With the ACA information reporting deadlines for the 2016 calendar year now past (barring an individual extension), employers should- if they have not already done so- confirm the accuracy of all information returns and correct any errors as soon as possible with both the IRS and their employees. This is true even if there are no penalties associated with filing mistakes as long as the employer demonstrates that it made a good faith basis in completing the required ACA forms. This “good faith” basis was extended to the 2016 filing year by the Obama administration earlier this year.
Why correct filings that are done incorrectly?
- the employer should provide the government and its own employees with accurate reporting information, and
- if your returns have obvious errors within many documents filed, it would seem that this employer would be a more attractive audit target to the IRS.
Isn’t the ACA going to be repealed?
Everything is still up in the air. The recent proposal to repeal Obamacare did not have enough votes so now it remains to be seen whether Obamacare will be repealed or modified. For the time being, the status quo remains and ACA reporting is required. What also is uncertain is whether the Trump administration will allow the IRS to enforce the employer mandate penalties since it has been announced that the IRS will not be enforcing the individual mandate penalties. Thus individuals who did not purchase health insurance for 2016 will not be penalized despite all of the prior threats about fines being assessed. However, please keep in mind that there is a penalty for failing to file the reporting (1094/1095) forms. I am certain the IRS will assess failure to file penalties barring any new legislation so why trigger that penalty? You will also increase your general audit chances when there is any willful failure or refusal to file the required IRS forms.
Forms 1094-C and 1095-C
As a refresher, Forms 1094-C and 1095-C are used by applicable large employers to satisfy their reporting obligations. To correct information on the paper version of the original Authoritative Transmittal Form 1094-C, the IRS instructions provide that employers should take the following steps:
- Prepare a new authoritative Form 1094-C including the correct information
- Enter an "X" in the CORRECTED checkbox at the top of the form
- File the standalone corrected authoritative Form 1094-C with the IRS
If correcting information on the paper version of a Form 1095-C that was previously filed with the IRS, the IRS instructions provide that employers should:
- Prepare a new Form 1095-C
- Enter an "X" in the CORRECTED checkbox at the top of the form
- File the corrected Form 1095-C, along with a non-authoritative Form 1094-C (DO NOT mark the CORRECTED checkbox on the Form 1094-C), with the IRS
- Furnish the employee a copy of the corrected Form 1095-C (note that different rules apply for an employer that is eligible to use the Qualifying Offer Method)
Besides the 2016 Instructions for Forms 1094-C and 1095-C containing discussions on corrections methods, Section 7.1 of Publication 5165 provides instructions for making a correction to a Form 1094-C or 1095-C filed electronically. I want to reiterate that Publication 5165 should be referenced for any reporting errors to be corrected for electronic filings.
Forms 1094-B and 1095-B
Forms 1094-B and 1095-B are used by self-insuring employers that are not considered applicable large employers and other parties that provide minimum essential health coverage such as those employers with less than 50 full time equivalent employees. If a Form 1095-B filed with the IRS on paper contains an error, the IRS instructions provide that the employer should file a corrected return as follows:
- Fully complete a new Form 1095-B
- Enter an "X" in the CORRECTED checkbox at the top of the form
- File the corrected Form 1095-B, along with a transmittal Form 1094-B, with the IRS
- Furnish a copy of the corrected Form 1095-B to the person identified as the responsible individual
Similar to the 1094-C and 1095-C corrections, the 2016 Instructions for Forms 1094-B and 1095-B contain discussions on correction methods and Section 7.1 of Publication 5165 is the source for instructions for making a correction to a Form 1095-B filed electronically.
If you have any questions as to whether your forms were prepared correctly or you realize that you need to make corrections for any of you ACA reporting obligations and need assistance, please contact your HNI benefits representative.
