IRS to Offer More Information With ACA Forms' Error Notices

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By Caitlin E. Reilly and Michael Trimarchi

The Internal Revenue Service is working on a process for tax year 2016 to provide more information to employers receiving error messages generated after filing Forms 1095-C, Employer-Provided Health Insurance Offer and Coverage Insurance, and 1094-C, Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns, an official from the agency said June 2.

Filing 2015 Forms 1095-C and 1094-C through the Affordable Care Act Information Returns (AIR) system may result in acceptance, acceptance with errors or rejection of the forms. Employers receiving error messages may not be able to determine on which individual forms the errors occurred, complicating the correction process, said Martin Pippins, director for customer service and stakeholder relations of the agency's ACA office.

The IRS hopes to have more precise error messages in place for forms filed next year, to help employers identify and correct mistakes, Pippins said during the IRS monthly payroll industry teleconference. The issue was first raised in the May industry teleconference.

A mismatch of the name and taxpayer identification number often triggers the error message, Pippins said. A form accepted with errors is not subject to penalties at this time.

Officials on the call also said:

•If Form 1094-C is filed electronically, a signature is not required for tax year 2015. If a paper form is filed, a signature is required. The IRS has not decided whether to require electronic signatures for tax year 2016 forms, Pippins said.

• The inflation adjustment used to determine the change in the ACA tax credits, allowed to be used by filers to meet the affordability safe harbor in 2015 and 2016, may be used to determine the adjustment for 2017, Pippins said

•The IRS is considering clarifying instructions for two codes used on Form 1095-C, Employer-Provided Health Insurance Offer and Coverage, for next year’s employer reporting requirements. The agency received requests for guidance on the use of the Section 4980H safe-harbor codes 2C and 2F on line 16 of the form, and which code takes precedence over the other at different times of the year.

•The IRS does not have a release date for 2016 ACA draft forms, although a goal of July was established, Pippins said.

•Regarding information return filing in general, Portable Document Format (PDF) submissions or scanned documents may not be made through the Filing Information Returns Electronically (FIRE) system, said an official of the IRS electronics products office.

The IRS received a large number of PDF submissions this year, especially because there was an increase in filing of Forms 4419, Application for Filing Information Returns Electronically (FIRE), the official said.

The form, which was updated in April, now has a note: “In order to file electronically through the FIRE System, you must have software or a service provider that will create the file in the standard ASCII format.”

To contact the reporters on this story: Caitlin E. Reilly and Michael Trimarchi

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