ACA Compliance Guide for Employers (2026): Requirements, Reporting and Penalties

The Affordable Care Act (ACA) transformed how US employers approach health benefits — and the compliance obligations it created are still catching companies off guard in 2026. Missed deadlines, miscalculated affordability, and incorrect 1095-C coding are among the top reasons employers receive IRS penalty notices totaling tens of thousands of dollars.

This guide cuts through the regulatory language and gives you a practical, implementation-focused roadmap. Whether you are an HR leader at a company that just crossed the 50-employee threshold or a benefits administrator at a large enterprise, you will find specific thresholds, current penalty amounts, form-by-form reporting guidance, and software recommendations that actually make compliance manageable.

1. What Is the ACA Employer Mandate? (Fast Facts)

The ACA employer mandate — formally called the Employer Shared Responsibility Provision (ESRP) under Internal Revenue Code Section 4980H — requires Applicable Large Employers (ALEs) to offer affordable, minimum-value health coverage to full-time employees and their dependents. Employers that fail to do so face excise tax penalties if at least one full-time employee receives a premium tax credit through the ACA Marketplace.

ACA Employer Mandate — Key Facts	Details
Who it applies to	Applicable Large Employers (ALEs) — 50+ full-time equivalent employees
Coverage required	Minimum Essential Coverage (MEC) to full-time employees and their dependents
Affordability threshold (2026)	9.02% of employee household income (safe harbor: W-2 wages)
Minimum value	Plan pays at least 60% of covered costs
Part A penalty (2026)	$2,900 per full-time employee (minus first 30) if no MEC offered to 95%+ of FTEs
Part B penalty (2026)	$4,350 per FTE who receives a Marketplace tax credit
Annual reporting	Forms 1094-C and 1095-C filed with IRS; 1095-C furnished to employees
1095-C furnishing deadline (2026)	March 3, 2026 (employees)
IRS filing deadline (2026)	February 28, 2026 (paper) / March 31, 2026 (electronic)
Electronic filing threshold	10 or more returns (effective for 2024 and later tax years)

2. Who Is an Applicable Large Employer (ALE)?

An Applicable Large Employer is any employer that employed an average of at least 50 full-time employees — including full-time equivalent (FTE) employees — during the prior calendar year. ALE status in 2026 is determined by your 2025 workforce counts.

How to Calculate Your FTE Count

The IRS uses a specific methodology for this calculation — it is not simply your headcount.

Count full-time employees: Any employee who works an average of 30 or more hours per week (or 130 hours per month) is a full-time employee. Count these employees for each month of the prior calendar year.
Calculate part-time FTEs: For each month, add up all hours worked by employees who worked fewer than 130 hours, then divide that total by 120. This gives you the FTE count for part-time workers for that month.
Add and average: Add the full-time count and the part-time FTE count for each month (12 months), sum all 12 monthly totals, then divide by 12. If the result is 50 or more, you are an ALE for the following year.

One of the most commonly missed ALE traps involves controlled groups. If your company is part of a controlled group of corporations, an affiliated service group, or another arrangement under IRC Sections 414(b), (c), (m), or (o), all employees of the entire group are aggregated for ALE determination purposes. This means a holding company with five subsidiaries, each employing 15 people, is an ALE — even though no single entity has 50 employees.

Each member of the controlled group that has at least one full-time employee must file its own 1094-C and 1095-C forms, and each member bears its own ESRP liability separately.

Seasonal Worker Exception

If your workforce exceeded 50 FTEs for 120 days or fewer during the prior calendar year, and the employees who caused the overage were seasonal workers, you are not an ALE. Seasonal workers are employees who perform labor or services on a seasonal basis as defined by the Department of Labor, including retail workers employed exclusively during holiday seasons.

3. ACA Minimum Essential Coverage Requirements

ALEs must offer Minimum Essential Coverage (MEC) to at least 95% of their full-time employees and those employees’ dependents each month, or risk Part A penalties. Note: dependents means children up to age 26 — spouses are not included in the dependent coverage requirement for purposes of avoiding penalties, though many employers cover them anyway.

What Counts as MEC?

