IRS Quick Alert for Electronic ACA Filing

Today is the deadline for filing electronic ACA reports.  The following email came today from the IRS QuickAlert subscription service:

“If you are an applicable large employer, self-insured employer, or other health coverage provider, the deadline to electronically file ACA information returns with the IRS is midnight ET on June 30, 2016.  The ACA Information Returns (AIR) system will remain up and running after the deadline.  If you are not able to submit all required ACA information returns by June 30, 2016, please complete the filing of your returns after the deadline.

It is important to note the following:

• The AIR system will continue to accept information returns filed after June 30, 2016.  In addition, you can still complete required system testing after June 30, 2016.
• If any of your transmissions or submissions was rejected by the AIR system, you have 60 days from the date of rejection to submit a replacement and have the rejected submission treated as timely filed.
• If you submitted and received “Accepted with Errors” messages, you may continue to submit corrections after June 30, 2016.

The IRS is aware that some filers are still in the process of completing their 2015 tax year filings.  As is the case for other information returns, penalties may be associated with the submission of the ACA information returns for failure to timely file required returns.  As the IRS has publicly stated in various forums in recent months, filers of Forms 1094-B, 1095-B, 1094-C and 1095-C that miss the June 30, 2016, due date will not generally be assessed late filing penalties under section 6721 if the reporting entity has made legitimate efforts to register with the AIR system and to file its information returns, and it continues to make such efforts and completes the process as soon as possible.   In addition, consistent with existing information reporting rules, filers that are assessed penalties may still meet the criteria for a reasonable cause waiver from the penalties.”

HR Update for electronic filing

Version 7.61.355 has been released with additional validation features when generating the electronic ACA report file.  This version is available for download right now via the Check for Updates option on the Tools menu.

The program will now check additional required items and report problems on the exception reports that could lead to the file being rejected by the IRS.  You will likely want to correct these errors if possible before uploading your file.

Also, additional fields are checked for invalid characters and these are removed automatically.  For instance, periods in the address line will be removed (“P.O. BOX” will be changed to “PO BOX” and “ST.” to “ST”).

The biggest problem with initial files uploaded to the IRS was with missing or incomplete employee addresses.  The address, city, state, and zip are all required fields on the 1095-C form.  If any of these are missing, the employee account #, name and full address will be listed on the exception report.

In some cases it may be impossible to obtain a correct/valid address for an employee that is no longer working.  A checkbox has been added to the Generate Electronic ACA Files window to tell the program to substitute the employer address for employees that have a missing or invalid address.

We recommend all customers update to this version before generating their files for upload to the IRS.

 

ACA Reporting: uploading your test file

After you have obtained your TCC from the IRS, the next step is to upload a set of test files to pass their “communications test”.  This will verify that you can upload the required manifest and form files and receive the Receipt ID produced by the IRS.

Unfortunately, the IRS doesn’t seem to have gone out of their way to provide you an obvious method of getting to the test file upload page.  When you log into your e-Services account, there doesn’t seem to be any menu option or link that will take you there.

Here is the link for the AIR UI Channel Login – AATS (Testing).  Use this link to upload your test file.  Refer to the online help page for more details about generating the test file and uploading it.  (Press F1 on the Generate Electronic ACA File window to view the help page.  Review the information for the Create Test File button and the link at the bottom of the page for the ACA Electronic Test File Upload.)

After uploading your test file, call the IRS Help Desk to give them the Receipt ID so that they can check the file and change your status from “test” to “production”.

Here is the link for the AIR UI Channel Login -Production. Use this link after you’ve upload your test file and your TCC status has been changed to “Production” to upload the actual ACA electronic file.

Electronic ACA reporting update

The IRS has notified us that we have passed the test scenarios and that our software developer TCC status has been changed to “production”.  This change will go into effect in 48 hours, so we recommend that you submit your electronic files no earlier than June 9th.

