IRS Publications Address Electronic Information Reporting
Beginning next year, many employers will have to file Forms 1094 and 1095 to provide information to the IRS and plan participants regarding health care benefits. The agency will use the forms to enforce the Affordable Care Act’s (ACA’s) shared-responsibility (or “play or pay”) provision, as well as individual mandate and tax credit eligibility rules.
If required to file these forms, you may want to do so electronically. To help employers with this process, the IRS has released two final publications setting out specifications for voluntary electronic filings in 2015 via the new ACA Information Returns (AIR) system.
Purpose of the pubs
These publications, which generally track the drafts released earlier this year, provide necessary technical information for:
- Issuers, which are reporting entities filing their own returns,
- Transmitters, which are third parties transmitting returns on behalf of reporting entities, and
- Software developers, which are entities writing origination or transmission software.
Employers fall into the first category of “issuers.” But, if you’ll use a third party to transmit returns on your behalf, you may want to check in with that provider to ensure it’s giving the electronic filing requirements due attention.
Highlights to consider
Here are some highlights of each final publication:
Publication 5165. This publication is a detailed guide for electronic filing of Forms 1094 and 1095 — starting with the process for obtaining a transmitter control code, which is needed to access the AIR system. From there, technical details are provided for document formatting, transmission methods, potential errors and the correction process.
The publication also supplies information on who may be authorized to act as a “responsible official” — an entity’s first point of contact with the IRS who’s responsible for ensuring adherence to all electronic reporting requirements. The list of available titles for responsible officials (such as CEO, CFO, President and Vice President) suggests that these individuals must have a high degree of authority within the reporting entity.
Publication 5164. This publication describes the ACA Assurance Testing System (AATS), which users must complete successfully before they can use the AIR system. AATS includes five test scenarios and summary information, which users will convert to applicable files for the forms they’ll test. (The scenarios are available on a separate page on the website.)
The level of testing depends on whether the user is an issuer, transmitter or software developer — with software developers bearing the heaviest testing burden. For issuers that are employers, the level of testing may also depend on whether they sponsor insured or self-insured health plans. A test submission will pass when it exactly matches the answer key for that submission based on a character-by-character comparison.
Again, the publications apply only to voluntary 2015 filings. But, with the mandatory filing deadline fast approaching, major changes for 2016 aren’t anticipated. Accordingly, whether or not you plan to file returns voluntarily this year, review the publications carefully to confirm that your electronic filing processes will be ready for 2016.
Click here to learn about two additional items the IRS has recently released for reporting health care plan information using Forms 1094 and 1095.
Questions about electronic information reporting?