MEC is a broad category. Employer-sponsored plans that qualify include:

Group health plans (fully insured and self-insured)
Government-sponsored programs (Medicare, Medicaid, CHIP, TRICARE)
Individual health coverage purchased through the ACA Marketplace
Retiree coverage
COBRA continuation coverage

However, the following do not count as MEC for employer mandate purposes:

Stand-alone dental or vision plans
Accident or disability income insurance
Long-term care insurance
Workers’ compensation
On-site medical clinics that provide only de minimis care (unless they qualify as an Employee Assistance Program offering MEC)

The 95% Offer Requirement

You must offer MEC to at least 95% of your full-time employees each calendar month (not on average). The IRS does allow a de minimis safe harbor: if you fail to offer coverage to 5% or fewer of your full-time employees (or five employees, whichever is greater), you avoid Part A liability even if some of those employees obtain subsidized Marketplace coverage. In practice, this means tracking eligibility at the employee level, every month — which is why ACA compliance software becomes essential at scale.

4. Affordability and Minimum Value Rules

Offering coverage is not enough. The coverage must be both affordable and provide minimum value, or employees who are offered it can still obtain Marketplace subsidies — and you can still face Part B penalties.

Affordability: The 2026 Threshold Is 9.02%

Coverage is considered affordable if the employee’s required contribution for self-only coverage under the lowest-cost plan option does not exceed 9.02% of household income for 2026. The IRS adjusts this percentage annually (it was 9.12% in 2023, 8.39% in 2024, and 9.02% in 2025 and 2026).

Because employers do not know employees’ actual household income, the IRS provides three affordability safe harbors:

Safe Harbor Method	How It Works	Best For
W-2 Wages Safe Harbor	Employee contribution ≤ 9.02% of W-2 Box 1 wages for the calendar year	Employers with stable full-year workforce
Rate of Pay Safe Harbor	Employee contribution ≤ 9.02% of (hourly rate × 130 hours) for hourly workers, or monthly salary for salaried workers	Employers with variable-hour employees
Federal Poverty Level (FPL) Safe Harbor	Employee contribution ≤ 9.02% of the federal poverty level for a single individual ($15,060 for 2026) — i.e., maximum employee premium of $113.20/month	Simplest to administer; lowest maximum employee cost

The FPL safe harbor is the easiest to apply uniformly but results in the lowest permissible employee contribution (~$113/month for self-only in 2026), which may increase employer costs. The Rate of Pay safe harbor is popular for hourly workforces because it ties affordability to current wages without waiting for year-end W-2s.

Minimum Value: The 60% Actuarial Value Test

A plan provides minimum value if it pays for at least 60% of the total allowed cost of benefits expected to be incurred under the plan — essentially a Bronze-level plan or better. The IRS provides an online MV Calculator at irs.gov that employers and their actuaries can use to verify this. Plans that cover only preventive services, or that have extremely high deductibles, frequently fail the minimum value test even if they otherwise qualify as MEC.

Beginning with plan years after 2019, plans must also provide substantial coverage of inpatient hospitalization and physician services to satisfy minimum value — a rule that closed a loophole some employers had used to offer bare-bones skinny plans.

5. ACA Reporting Requirements: Forms 1094-C and 1095-C

All ALEs must file information returns with the IRS and furnish statements to employees each year. This is the most operationally intensive part of ACA compliance — and the part most likely to result in penalties for errors even when you are otherwise compliant.

Form 1095-C: Employee-Level Reporting

Form 1095-C is completed for each full-time employee (and any employee enrolled in self-insured coverage). It has three parts:

Part I: Employee and employer identifying information
Part II: Offer of coverage (Lines 14–16) — the most complex section, using a series of codes to describe what was offered each month, the employee’s required contribution, and any applicable safe harbor
Part III: Covered individuals (required only for self-insured plans) — lists the employee and all dependents covered each month

Understanding 1095-C Line 14 and Line 16 Codes

Line 14 (offer of coverage codes) and Line 16 (safe harbor codes) on Form 1095-C are the most error-prone part of ACA reporting. Here are the codes you will use most frequently:

