Every year, companies across the country have to ensure they're operating by federal standards and regulations. Most recently, the Affordable Care Act has been the talk of the town. As the healthcare mandate was phased in, employers were given safe harbors and additional time to complete the necessary paperwork.
Although deadline changes are becoming less frequent, they still occur on occasion. The IRS recently released updated information regarding Forms 1094 and 1095. Here's what business leaders should know:
The IRS has extended the deadline for Form 1095-C to be sent to employees.A new timetable
On an annual basis, organizations are required to not only distribute paperwork to employees, but submit certain documentation on their behalf.
Large employers – those with 50 or more full-time equivalent workers – must file Form 1094-C and 1095-C. The latter documentation must also be sent out to employees by a firm deadline. This year, the IRS has changed that timetable for companies, according to Notice 2016-70. Instead of the usual January 31 deadline, businesses now have until March 2 to make sure employees have this paperwork.
In addition to distributing Form 1095-C to employees, organizations are also required to submit the documentation to the IRS along with Form 1094-C – which provides information regarding employer contact information, number of employees and number of 1095-C forms being submitted.
So far, the IRS has not changed the deadline for Forms 1094-C and 1095-C to be sent to the federal government. Those dates remain Feb. 28, 2017 if companies file by paper or March 31 if completed electronically.
It's important to note that employers filing 250 or more returns are required to do so electronically. Those companies submitting less than this number can utilize the digital option of their own volition.
Transition relief also extended
Notice 2016-70 also prolongs some elements of the ACA's transition relief plan as long as employers can prove they made good-faith efforts to complete the regulation's requirements in a timely manner.
Penalties for failing to file an information return or statement or for filing incorrect form could be waived under this extension.
"Companies will receive one of four labels on their returns."
The corrections process
It's not uncommon for employers to make errors on the ACA forms they submit to the IRS. While transition relief can help companies avoid penalties, it's crucial for businesses to rectify these errors in an efficient manner.
As part of an organization's good-faith effort to maintain compliance, they must resubmit their documentation via the ACA's correction process. When company leaders file their returns via the ACA Information Returns (AIR) system, they will receive one of the following four responses: accepted, accepted with errors, partially accepted or rejected.
The first three options enable employers to correct and resubmit via the AIR system, but in a separate transmission to avoid mixing with the original submission or other corrected documents.
Businesses that experience rejected forms must file replacement documentation. Leaders must be sure to resend all the records they want the IRS to process – especially those that were in the canceled transmission that the new submission is replacing.
TIN validation errors are common
One of the most frequent mistakes that can cause ACA forms to receive the "accepted with errors" label is Taxpayer Identification Number (TIN) validation errors. This occurs when an employee, spouse or dependent's name doesn't match the provided Social Security Number in the IRS database. These types of problems can be caused by administrative blunders or outdated information – if the employee has a new last name, for example, according to Wells Fargo.
Next steps for employers
Filing ACA documentation can be a long and overwhelming process, but it's a necessary stress. The information provided ensures employers are offering their workers the appropriate healthcare coverage based on federal requirements.
To avoid the anxiety that comes with the process, companies should attempt to ready their forms prior to the deadline. Relying on IRS extensions that may not occur could result in expensive noncompliance penalties for businesses that don't submit on time. Not only should organizations distribute the appropriate forms to employees well in advance, they should remain aware of approaching deadlines for actual IRS submittal.
Giving themselves ample time to complete and file the documentation can reduce the number of errors human resources teams will encounter and keep the corrections needed to a minimum.
The ACA reporting period is on the horizon. Is your company ready? If you need assistance with this documentation, Triiton Benefits & HR Solutions can help by taking over your ACA compliance responsibilities.