Penalties and Consequences of not filing PCORI Fee (in 2026)

Article Summary

• The PCORI fee is a mandatory federal excise tax under IRS rules, and missing the deadline can result in penalties, interest, and compliance violations.

• Failure to file or pay on time is treated as a late Form 720 submission, with no automatic extension and increased exposure for the responsible payer.

• Non-compliance can trigger IRS failure-to-file and failure-to-pay penalties, along with interest charges, audit risk, reputational damage, and weaker future compliance standing.

• After receiving an IRS notice, taxpayers should review it carefully, pay outstanding amounts promptly, correct errors using Form 720-X if needed, and consider penalty relief options where eligible.

• Relief may be available in limited cases through reasonable cause, statutory exceptions, or general administrative relief, depending on IRS evaluation and supporting evidence.

• The PCORI fee is reported annually on Form 720 (Part II, IRS No. 133) and is generally due on July 31 each year, unless adjusted for weekends or holidays.

• The Patient-Centered Outcomes Research Institute fee applies to self-insured plans and insurers, and is calculated per covered life based on IRS-defined rates that vary by plan year.

• Filing can be completed through Form 720 using IRS-approved online platforms like Simple720, which provide a guided, web-based process to ensure faster and compliant submission.

• Missing the PCORI deadline can lead to penalties, interest, and increased scrutiny, making timely annual filing essential for maintaining IRS compliance.

The non-payment of PCORI fees on time is not a trivial matter concerning regulatory violations. There could be penalties and interests charged because there has been non-compliance with the IRS regulations concerning excise taxes.

The PCORI fee is mandatory for applicable self-insured health plans, HRAs, and certain plan sponsors as defined under IRS regulations and IRC 4375/4376.

In the case where an individual is liable, then Form 720 should be filed and the PCORI fee should be paid on time. In case of failure to meet this requirement, then:

• It will be viewed as a late filing based on IRS Form 720 Excise Tax Guidelines

• Automatic extension will not be granted in filing PCORI report

• There will be an increased risk of exposure for the responsible payer

In short, timely filing is not optional. It is a statutory obligation.

1) Penalties

The non-filing and failure to pay the PCORI fee through Form 720 would entail penalties under IRS Penalty Provisions (Failure-to-File and Failure-to-Pay).

Important implications would be:

• Failure to File Form 720: A penalty of 5% of the unpaid tax is assessed for each month (or part of a month) that the return is late, up to a maximum of 25%. If the return is not filed within 60 days after the deadline, the minimum penalty is $100, or the total amount of tax due, whichever is less.

• Failure to Pay the Tax: If the return is filed but the tax isn’t paid on time, a separate penalty applies at 0.5% of the unpaid tax for each month (or part of a month), up to 25% maximum. The Internal Revenue Service (IRS) charges interest on any unpaid amounts daily.

• Accrual of interest until full payment has been made

2) Reputation Risk

Delays and failure to comply will have a negative effect on the reputation of your organization regarding tax compliance with the IRS.

• Shows weakness in compliance control

• Negative reputation with regard to auditors, partners, and regulatory agencies

• Greater scrutiny in the future

3) Unwanted Audits and Risk of Non-compliance

Failure to comply with the federal excise tax regulations may increase the risk of having an IRS audit.

• Risk of audit or review increased

• Requirement to submit proof that earlier filings were done

• Administrative work increased

4) Lack of Future Compliance Offerings

Past records of non-compliance may affect business reputation indirectly.

• Decreased trust on behalf of insurance companies, TPAs, or partners

• Potential delays in issuing compliance certificates

• Higher risk assessments during financial or regulatory evaluations

1) To begin with, do not panic. Read the entire penalty notice from the IRS to understand the exact nature of the penalty imposed on you. The IRS explicitly mentions what the type of penalty is and its cause in the notice.
2) Once you have figured out the reason for the penalty, act quickly. If the reason for the penalty is that you did not make full payment of the tax, then paying the tax immediately will help avoid additional penalties and interest rates.
3) In case there is an error in your submission, you can correct the mistake using Form 720-X, which is an amended return.

4) In some cases, you may qualify for IRS first-time penalty abatement relief if you have maintained a clean compliance history for the past three years and meet the eligibility conditions along with a valid reasonable cause.
5) Lastly, if the mistake is due to unforeseeable or unavoidable reasons, then there is a possibility of applying for abatement by proving your case before the IRS.

In limited cases, the IRS may provide penalty relief depending on eligibility under specific provisions.

1) Reasonable Cause Relief

The IRS will not charge you any penalties if you prove that there is reasonable cause for your case.

• You have to prove that there were circumstances out of your control.

• You have to prove that you acted in good faith.

2) Reliefs Under Statutory Exceptions

Statutory exceptions may relieve certain penalties if the situation qualifies for statutory exceptions.

• Only when the IRS law allows statutory exceptions

• Relies on the existence of a legal justification for statutory exceptions

• Must be determined on a case-by-case basis by the IRS

3) General Penalty Relief

IRS also offers general administrative penalty relief in certain circumstances.

• Generally offered where taxpayers correct errors on their own

• Depends on the previous track record of compliance by taxpayers

• Is not guaranteed and considered on a case-by-case basis

The PCORI fee is reported on IRS Form 720, Part II, using IRS Number 133. It is due annually in the second quarter filing window, with a standard deadline of July 31 of every year.

PCORI Filing Due Date Table

Important Note

If the PCORI Due Date falls on a legal holiday or weekend, the filing is due on the next business day. However, for the referenced 2026 filing cycle, July 31 falls on a Friday, so there is no extension or rollover benefit.

The Patient Centered Outcomes Research Institute (PCORI) fee is an annual excise tax imposed by the Internal Revenue Service (IRS) to finance medical studies.

Applicable Law: Under the Affordable Care Act (ACA) Section 6301.

Effective Years: Applies for plan years ending after October 1, 2012.

Who Pays: Health insurers and employers sponsoring self-insured plans.

PCORI Fee Rate (2026):

$3.47 per covered life for policies ending Jan–Sep 2025

$3.84 per covered life for policies ending Oct–Dec 2025

In contrast to manually submitting or setting up complicated software, utilizing an IRS-approved PCORI online portal will make the whole process effortless.

With Simple720, you can easily submit your Form 720 PCORI Fee for 2026.

Why choose Simple720?

• Easy and quick filing process with step-by-step guidance

• A cost-efficient option for PCORI Form 720 Filing

• An official IRS-approved online filing system in the USA

• Designed by tax experts with industry experience

• No installation of any software needed – completely web-based system

Conclusion

The deadline of PCORI fee is an important annual compliance mandate, failure of which will lead to penalties, interest, and additional audit from the IRS. As the reporting of PCORI fees through the form 720 is possible only once a year in the second quarter, prompt filing becomes essential to stay compliant.

Easily file your PCORI Fee 2026 online with Simple720 it is easy!