Code	Line	Meaning
1A	14	Qualifying offer — MEC providing minimum value offered to FT employee and dependents and spouse at employee cost not exceeding FPL safe harbor
1B	14	MEC providing minimum value offered to employee only
1C	14	MEC providing minimum value offered to employee and dependents (not spouse)
1E	14	MEC providing minimum value offered to employee, dependents, and spouse
1H	14	No offer of coverage (employee not yet eligible, in waiting period, or terminated)
2A	16	Employee not employed during the month
2B	16	Employee not a full-time employee for the month
2C	16	Employee enrolled in coverage — regardless of whether it is affordable
2D	16	Employee in a Limited Non-Assessment Period (initial measurement, waiting period)
2E	16	Multiemployer plan relief applies
2F	16	W-2 affordability safe harbor
2G	16	FPL affordability safe harbor
2H	16	Rate of Pay affordability safe harbor

Form 1094-C: Employer-Level Transmittal

Form 1094-C is the cover sheet that transmits the 1095-C returns to the IRS. Employers file one 1094-C with all 1095-Cs. Line 22 on Form 1094-C allows you to certify eligibility for certain alternative reporting methods (Qualifying Offer Method, 98% Offer Method). The 98% Offer Method is particularly useful: if you offered affordable MEC to at least 98% of your full-time and part-time employees, you do not need to identify which specific employees were full-time, simplifying Part III of Form 1094-C.

2026 Filing Deadlines

Deadline	Action Required
January 31, 2026	Original furnishing deadline for 1095-C to employees (automatic 30-day extension granted by IRS Notice for recent years — confirm annually)
March 3, 2026	Extended furnishing deadline if IRS grants automatic extension (as it has in recent years)
February 28, 2026	Paper filing deadline for 1094-C and 1095-C with IRS (paper filers with fewer than 10 returns)
March 31, 2026	Electronic filing deadline for 1094-C and 1095-C via IRS AIR system

As of the 2023 tax year, the IRS lowered the electronic filing threshold from 250 returns to 10 returns (aggregated across all return types). This means virtually every ALE must file electronically through the IRS Affordable Care Act Information Returns (AIR) system, using software that generates valid XML files — another reason purpose-built ACA software pays for itself.

State ACA Reporting Requirements

Several states have enacted their own individual mandate laws and require separate reporting — often using 1095-C data but submitted directly to the state. As of 2026, states with individual mandates and reporting requirements include California, New Jersey, Massachusetts, Rhode Island, Vermont, Washington DC, and Hawaii (effective 2026). Employers with employees in these states must track state-specific deadlines separately from federal IRS deadlines.

6. Employer Shared Responsibility Payments (ESRP): Part A and Part B Penalties

The ESRP is not technically a “penalty” in the traditional sense — it is an excise tax assessed by the IRS under IRC Section 4980H. The IRS issues Letter 226-J to propose ESRP assessments, and employers have 30 days to respond. Understanding how each type of penalty is triggered — and how to avoid or contest them — is critical.

Part A Penalty (Section 4980H(a)): The Sledgehammer

The Part A penalty applies when an ALE fails to offer MEC to at least 95% of its full-time employees and their dependents in a given month, and at least one full-time employee receives a premium tax credit through the Marketplace for that month.

2026 Part A Penalty amount: $2,900 per year per full-time employee (annualized), minus the first 30 full-time employees. The monthly amount is $241.67 per full-time employee (minus the 30-employee exclusion).

Example: An ALE with 200 full-time employees fails to offer MEC to 12 employees (6%) for all 12 months of 2026. At least one of those 12 obtains a Marketplace subsidy. The Part A penalty applies to all 200 employees minus 30 = 170 employees. Annual penalty: 170 × $2,900 = $493,000. This is why the 95% offer threshold is so important — missing it by even a few employees can trigger a company-wide penalty.

Part B Penalty (Section 4980H(b)): The Scalpel

The Part B penalty applies when an ALE offers MEC to at least 95% of full-time employees (avoiding Part A), but the coverage offered to a specific full-time employee is either not affordable or does not provide minimum value — and that employee obtains a premium tax credit through the Marketplace.

2026 Part B Penalty amount: $4,350 per year per full-time employee who receives a premium tax credit (monthly amount: $362.50). This penalty is assessed only on the employees who actually receive a subsidy, not on the entire workforce.

Example: An ALE with 500 employees offers coverage that passes the 95% test, but charges employees 12% of their W-2 wages for self-only coverage — exceeding the 9.02% affordability threshold. Ten employees determine the coverage is unaffordable and obtain subsidized Marketplace coverage. Part B penalty: 10 × $4,350 = $43,500.

