Jul 28, 2016 – Compliance Observer Alert – ACA Reporting Update

Compl Obs Header Alert_2016

July 28, 2016

ACA Reporting Update

Applies to:  All Employers

 

Background

Under the ACA, Applicable Large Employers (ALEs) are required to report on the health coverage offered to full-time employees.  To report this information to the IRS an ALE must use forms 1094-C and 1095-C (“IRS returns”) and these forms must be filed by a required annual deadline to avoid penalties.

Reporting entities that file 250 or more 1095-Cs must file electronically through the IRS ACA Information Returns (AIR) Program.

 

Filing Deadlines

ALEs that are not required to file electronic returns (i.e. less than 250 returns) were allowed to file paper returns with the IRS, for 2015 tax year, by May 31, 2016.

The deadline for filing electronic IRS returns, for 2015 tax year, through the AIR program was June 30, 2016.

The IRS has recently announced that electronic information returns may continue to be filed after the filing deadline of June 30th.

According to the IRS it will not assess penalties for late filing on reporting entities that have made legitimate efforts to file information returns, if they continue to make efforts and complete the process as soon as possible. In addition, penalties may be waived in some cases, for reasonable cause.

 

According to the IRS

Late Filing:

  • The AIR system will continue to accept information returns filed after June 30, 2016. In addition, employers can still complete required system testing after June 30, 2016.
  • If a transmission or submission was rejected by the AIR system, reporting entities have 60 days from the date of rejection to submit a replacement and to have the rejected submission treated as timely filed.
  • If a reporting entity submitted and received “Accepted with Errors” messages, it may continue to submit corrections after June 30, 2016.
  • Both Good Faith relief and Reasonable Cause waivers are in effect for the first filing year.
  • It is a best practice to document efforts to comply with the information reporting requirements for either Good Faith relief or Reasonable Cause waivers.

Electronic Filing & Error Messaging:

  • An error message is not a penalty assessment (not a Notice 972CG) and receipt of an error message does not necessarily mean that there will be a penalty assessment in the future.
  • An error message informs the filer that the IRS has identified an error, including TIN Validation failures.

Error Correction:

  • Error correction is part of the good faith effort to file accurate and complete information returns
    • Filers have the responsibility to attempt to obtain and file the correct information required by the law, whether it is from their own records or soliciting correct information from third parties who are likely to have correct information
    • After checking the information, filers that believe the information submitted was correct or are unable to obtain corrected information are not required to file a corrected return with the IRS
  • Need to document efforts to verify or obtain correct information
  • IRS has developed a 42 minute educational recording about corrections (located on IRSvideos.gov, link)
  • Example that does not meet good faith standard: Transmittal of a batch of returns that provided no data other than names and addresses (reasonable cause rules would still apply)

 

What Should Employers Do Now?

  • Employers who missed any of the filing deadlines should take steps to file 2015 returns with the IRS as soon as possible.
  • If you received errors on your electronic filing take steps to obtain and file the correct information.
  • DOCUMENT! your efforts to file accurate, complete and timely returns.

 

Resources

IRS ACA Information Returns (AIR) Program page

ACA Information Returns (AIR) Program Overview page

IRS July_2016_Webinar_Presentation_Final.pdf

 

Preparing for 2016 Reporting

The IRS has recently released 2016 DRAFT versions of the 1094 and 1095 Forms.  Instructions for the 2016 forms (draft or final) have not yet been released.

  • Forms 1094 B and 1095 B (released on June 22, 2016) are to be used by entities reporting under Section 6055, including self-insured plan sponsors that are not applicable large employers (ALEs).
  • Forms 1094 C and 1095 C (released on July 7, 2016) are to be used by ALEs to report under Section 6056, as well as for combined Section 6055 and 6056 reporting by ALEs who sponsor self-insured plans.

 

Need assistance with the 2016 Reporting?

AssuredPartnersNL will again be offering reporting services through AssuredAnswers.  Contact your AssuredPartnersNL broker to get more information and to enroll.  Those that enroll by August 31st will be eligible for a dicount, provided certain requirements are met.

 

Source: IRS

 

Please contact your AssuredPartners NL Benefits Team if you have questions or need assistance with this topic or other compliance matters.

As part of our services to you, AssuredPartners NL and its partner agencies strive to provide you with insurance and benefit related information that is both accurate and informative.  Laws, regulations and circumstances change frequently, and similar situations or slight changes to laws and regulations can lead to entirely different results. The information contained herein is for educational and/or informational purposes only and is not, nor is it intended to be legal advice.  You should always seek the advice of legal counsel for guidance regarding individual situations.

 

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