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Corrections to forms that report employee health coverage under the Affordable Care Act are to be made by employers using an upcoming Internet-based system for electronically filing the forms, Internal Revenue Service officials said June 4.
The Affordable Care Act Information Returns program (AIR) had not been available for filers that provided 2014 Forms 1095-C, Employer-Provided Health Insurance Offer and Coverage, which were not required to be filed in 2015 and for which the corrections process was less clear.
Employers can review IRS draft Publication 5165 for preliminary details regarding how to use AIR to file and correct Forms 1095-C and related forms for complying with the ACA-related Sections 6055 and 6056 of the Internal Revenue Code, IRS representatives Marie Cashman and Martin Pippins said in a monthly payroll industry teleconference.
Test filings of data that would be reported with Forms 1095-C are to be available through AIR starting this summer, with the program available for the formal filing of Forms 1095-C and related returns starting in the fall, the IRS said on a webpage regarding AIR. Employers with at least 50 full-time equivalent employees must provide 2015 Forms 1095-C to individuals by Feb. 1, 2016, and must provide the returns to the IRS by Feb. 29, 2016, if filing by paper and by March 31, 2016, if filing electronically. Electronic filing is required for filers of at least 250 Forms 1095-C.
Employers that need to include more than six individuals in Part 3 of the 2015 Form 1095-C for reporting health-coverage data for employees under the ACA are to use continuation sheets to report additional individuals.
The final 2015 Form 1095-C, Employer-Provided Health Insurance Offer and Coverage, and a continuation sheet for the form are expected to be released earlier for the 2015 filing season than the final 2014 Form 1095-C was released for the 2014 filing season, Pippins said.
Employers with at least 50 full-time equivalent employees generally are required to complete Part 3 of Form 1095-C if they are self-insured for health coverage for employees. Employers with fewer than 50 full-time equivalent employees but that are self-insured for health coverage for employees would file Form 1095-B, Health Coverage.
Configuring electronic systems to enable employers to use continuation sheets for Form 1095-C could be difficult for programmers based on the technological specifications of accommodating the continuation sheets, said Janice Krueger, a representative of the National Association of Computerized Tax Processors. However, multiple stakeholders identified to the IRS that offering the continuation sheets would be beneficial, Cashman and Pippins said.
No form is required to be filed for enabling a reporting agent to receive authorization to file Forms 1095-C and 1094-C on behalf of an employer, Pippins said. The current Form 8655, Reporting Agent Authorization, does not identify Forms 1094 or 1095 as among those that require authorization.
Employers are to be able to insert foreign street addresses into Forms 1094 and 1095, Cashman said.
An employee's required contribution to employer-provided coverage must be less than an annually adjusted percentage of the employee's household income to be considered affordable, and the percentage is 9.56 percent for 2015, up from 9.5 percent.
A safe-harbor method that employers can use to determine whether the coverage is affordable does not have adjustments for inflation, Pippins said. The method determines whether the coverage exceeds 9.5 percent of the employee's wages in Box 1 of Form W-2.
Other topics discussed during the IRS payroll teleconference included:
• The program for certifying professional employer organizations, which was to launch July 1, is likely to be delayed, senior tax analyst Judy Davis said.
The program, which is expected to streamline enforcement standards, was included in the Tax Increase Prevention Act of 2014 that was signed Dec. 19, 2014. Under the program, IRS certification of the organizations is required before services dealing with employment taxes and other payroll functions can be provided to an employer.
A director recently was chosen and work teams were established, but Davis said more time is needed to meet program requirements and to determine technological needs.
“That's going to help us ask for an implementation postponement because we're not sure how long it's going to take,” Davis said. “But we're going to work as expeditiously as possible.”
• Reporting agents, or batch filers, with at least 5,000 employment tax returns for 2014 must file returns through the modernized e-file system, 94x MeF Employment Tax Program, starting with those due July 31, 2015, said an IRS official with the electronic filing program. The forms involved are 940, 941, 943, 944 and 945 and were part of the 94x Legacy Employment Tax Program, which is to be shut down in December 2015.
Reporting agents filing fewer than 5,000 employment tax returns must file all third-quarter and previous quarterly returns through the program by Oct. 31, 2015, the official said. All fourth-quarter and annual electronic Form 94x filings due starting Jan. 31, 2016, also must be filed through the program.
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