Important: The Part B penalty per employee cannot exceed the Part A penalty amount — so if Part B per employee would exceed the Part A calculation, the Part A amount caps it.

How the IRS Identifies ESRP Liability

The IRS cross-references your 1094-C/1095-C filings against Marketplace enrollment data provided by the Department of Health and Human Services. When an employee claims a premium tax credit and your 1095-C shows code 1H (no offer) or an unaffordable offer without a safe harbor code, the IRS generates a proposed ESRP assessment via Letter 226-J.

You have 30 days from the date of Letter 226-J to respond. You can contest the assessment by demonstrating that the employee was not full-time, that a valid offer was made, or that the offer was actually affordable under a safe harbor. This is why accurate, month-by-month 1095-C coding is your primary defense — if you coded correctly but failed to use a safe harbor code, you may lose an otherwise valid argument.

Statute of Limitations

The IRS has no fixed statute of limitations for assessing ESRP — unlike income tax, which generally has a 3-year limitation. The IRS has been issuing 226-J letters for tax years as far back as 2015, meaning employers can receive penalty notices many years after the coverage year in question. This underscores the importance of retaining ACA records (hours tracking, offers made, enrollment evidence) for at least 6 years.

7. Common ACA Compliance Mistakes Employers Make

Understanding the rules is one thing — avoiding the operational errors that generate real penalties is another. These are the mistakes ACA compliance consultants see most frequently.

Mistake 1: Failing to Track Variable-Hour Employees Correctly

The ACA allows two methods for determining full-time status for variable-hour, part-time, or seasonal employees: the Monthly Measurement Method and the Look-Back Measurement Method. Most large employers use the Look-Back Method, which involves a measurement period (3 to 12 months), a stability period, and an administrative period. Failing to correctly implement these periods — or mixing up which employees are on which method — leads to employees being classified as part-time when they qualify as full-time, resulting in penalty exposure.

Mistake 2: Ignoring the 90-Day Waiting Period Rule

Under the ACA, ALEs cannot impose a waiting period longer than 90 days before coverage becomes effective for an otherwise eligible employee. This is separate from the measurement period rules. Employers sometimes confuse the 90-day waiting period limit with the look-back measurement period, or apply a waiting period on top of an initial measurement period in a way that violates the 90-day rule. The IRS and DOL jointly enforce this provision.

Mistake 3: Using the Wrong Affordability Safe Harbor

Choosing the W-2 safe harbor for employees who had significant pre-tax benefit deductions or unpaid leaves of absence can result in incorrect affordability calculations. The W-2 safe harbor uses Box 1 wages (taxable wages after pre-tax deductions), which can be significantly lower than annual compensation — meaning the 9.02% affordability test is applied to a lower base, making coverage appear unaffordable when using a flat premium. Run the math before committing to a safe harbor method at the start of each plan year.

Mistake 4: Incorrect or Inconsistent 1095-C Coding

Line 14 and Line 16 code errors are among the most common reasons employers receive 226-J letters. Typical errors include: using code 1H (no offer) for an employee who was in a limited non-assessment period (should be 1H + 2D); omitting Line 16 safe harbor codes that would protect against Part B liability; and using annual codes (like 1A for all 12 months) when the employee’s situation actually changed mid-year. Every month of every employee’s record must be reviewed individually.

Mistake 5: Overlooking Controlled Group Members

As noted in Section 2, controlled group rules catch many employers off guard. PE-backed portfolio companies, franchises, and companies with common ownership frequently fail to recognize that their combined employee count makes them ALEs. By the time the IRS sends a 226-J letter for multiple years of non-filing, the exposure can be in the millions.

Mistake 6: Missing State Reporting Deadlines

State-level ACA reporting (California, New Jersey, Massachusetts, etc.) has separate deadlines from the federal IRS deadlines. California’s deadline for furnishing the 1095 equivalent to employees is January 31 of each year, with no extended grace period. New Jersey requires filing directly with the state Department of Treasury. Employers with multi-state workforces who treat ACA reporting as a purely federal exercise frequently incur state penalties on top of any federal exposure.

Mistake 7: Failing to Respond to Letter 226-J Correctly

When an employer receives a Letter 226-J, the stakes of the response are high. Many employers either ignore the letter (the 30-day response window passes and the assessment becomes final) or respond without adequate documentation. A proper response requires a detailed employee-by-employee explanation using the Employee PTC Listing attached to the letter, documentation of offers made, and evidence of any applicable safe harbor. Work with an employment tax attorney or ACA compliance specialist for any 226-J response.

