors, significantly reducing the assessed penalty. Building on that progress, the team then completed a detailed review of employee-level records, hand-correcting several hundred reporting codes to address the remaining issues. Throughout the process, Lumelight managed communication with the IRS and shared real-time updates so the client was never left waiting or uncertain about next steps.
The Impact
The initial response reduced the assessed penalty from $32 million to $140,000. The final submission eliminated the remaining balance entirely. More than fifty hours of administrative work were removed from the client’s internal teams during a high-pressure period. What began as a severe compliance threat became a resolved issue, handled with clarity and control. The organization moved forward with greater confidence in its reporting process and the reassurance that it had experienced guidance in moments when precision mattered most.
