Employers Challenged by IRS Reporting Related to ACA

Companies have a hard time getting accurate Social Security numbers for employees’ family members.

If the current Affordable Care Act employer coverage reporting rules stay in place, the Internal Revenue Service has to do something to ease employers’ desperation over getting accurate Social Security numbers for the employees’ spouses, children and other dependents.

The Information Reporting Program Advisory Committee (IRPAC), a panel that gives members of the public a chance to review IRS procedures, gave the IRS that advice in a new report on 2017 tax administration concerns.

The Affordable Care Act imposed employer health coverage reporting requirements by adding Section 6055 and Section 6056 to the Internal Revenue Code (IRC). The watchdog agency sees delays in efforts to set up 1095-C compliance systems.

To comply with IRC Section 6055 and IRC Section 6056, employers big enough to count as “applicable large employers” under federal rules must send out waves of 1095-B tax forms or 1095-C tax forms to employees to document whether the employees and their dependents were offered what the government defines as “minimum essential coverage.” Employers also must send related 1094-B or 1094-C health coverage offer summary forms to the IRS.

To complete the 1095 series forms, an employer needs the full names and Social Security numbers of employees and their dependents, IRPAC says.

Many employers have trouble getting the coverage information together in time to meet the current IRS reporting headlines, in part because employee decisions made as late as February can affect the coverage reporting for the prior calendar year, IRPAC says.

Getting accurate dependent Social Security numbers, and making sure that employees are giving dependent names in a way that’s consistent with the information in IRS data-matching systems, can also be extremely difficult, and it appears that screening for health coverage form data conflicts is tougher than the screening for conflicts on ordinary W-2 wage reporting forms, IRPAC says.

In the past, the IRS has helped employers by extending the filing deadline for the health coverage offer reports and saying it will go easy on employers as long as they appear to be making good faith efforts to comply with the reporting rules.

"In the absence of another universal extension to the furnishing deadline, the IRS should be expect to be inundated with requests for extensions," IRPAC says.

The IRS should continue to extend the filing deadlines and go easy on employers that have problems getting their filings through the Social Security number matching system, IRPAC says.

The Trump administration has encouraged federal agencies to ease up on many types of Affordable Care Act compliance efforts, but the Affordable Care Act employer reporting requirements are still on the books. Some of the major Republican and bipartisan proposals for changing the law would eliminate the employer mandate, but it’s not certain whether any of the proposals would change the employer coverage reporting requirements.

 

ThinkAdvisor

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