8. ACA Compliance for Multi-State Employers

Multi-state employers face a layered compliance challenge: federal ACA requirements apply uniformly, but state-specific mandates, reporting deadlines, and benefit requirements add significant complexity.

State Individual Mandates and Employer Reporting

The following states have active individual health insurance mandates as of 2026, each requiring employers to report coverage offered to residents:

State	Employer Reporting Deadline (2026)	Submission Method
California	March 31, 2026	FTB (Franchise Tax Board) online portal
New Jersey	February 28, 2026	NJ Division of Taxation directly
Massachusetts	January 31, 2026 (MA 1099-HC to employees); April 1, 2026 (state filing)	MA Health Connector
Rhode Island	March 31, 2026	RI Division of Taxation
Washington DC	April 30, 2026	DC OTR portal
Hawaii	TBD for 2026 (mandate effective 2026)	Hawaii DOL
Vermont	No employer filing required (tracks via tax returns)	N/A

Self-Insured vs. Fully Insured Plans Across State Lines

Self-insured plans are governed by ERISA and are generally exempt from state insurance mandates — meaning a self-insured employer is not required to follow state-mandated benefit requirements (such as mental health parity rules beyond the federal MHPAEA or specific coverage mandates). Fully insured plans, however, must comply with the insurance regulations of the state where the policy is issued, which can vary significantly. This is a major reason mid-to-large employers with multi-state workforces often move to self-insured or level-funded arrangements.

Affordability Calculations in High-Cost States

The ACA affordability threshold (9.02% in 2026) is a federal standard applied uniformly regardless of state. However, health insurance premiums vary dramatically by state. An employer offering the same plan to employees in California and Mississippi may find that the California premium renders the plan unaffordable under the rate of pay safe harbor even though the Mississippi premium is well within the threshold. Multi-state employers must model affordability by state, or adopt a plan contribution strategy that is affordable in all states where employees reside.

9. Best HR Software for ACA Compliance

Manual ACA compliance — tracking hours in spreadsheets, generating 1095-C PDFs manually, calculating affordability by hand — is not realistic for any employer with more than 75 employees. The right software automates the most error-prone tasks: hours tracking, eligibility determination, affordability testing, 1095-C code generation, and electronic IRS filing. Here are the leading platforms for ACA compliance in 2026.

ADP Workforce Now

ADP Workforce Now is the most widely deployed HR platform among mid-market and enterprise employers, and its ACA module is one of the most comprehensive available. It handles look-back measurement period tracking, generates 1095-C forms with automated code suggestions based on offer and enrollment data, and files electronically with the IRS AIR system. ADP also provides penalty risk assessments and 226-J response support services. Best for: employers with 100+ employees who want an all-in-one HR/payroll/benefits platform with ACA included.

Paylocity

Paylocity’s ACA module integrates tightly with its payroll and benefits administration features, making it strong for employers who want a single system for payroll, benefits enrollment, and ACA reporting. It automates eligibility tracking and sends alerts when employees are approaching full-time status during the measurement period. Best for: mid-market employers (50–500 employees) that want a modern UI and integrated benefits enrollment alongside ACA compliance.

Benefitfocus

Benefitfocus (now part of Voya Financial) is a benefits administration platform with dedicated ACA compliance capabilities, including 1094-C/1095-C generation, electronic filing, and affordability analysis. It is particularly strong for employers with complex benefits configurations and multiple plan options. Best for: large employers with complex benefits programs that want a dedicated benefits administration platform with robust ACA support.

Namely

Namely is an HR platform built for mid-sized companies (50–500 employees) that includes ACA compliance tracking, automated eligibility notifications, and 1095-C preparation. Its benefits administration module connects directly to carriers and manages enrollment alongside compliance tracking. Best for: growing companies that want a people-first HR platform with ACA built in rather than bolted on.

Rippling

Rippling offers automated ACA compliance as part of its broader HR, IT, and finance automation platform. Its compliance module tracks employee hours, determines eligibility, and generates 1095-C forms automatically based on enrollment and payroll data. Rippling is particularly effective for employers who add employees frequently or have high turnover, since eligibility tracking is continuous rather than periodic. Best for: fast-growing companies and tech-forward HR teams that want ACA compliance integrated into a modern, automated HR stack.

