As employers continue to work through the challenges of complying with the Affordable Care Act, professionals in the industry are reticent to accept anything less than perfection when dealing with IRS regulations. Why? To alleviate any concern about potential penalties due to non-compliance down the road.

In Notice 2016-70 dated December 5, 2016, the IRS made clear some important information for employers. In addition to extending the deadline for supplying employees with the required ACA Information Returns (forms 1095-C and 1095-B) by March 2nd of 2017, the IRS also extended good-faith transition relief under I.R.C. Section 6721 and 6722 for required reporting under I.R.C. Sections 6055 and 6056 for 2016. 

Good faith effort defined by the IRS in Form 1095-C instructions imageRemember: This now applies to 2016 reporting as well

This is great news as employers are still struggling to correctly understand, interpret and apply the reporting requirements for their organizations. While it is important to remember that the employer must complete the required forms and do so as accurately as possible, they will not have to be overly concerned about potential inaccuracies on the forms sent to the employee and the IRS. The following excerpt from the notice spells this out in detail:

“Specifically, this notice extends transition relief from penalties under sections 6721 and 6722 to reporting entities that can show that they have made good-faith efforts to comply with the information-reporting requirements under sections 6055 and 6056 for 2016 (both for furnishing to individuals and for filing with the Service) for incorrect or incomplete information reported on the return or statement. This relief applies to missing and inaccurate taxpayer identification numbers and dates of birth, as well as other information required on the return or statement.”

For many employers, personal standards override the government rule. We are hearing that when faced with such new and intensified requirements for workforce reporting, employers immediately equate “good-faith effort” with “mistakes.” To them, that’s not acceptable regardless of what official word they have from the ACA enforcement agency.

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This is what Carol Wright, HR and Benefits Specialist from Greenleaf Nursery, a Park Hill, Okla.-based ALE business, says on the topic:

“The government may not impose a penalty for incomplete or incorrect information on ACA returns, but for me this is a reflection on me and my work. I want the forms to contain correct information for our employees.”

It is important to understand what brought about the ‘good-faith’ reprieve.