2016 ACA Employer Reporting: Business as usual at IRS

Between campaign promises and early actions on starting the repeal of the Affordable Care Act, many employers are under the hopeful impression that the ACA reporting requirements may go away.

At this point, who knows? Moreover, who knows how long it may take before they do or are replaced by a different kind of employer reporting?

Here is what we DO know: ACA is still in effect and applicable large employers need to comply:

  • Employers must still complete, distribute and file 1094-C/1095-C forms for 2016 by March 2 of this year.
  • Employers must still monitor eligibility and affordability this year for next year’s reporting.

 Based on the February 2nd 2017 monthly IRS Payroll Industry call, keep calm and carry on seems to be the message.

They stated that the IRS has received the Executive Order and is currently reviewing the letter to assess the implications. That was it on that … moving on.

More importantly, the IRS has started sending Non-Filing Letters. This Letter 5699 requests missing ACA information from Applicable Large Employers (ALEs). The determination for at-risk employers is made based on W-2 total employee count reported for calendar year 2015.

In the letter, titled “Request for Employer Reporting of Offers of Health Insurance Coverage (Forms 1094-C and 1095-C)”, an IRS tax compliance officer is notifying the employer that it may be non-compliant with Internal Revenue Code (IRC) Section 6056 because the IRS has not received 2015 returns.   The letter states that IRC Section 6056 requires ALEs to file ACA information returns with the IRS and provide statements to full-time employees relating to the health insurance coverage, if any, that was offered to full-time employees.

The IRS requires one of the following responses within 30 days from the date of the letter:

  • I was an ALE for calendar year 2015 and already filed Form 1094-C and Forms 1095-C with the IRS using <name> and <employer identification number> on <date>.
  • I was an ALE for calendar year 2015 and my Form 1094-C and Forms 1095-C are included with this letter.
  • I was an ALE for calendar year 2015 and will file my Form 1094-C and Forms 1095-C with the IRS using <name> and <employer identification number> by <date>. (If more than 90 days from the letter, the response must explain why.)
  • I was not an ALE for calendar year 2015.
  • Other (must explain)

 

There’s no IRS grace for not filing the ACA forms 1095-C and 1094-C:

The IRS is actively preparing to begin assessing penalties to ALEs who fail to report according to IRS Section 6056.

  • If you’ve been offering compliant coverage all along that now also has the ACA stamp of approval, you’ve still got to produce Form 1095-C for employees and file Form 1094-C for the IRS.
  • If your ACA strategy is to “pay” – accept what’s called the IRS sledgehammer penalty for choosing not to offer compliant health coverage – you’ve still got to produce Form 1095-C for employees and file Form 1094-C for the IRS.

 

Although the IRS has extended the “good-faith effort” for 2016 forms, this does not exempt you from the reporting requirements (and related penalties) – it may forgive errors in the reporting but not the non-reporting itself. Please see Notice 2016-70 for more information. This is the same notice that extended the filing deadline for this year.

At the end of the day, employers have to decide what level of risk you want to expose your company to and at what cost.

Integrity Data can help you comply with these ACA reporting requirements in a way that is easy, comprehensive and affordable while ensuring that the software remains continuously updated with any possible future changes made to the reporting mandate.