Under the Affordable Care Act, certain American employers have increased responsibility when it comes to offering health insurance to employees. And with that responsibility comes IRS reporting requirements to avoid related tax penalties.
Beginning in 2016, all employers with 50 or more full-time employees are considered ALEs—Applicable Large Employers. ALEs are required to offer health insurance to at least 95 percent of its full-time employees, and must file report to the IRS whether they offered coverage, and what type.
ALEs must file Forms 1094-C and 1095-C, which are used to determine whether the employer owes a payment under the employer shared responsibility provisions of the ACA. As with any filing, errors can occur. For tax year 2016, the IRS plans to provide more information to employers on the types of errors that can arise when filing these forms.
ACA Error Messages
Some of these errors include Taxpayer Identification Number (TIN) validation errors due to name mismatches—perhaps from marriage or divorce. This is the most common error. Other problems might include invalid employee Social Security numbers or something as simple as missing employer contact information.
For the 2015 tax year, form filings through the IRS’s system can result in acceptance, acceptance with errors or rejection of the forms. Forms accepted with errors have not been subject to penalties at this point.
If your clients have questions about error reports under the Affordable Care Act, explain the basics. Your employer clients should review any error reports they receive from online filings and document any corrective actions taken.
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