As March 31, 2016 approaches in the world of Affordable Care Act reporting, where one head-scratcher about Form 1095-C best practices often compounds another, a different kind of perplexity is now unfolding.

Counting down to the date marking the 1095-C breather that everyone welcomed for Tax Year 2015 – the March 31 extension of the original February 1 cutoff for employees having the forms in hand, you would think that another overarching 1095-C breather – the unprecedented IRS “good-faith effort” reprieve for thoroughness and accuracy – would be just as welcome among employers that must be ACA-compliant.

Not so, for detail-driven employers that we work with.

Good faith definition in IRS Form 1095-C instructions

If this is blurry, please click on the image to sharpen the detail.

In the ACA User Group sessions we host weekly during 1095-C production season, we address the following two points – though we hear back that this IRS gesture is not resonating:

  1. Relief from penalties. For 2015 reporting, the IRS will not impose penalties on a filer for reporting incorrect or incomplete information if the filer can show that it made good faith efforts to comply with the information reporting requirements for 2015.” (Form 1095-C/1094-C instructions, Page 5, last paragraph under “Furnishing Forms 1095-C To Employees”)
  2. “… the IRS will not impose penalties under Sections 6721 and 6722 on ALE members that can show that they have made good faith efforts to comply with the information reporting requirements.” (Notice 2015-87, Part VI, Q&A 26. Sections 6721 and 6722 of the tax code relate to filing penalties for incorrect and incomplete information on required returns.)

ALE is the Affordable Care Act acronym for Applicable Large Employer – that is, every employer in the 50 U.S. states with 50 and more full-time employees, including equivalents. An ALE must offer health insurance of a certain standard to full-time employees or face a penalty. And for every eligible employee, an ALE must document – yearly, in monthly breakdowns, on a 1095-C form – the coverage that is or is not offered.

Personal standard overrides government rule

We are hearing is that, when faced with such new and intensified requirements for workforce reporting – requirements that include filing copies of employees’ 1095-Cs with the federal agency known for always expecting painstaking precision, employers immediately equate “good-faith effort” with “mistakes.”

And that’s not acceptable to them.

Regardless of what official word they have from the ACA enforcement agency.

“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,” says Carol Wright, an HR Specialist/Benefits at Greenleaf Nursery, a Park Hill, Okla.-based business that is an ALE.

Rejecting a gateway to procrastination

The odd reality of this temporary IRS relaxation of rules for enforcement is not a matter that professionals who continuously pore over payroll and benefits data can reconcile with their mantra for employer in