The penalty is currently $250 per form, subject to a maximum of $3 million, although there are circumstances in which the penalty can be reduced or, in the case of intentional conduct, increased. Employers subject to the employer shared responsibility provisions, called applicable large employers or ALEs, are required to report under section 6056. An ALE is an employer that employed an average of at least 50 full-time employees (including full-time equivalent employees) on business days during the preceding calendar year. ALE’s who do not offer insurance with minimum essential coverage to at least 95 percent of all, or all but 5, full-time employees and their dependents. There was transition relief reducing this threshold to 70 percent in 2015 and for some non-calendar year plans part of 2016. If any full-time employee receives a premium tax credit, the penalty is an annualized amount of $2,000 per full-time employee above the first 30 full-time employees.

Unless there is a change in the employee status, you will continue to use the same code input for following calendar months. A new paragraph titled “Additional Instructions” was added, which directs individuals to an IRS webpage providing information on the individual and employer shared responsibilities provisions and premium credits. References to transition relief available to non-calendar-year plans have been deleted.

I was an ALE for calendar year 2015 and already filed Form 1094-C and Forms 1095-C with the IRS using name of employer and employer identification number on date. The IRS is currently issuing notices to large employers to disclose whether they complied with the ACA reporting duties or not. This Client Alert is for information purposes only and should not be construed as legal advice. This information is not intended to create, and receipt of it does not constitute, a lawyer-client relationship. If you have any questions or would like additional information, please reach out to a member of Maynard Cooper’s Employee Benefits and Executive Compensation team. “Plan Start Month” continues to be optional for 2017 , but may be required for 2018 reporting.

So, the $280 penalty is doubled to $560 per return if they were not filed or furnished. The 4980H liability or ESRP is assessed when an ALE does not offer adequate affordable coverage to full-time employees and their dependents. So, even after the corrections to what was originally filed are made, an employer might still owe an ESRP. For calendar year 2017, the forms aredue to employees by January 31, 2018and due electronically to the IRS by April 2, 2018. The IRS uses the information provided on the forms to enforce provisions of the ACA and apply penalties. Employers must file the Forms by February 28, 2018 if filing on paper, or by March 31, 2018 if filing electronically. However, because March 31st falls on a weekend employers actually have until the following Monday, April 2nd to electronically file with the IRS.

Plans, Perks & Pay

Despite efforts in Congress to repeal and/or replace the Affordable Care Act , it appears, at least for now, that the ACA is here to stay. That means that employers must remain in compliance with the coverage and reporting provisions. ADP maintains a staff of dedicated professionals who carefully monitor federal and state legislative and regulatory measures affecting employment-related human resource, payroll, tax and benefits administration, and help ensure that ADP systems are updated as relevant laws evolve. For the latest on how federal and state tax law changes may impact your business, visit the ADP Eye on Washington Web page located at /regulatorynews. Directs ALE members to the IRS ACA Tax Provisions Questions and Answers website for additional information, including examples, about reporting offers of COBRA coverage and post-employment coverage. The IRS has issued the instructions to the new ACA forms for employers to make their ACA-mandated IRS filing for the 2017 tax year.

Failure to file complete and accurate Forms 1094-C by the form deadline will result in penalties equal to $250 per form, not to exceed $3 million per year. Failure to file and furnish correct information on Form 1095-C could result in a $500 per form penalty for employers.

What Are The Information Reporting Requirements For Employers Relating To Offers Of Health Coverage Under Employer

Fines can be financially devastating, so businesses should respond to any notice from the IRS to avoid additional IRS action or penalties. Information is reported on a calendar-year basis regardless of the employer’s health plan year or fiscal year.

Specifically, the safe harbor requires an employer to solicit the TINs of the employee and his or her dependents initially, and at certain prescribed times thereafter. A written solicitation must be made on a Form W-9 or on a document that that is “substantially similar” to Form W-9. An ALE Member may file more than one Form 1094-C, provided that one of those transmittals is an Authoritative Transmittal reporting What is bookkeeping aggregate employer-level data for the ALE Member. See the Instructions for Forms 1094-C and 1095-C for further details about the Authoritative Transmittal. Section 6056 applies to all employers that are ALE Members, regardless of whether the employer is a nonprofit, tax-exempt or government entity . “Employers, with a year of ACA reporting under their belt, realize the scope of this task,” said Praisner.

