IRS Form 1095 Reporting and IRS eFiling for tax years 2015 and 2016 were graciously seen by the IRS as practice years. In other words, penalties would not be imposed as long as a firm could demonstrate that they made a good-faith effort to comply. This guidance was provided by the IRS in Question 34 on their Basics of Employer Reporting site:
“The IRS will not impose penalties under sections 6721 and 6722 on ALE Members that can show that they have made good faith efforts to comply with the information reporting requirements.”
While this guidance did not cover those who chose not to file when required, it provided leeway for companies to develop the data procedures and systems needed to comply.
We recently attended a healthcare design and ACA session in Los Angeles which pointed out that in the absence of any legislative efforts the law remains exactly the same as in prior years. In fact this has always been the case because all of the repeal and replace initiatives that were subject to the Byrd rule contained no provisions to eliminate reporting.
Given all the confusion surrounding ACA legislation many employers may not have taken the steps to ensure that the vendors they are using are in strict compliance. At BenefitScape, we have always held our filings to this standard. Our BenefitScape software contains our VeriTracACA module which, in addition to performing over 600 checks on the data and calculated results, also develops a penalty profile to help our clients see what potential compliance penalties exist. In this way we can take the appropriate remedies and prevent these penalties.
The take away: Many vendors that are providing ACA filing services may not have developed their software and procedures to the standards now required by the IRS. Several large employers emphasized with us the importance of using a specialist that is solely focused on ACA Compliance. One company with 400,000 employees indicated that a specialist was required to design their solution to scale such a large population.
So maybe it’s time to ask yourself: With all the effort that you put in to develop the data and the procedures to comply with ACA regulations, maybe it’s time to investigate using a specialist for your ACA Compliance effort. The stakes are high and since it may be a full year before your results are challenged, being able to rely on the specialist to provide the audit trail and forensic data you need to defend your position will become very important.