As a reminder, you need to complete the following before you can electronically file your 1094-C/1095-C information:

1. Have two responsible individuals in your company sign up for IRS e-Services accounts.  This requires submitting information found on your tax returns to verify your identity.  The IRS will send a letter in the mail to complete the registration process.
2. One of these individuals must complete the application for the issuer or transmitter TCC and both must electronically sign it.
3. Submit a test file to complete the required communications test.  Make sure that the IRS changes your TCC status from “test” to “production”.  You cannot submit “live” data if your TCC status is “test”.
4. Fill out the 1094-C information, print the form on paper, and verify that the information is correct.  You don’t need to file on paper, but you should print a paper copy to make sure that the program is filling out the form with the correct information.

An update to the Human Resources program is now available that will generate a test file for step #3 along with a documentation update on the Generate Electronic ACA File option. You can download and install this update and review the information now.

Due to the lead time in signing up for e-Services and getting your TCC status changed to “production”, you need to start this process well before the deadline of June 30.  If you have not started this process yet, get started immediately.

1095-C filing deadlines extended

Yesterday, the IRS released Notice 2016-4, extending the deadlines for providing the 1095-C form to employees and filing the 1094-C/1095-C with the IRS.

The old deadline for providing the 1095-C form to employees was February 1, 2016.  The new deadline is March 31, 2016, giving employers an additional 2 months.  (Note: if you planned on mailing the 1095-C with the employees’ W-2, the deadline for providing W-2’s has not changed.  Therefore, you will either need to stick to the original deadline to mail the forms together, or mail them separately.)

The old deadline for filing the 1094-C and 1095-C on paper with the IRS was February 29, 2016.  The new deadline is May 31, 2016, giving employers an additional 3 months.

The old deadline for filing the 1094-C and 1095-C electronically with the IRS was March 31, 2016.  The new deadline is June 30, 2016, also giving employers an additional 3 months.

These extensions are automatic and do not require filing an application.

If you have not been using the HR software for the entire year, or are transitioning from another payroll/accounting system to Datatech’s software, this will provide you with additional time to import/enter data, compile information and review the forms for accuracy.

ACA Reporting Status in HR

The current release of the HR program includes the Compile 1095-C Information option with the updated logic needed to automatically assign Series 1 and 2 codes for each month when using the the monthly measurement period.  (Previously releases of the HR program only included a preliminary Compile option that was meant for testing.)  We expect to complete the logic for the look-back measurement period this week, and have a new version that includes this ready for download early next week.

If you have not already done so, review the “Preparing for 1095-C reporting”  series of articles (1, 2, 3, 4) on our blog that were published earlier this month, then review the following topics in the online help for the HR program:

Compile 1095-C Information
Enter/Edit Form 1095-C
Print 1095-C Reports

The Compile 1095-C Information includes sub-topics discussing the logic used to assign the series 1 and 2 codes and codes that may be open to interpretation.  (The next post on our “Preparing for 1095-C reporting” series will cover these topics and summarize much of the information that is already published in the help file.)

A video is also planned showing how the 1095-C options work as well as how to review and check the results of the Compile process.

Transitioning Methods

Employers that are transitioning from the monthly measurement period to the look-back measurement period may need some additional logic added to the 1095-C reporting to determine the applicable Series 2 codes during the transition period.  We will provide additional information on this next week.

Offers of Coverage During Open Enrollment

Some additional logic may be added to the program to handle offers of coverage during an open enrollment period (as opposed to an offer of coverage when an employee becomes eligible).  This may depend on whether or not a health benefit record was entered for every employee offered coverage during the open enrollment period.  The instructions provided by the IRS for the 1095-C do not explain how these offers should be reported.  We are reviewing information from the IRS and will provide an update on this.

Electronic Reporting

The IRS will begin their “business rule” testing of the electronic 1094-C/1095-C files in January.  We will be submitting test files as soon as this testing period opens to get our software certified for electronic reporting.  An update will be released to the HR program when the testing phase has been completed.  Until then, the Generate Electronic Files option will only create a test file.