• Under Code sections 6055 and 6056, ALEs must use Form 1094-C to report required information about whether or not the employer offered affordable minimum essential health coverage and enrollment in minimum essential health coverage for eligible employees.
• This is the case even if a particular ALE Member does not employ enough employees to meet the 50-full-time-employee threshold.
• Employers must face reality and continue to be compliant or face the consequences.
• As a reminder, applicable large employers provide the Form 1095-C to individuals.
• A new paragraph titled “Additional Instructions” was added, which directs individuals to an IRS webpage providing information on the individual and employer shared responsibilities provisions and premium credits.

Form 1095-C helps employees complete their individual tax returns by providing important information regarding their health coverage for the previous calendar year. On Line 61 of individual tax returns, employees must show whether they or their family members had minimum essential coverage. The IRS will use the information provided on Form 1094-C and Form 1095-C to administer the employer shared responsibility provisions.

Furnishing Deadline Delayed For 2017 Aca Reporting

Laurie Savage is Senior Compliance professional, leading robust legislative research efforts analyzing intricate policy, including the Affordable Care Act , paid leave, tax reform and recently, legislation responding to the COVID-19 pandemic. If employers owe the IRS they will begin receiving demand for payment notices for the amount owed. Ignoring these notices will only result in another notice being sent for the amount owed, and continued failure to square up on the financial obligation eventually might culminate with an intent to levy notice from the IRS. At this point, an employer who has been determined to be an ALE and still has errors that remain uncorrected faces a more complex path, including appealing the assessment determined based on changes made to 226-J or failure to respond to 226-J. All reporting will be for the 2017 calendar year, even for non-calendar year plans. Find the answers to all your clients’ questions about Social Security and Medicare in this essential Quickfinder handbook by Thomson Reuters Checkpoint. This publication provides technical guidance about composing and successfully transmitting compliant submissions to the IRS.

The ACA imposes large penalties on applicable large employers who fail to timely file Forms 1094 or 1095 with the federal government, or who fail to timely furnish Form 1095 to an employee. These forms document that the employer offered and, if applicable, provided health coverage under the ACA to the employee in 2017.

Information reporting penalties apply in addition to any penalties assessed for failures to meet the employer shared responsibility provisions, known as the employer mandate. Although the IRS has regularly enforced failure-to-file penalties since the law’s enactment, employers subject to the ACA and related information reporting requirements have just recently begun receiving notices of late filing penalties for the 2017 reports submitted. Employers should be aware that the IRS is signaling stepped-up enforcement of ACA compliance for 2017 and subsequent tax years.

Irs Issues Final 1094 And 1095 Forms

Information regarding a safe harbor for de minimis errors filed on Form 1095-C with incorrect dollar amounts on line 15 is included. If the safe harbor applies, employers will not have to correct Form 1095-C to avoid penalties, unless the recipient elects that the safe harbor not apply.

Forms with incorrect names, birthdates, or Social Security numbers can be costly. For the 2017 tax year, the IRS has made it even more difficult for large employers to avoid penalties under the Patient Protection and Affordable Care Act , and major questions remain about how employers can avoid penalties due to missing or incorrect Social Security numbers. In 2017, the IRS will not penalize employers for incomplete or incorrect forms if there’s evidence of a good-faith effort to comply. If you will be filing less than 250 forms, you may file by paper, though the IRS encourages electronic filing. For statements furnished to individuals under sections 6055 and 6056, any failures that reporting entities corrected by April 30 and October 1, 2016, respectively under section 6722 and , were subject to reduced penalties. Form 1095-C may be delivered to employees in any manner permitted for delivery of Form W-2 . But see the question and answer above for the requirements that must be met to furnish employee statements electronically.

There has been no change to the deadline for filing 2017 returns with the IRS, and taxpayers do not need to wait to receive Forms 1095-B and 1095-C before filing their tax returns. ALE’s who offer insurance with minimum essential coverage to at least 95 percent of all, or all but 5, full-time employees and their dependents . If a full-time employee not offered adequate or affordable coverage receives premium tax credit, the penalty is an annualized amount of $3,000 for each full-time employee not offered adequate or affordable coverage who received a premium tax credit. Failure to comply with the ACA information reporting requirements can result in penalties imposed under the general reporting penalty provisions of Internal Revenue Code section 6721 and section 6722. These reporting penalties, along with any additional payments assessed under the employer mandate, may present a significant liability for a non-compliant employer subject to the ACA. However, a waiver of penalty, including abatement of information return penalties for reasonable cause, may be available for certain failures.