Equifax Workforce Solutions (Equifax ACA Management)

For employers that already use a payroll or HRIS platform but need a dedicated ACA compliance layer, Equifax ACA Management is a stand-alone service that integrates with existing systems, performs eligibility tracking, generates and distributes 1095-C forms, and manages IRS electronic filing. It also provides penalty risk reporting and tracks employees who have enrolled in Marketplace coverage. Best for: large employers (500+) with existing HR infrastructure that needs a dedicated ACA compliance overlay.

10. ACA Compliance Checklist for Employers

Use this checklist to audit your ACA compliance posture at the start of each plan year and ahead of reporting season.

ALE Status Determination

Calculate full-time and FTE counts for each month of the prior calendar year
Include all controlled group members in the headcount
Apply seasonal worker exception if applicable
Document and retain your ALE determination calculation

Coverage Offering

Confirm your plan qualifies as Minimum Essential Coverage
Verify the plan provides Minimum Value (60% actuarial value) — use IRS MV Calculator
Calculate affordability under your chosen safe harbor for all eligible employees
Confirm the employee-only premium does not exceed 9.02% of the safe harbor income base
Ensure coverage is offered to dependent children up to age 26
Verify no waiting period exceeds 90 days

Eligibility Tracking (Ongoing Throughout the Year)

Track hours for all non-salaried and variable-hour employees monthly
Apply look-back or monthly measurement method consistently
Set up alerts for employees approaching the 130-hour/month threshold
Document all offers of coverage made and the date offered
Retain evidence of employee enrollment decisions (acceptance or waiver)

1095-C and 1094-C Reporting

Generate 1095-C for every full-time employee (and enrolled non-FT for self-insured plans)
Review Line 14 and Line 16 codes for every employee, every month
Ensure safe harbor codes are applied wherever applicable
Furnish 1095-C to employees by the applicable deadline (January 31 or extended date)
File 1094-C and all 1095-Cs with the IRS electronically via the AIR system by March 31
Complete state reporting for CA, NJ, MA, RI, DC, HI as applicable

Recordkeeping

Retain ACA records (hours data, offer documentation, enrollment evidence, 1095-C copies) for at least 6 years
Retain copies of all 1094-C and 1095-C filings submitted to the IRS
Document your ALE determination methodology for each calendar year
Keep affordability calculation worksheets for each plan year

IRS Penalty Response Readiness

Identify the person responsible for handling IRS correspondence related to ACA
Know your EIN and the EINs of all controlled group members
Have a plan for responding to Letter 226-J within 30 days
Maintain a relationship with an employment tax attorney or ACA compliance consultant

11. Frequently Asked Questions About ACA Compliance

The Bottom Line on ACA Compliance

ACA compliance is not a one-time project — it is an ongoing operational discipline that touches payroll, HR, benefits, and finance. The penalties are real, the IRS enforcement activity has not slowed, and the complexity only increases as your workforce grows or becomes more distributed across states.

The employers who stay out of trouble share three things in common: they track hours and eligibility continuously (not just at reporting season), they use purpose-built HR software to automate the data collection and form generation, and they have a defined process for reviewing 1095-C codes before filing. Every dollar spent on compliant HR and benefits software is a fraction of what a single Letter 226-J can cost.

If your organization is approaching the 50-employee threshold for the first time, or if you have received a 226-J letter and are unsure how to respond, consult with an employment tax attorney or a qualified ACA compliance specialist. The cost of expert guidance is almost always less than the cost of getting it wrong.

This guide is part of the Spotsaas US Employer Compliance series. Each article covers a distinct federal compliance area for US employers:

FMLA Compliance Guide for Employers — Leave requirements, intermittent leave rules, notice deadlines, and common violations
FLSA Overtime Rules: Employer Guide — Salary thresholds, exempt vs. non-exempt classification, and overtime calculation rules
I-9 Compliance Guide for Employers — Document verification, remote I-9 rules, E-Verify requirements, and ICE audit preparation
COBRA Administration Guide for Employers — Qualifying events, notice deadlines, premium calculation, and excise tax penalties
OSHA Compliance Guide for Employers — Recordkeeping forms, injury reporting deadlines, inspection process, and 2026 penalty amounts