Making the effort to correct errors reported by the IRS is just as important as filing and furnishing

You planned for your 2018 tax year reporting season, you mailed out all the Forms 1095-C to your employees and made your IRS filing date…but wait…the reporting season is not over. No matter how many times an employer has reviewed their forms data for errors, the IRS will also look at your filed forms to double check for any mismatched information or inconsistencies.

You crossed all your t’s and dotted all your i’s, but you still received a response from the IRS saying some of your filed forms have errors. Don’t worry, there’s still time to fix them.

The most common Form 1095-C mistake includes mismatched employee names versus IRS filed names. Perhaps one of your employees got married and hasn’t yet changed their legal name. Mismatched federal employer Identification numbers (FEIN) versus legal names also happen more than you think—did you serve your clients under a different name than the business name you used on your forms? The table below shows additional common errors.

Why correct filing errors?
If you do not complete your IRS forms correctly, your company could be subject to penalties that could swell into the millions and stack up from each month and year you are out of compliance. In fact, the IRS has used Letter 226-J to notify employers who may not have complied with section 4980(a) and (b) of the Employer Shared Responsibility provision of the ACA Employer Mandate during the 2015 tax year. The IRS has recently started sending employers letters who have potential penalties for the 2016 tax year. To read more about penalties click here.

Employers with outstanding errors, should correct Forms 1094-C and 1095-C for any open tax years (within three years of the filing due date) and should discuss any outstanding issues with their legal counsel.

What errors trigger the IRS to send a 226-J letter?
Many Letters 226-J are the result of mistakes in filling out the Forms 1094-C or 1095-C. Here are some things you should look for when reviewing your forms for accuracy:

Form 1094-C:

  • Make sure to check the Section 4980H Full-Time Employee Count for ALE Member box
  • Failing to check “Yes” or “No” to confirm whether an offer of Minimum Essential Coverage (MEC) was made to 95 percent of your full-time employees (Part III, Column A). All appropriate months must be checked.

Form 1095-C:

  • Failing to reflect an offer of coverage was made on Line 14. Employers should review each form to make sure the correct offer of coverage code is populated each month for every employee. Coverage must be available every day of the calendar month to be considered an offer of coverage.
  • Failing to offer affordable coverage that meets the MEC offer standard and leaving line 16 of Form 1095-C blank. Leaving line 16 blank on Form 1095-C indicates that the ALEM did not offer affordable coverage that met minimum value requirements.
  • Be on the lookout for bad code combinations like 1H/2C or blank Line 14 or 16.

How to correct errors
If the IRS notifies you of errors they identified on any ACA Information return or form, you should correct them as soon as possible.

For companies with under 250 employees who file paper forms, follow these tips to make your corrections:

  • Make sure you fill out and complete a new form, not just the lines, boxes or sections that need correction.
  • When resubmitting a corrected Form 1094-C section, line or box, be sure to check the box marked “corrected” at the top of the form. If the error is exclusively on the 1094-C and not on any of the associated Form(s) 1095-C, send only the 1094-C when refiling. If you are correcting a Form 1095-C that you have already filed with the IRS, you must check the checkbox on Form 1095-C to indicate a corrected form. Do not write CORRECTED on this form.
  • If you are correcting a Form 1095-C that you previously furnished to an employee but have not yet filed with the IRS, you should write CORRECTED on the revised form to the recipient, but you should not check the checkbox on Form 1095-C that indicates a corrected 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 unless the IRS indicated there were corrections needed on the Form 1094-C.

Similar to the paper corrections, the 2018 Instructions for Forms 1094-C and 1095-C contain discussions on how to correct filed forms electronically. Work with your ACA technology provider to learn what their alerts and notifications look like around the correction process.

Health e(fx) can help
We make corrections easier. If you work with Health e(fx) and have received a system alert indicating that your 2018 ACA Information Return submission contained any form errors forms that were rejected, our system can help you track the employees with mismatched information. This allows you to easily fix the error and resubmit a corrected form in a timely basis. If you have questions on where to find your current tax year or historical tax years filed forms, contact your Account Manager to learn more.

For those who don’t currently work with Health e(fx), please consider our solution to actively manage your ACA compliance for the 2019 reporting year. Selecting a vendor who provides a system, tools and support to manage end-to-end ACA compliance is one of the most important decisions a company can make today. If you want to learn more about how we can help support your reporting and ACA compliance needs, contact us today.

February 19, 2019

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