However, they should retain the information with their other tax-related records. Employers should be prepared to answer questions from their employees on this subject. Someone who has read only the headlines might think that the ACA’s individual coverage mandate has been retroactively repealed. The mandate – along with the potential tax penalty for failing to have “minimum essential coverage” – remains in effect for 2017. So employers may want to caution their employees against dropping their health coverage.

We wanted to pass along welcome news from the IRS regarding ACA reporting requirements under Code Sections 6055 and 6056 for the 2017 calendar year . As with prior years, the IRS has extended the deadline for furnishing to individuals the 2017 ACA reporting forms (i.e., Forms 1095-B and 1095-C) from January 31, 2018 to March 2, 2018. Note, however, that the Notice does not extend the deadline for filing the ACA reporting forms (i.e., Forms 1094-B, 1095-B, 1094-C, and 1095-C) with the IRS. This deadline remains February 28, 2018, if not filing electronically, or April 2, 2018, if filing electronically. The Affordable Care Act added Sections 6055 and 6056 to the Internal Revenue Code, thereby requiring sponsors of health care plans to maintain minimum essential coverage of their employees throughout the year or face potential fees. Further, every provider of MEC must report coverage information by filing an information return with the IRS and furnishing a statement to individual employees. Even though an extension has been granted, employers and other coverage providers are encouraged to issue their 2017 statements to employees as soon as they are able.

Under the ACA, governments, insurers, employers, and individuals are given shared responsibility to reform and improve the availability, quality, and affordability of health insurance coverage in the United States. Based on the ACA information reports filed, the IRS began issuing notices for the employer mandate penalties at the end of contribution margin 2017, beginning with the 2015 tax year. Since then, the IRS has moved to issuing these notices up to the 2017 tax year in recent months. IRS treatment of ACA compliance has reportedly grown stricter on recent notices, with more follow-up inquiries on corrected reporting errors and fewer routine grants of 90-day extensions to respond.

“Some employers may not understand that it’s not 95 percent for the year, it’s 95 percent for each one of the months,” Praisner warned. That could pose a challenge going forward, especially for employers that must provide 1095-Cs to employees by the end of January, indicating month-by-month coverage provided through the end of the previous December. “If you’re printing forms, Jan. 20 is about when they need to go to the printer in order to get mailed by Jan. 31,” Praisner said. Members aca reporting 2017 may download one copy of our sample forms and templates for your personal use within your organization. Please note that all such forms and policies should be reviewed by your legal counsel for compliance with applicable law, and should be modified to suit your organization’s culture, industry, and practices. Neither members nor non-members may reproduce such samples in any other way (e.g., to republish in a book or use for a commercial purpose) without SHRM’s permission.

Employers and insurers that provide minimum essential coverage are subject to the reporting requirements of Internal Revenue Code section 6055 to support enforcement of the individual mandate. Applicable large employer members are subject to the reporting requirements under IRC section 6056, which requires information about the health care coverage offered to full-time employees. For self-insured plans, Form 1095-C must also be provided to any individuals who enrolled in qualified coverage, which may include non-full-time employees and any covered spouses and dependents. For calendar year 2017, Forms 1094-C and 1095-C are required to be filed by February 28, 2018, or April 2, 2018, if filing electronically.

Questions And Answers On Reporting Of Offers Of Health Insurance Coverage By Employers Section

The IRS has finalized the forms and instructions that employers will use for 2017 reporting under the Affordable Care Act . Taxpayers do not need to wait to receive Forms 1095-B and 1095-C before filing their 2017 returns. In addition, individuals do not need to send the information they relied upon to the IRS when filing their returns but should keep it with their tax records. Copies of the draft Form 1094-B, Form 1094-C, Form 1095-B, and Form 1095-C can be obtained from the IRS. The draft instructions for Forms 1094-B and 1095-B and Forms 1094-C and 1095-C are also available. Recently, the Internal Revenue Service issued draft forms and instructions to assist employers in understanding their obligations for 2017.

This publication provides detailed technical information about the testing system for electronic filers. Therefore, software developers who passed testing for a prior year do not have to retest for 2017 forms that will be processed in 2018. And transmitters must complete communication testing to demonstrate their ability to successfully send returns and receive the acknowledgment file only in the first year that they will transmit forms. The IRS continues to emphasize that the testing system should not be used to submit actual individual or business names or taxpayer identification numbers, since the testing environment is not secure.

Author: Mark Kennedy