In its Affordable Care Act (ACA) Information Returns (AIR) Working Group Meeting on June 14, the IRS discussed several outstanding issues related to ACA reporting under Sections 6055 and 6056 of the Internal Revenue Code.  Section 6055 generally requires providers of minimum essential coverage to report health coverage.  Section 6056 generally requires applicable large employers to report offers of coverage to full-time employees.  The telephonic meeting touched on a number of topics:

  • Correction of 2015 Returns. The IRS confirmed that filers are required to correct erroneous returns filed for 2015.  Moreover, the IRS stated that error correction is part of the good faith effort to file accurate and complete returns.  As a result, filers who fail to make timely corrections risk being ineligible for the good faith penalty relief that has been provided with respect to 2015 Forms 1095-B and 1095-C filed in 2016.
  • Correction Timing. Corrections to Forms 1095-B and 1095-C must be made “as soon as possible after [a filer] discover[s] that inaccurate information was submitted and [it] gets the correct information.”  Filers may furnish a “corrected” information return to the responsible individual or employee before filing with the IRS by writing “corrected” on the Form 1095-B or 1095-C.  The copy filed with the IRS should not be marked corrected in that circumstance.
  • TIN Validation Failures. The IRS reiterated that the system will only identify the return that contained an incorrect name/TIN combination.  It will not identify which name/TIN combination on the return is incorrect, a source of frustration for filers because they are not permitted from using the TIN Matching Program to validate name/TIN combinations before filing the returns.  Accordingly, a filer will need to verify the name and TIN for each person for whom coverage is reported on the Form 1095-B or Form 1095-C.
  • TIN Mismatch Penalties. The IRS confirmed that error messages generated by the AIR filing system are not proposed penalty notices (Notice 972CG).
  • TIN Solicitation. The IRS reiterated the TIN solicitation rules first published in Notice 2015-68.  In the notice, the IRS provided that the initial solicitation should be made at an individual’s first enrollment or, if already enrolled on September 17, 2015, the next open season, (2) the second solicitation should be made at a reasonable time thereafter, and (3) the third solicitation should be made by December 31 of the year following the initial solicitation.
  • Lowest Cost Employee Share. Applicable large employers must report the lowest cost employee share for self-only coverage providing minimum value on Line 15 of Form 1095-C.  The IRS clarified that coverage must be available to the employee to whom the Form 1095-C relates at the cost reported.  In other words, if the employee cost share varies based on age, salary, or other factors, the share reported must be the one applicable to the employee for whom the Form 1095-C is being filed.

Reporting Self-Insured Coverage to Non-employees.  An employer that provides self-insured health coverage to non-employees may elect to report coverage on either Form 1095-B or Form 1095-C.  In response to a question, the IRS noted that Form 1095-C may only be used if the individual reported on Line 1 has a social security number.  Accordingly, coverage provided to a non-employee that does not have a social security number must be reported on Form 1095-B.

Tags: ACA Reporting, AIR Program, Corrections, Form 1095-B, Form 1095-C
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Photo of S. Michael Chittenden S. Michael Chittenden

Michael Chittenden practices in the areas of tax and employee benefits with a focus on withholding taxes, including state and federal employment taxes, Chapter 3, and the Foreign Account Tax Compliance Act (FATCA) and information reporting (e.g., Forms 1095, 1096, 1098, 1099, W-2…

Michael Chittenden practices in the areas of tax and employee benefits with a focus on withholding taxes, including state and federal employment taxes, Chapter 3, and the Foreign Account Tax Compliance Act (FATCA) and information reporting (e.g., Forms 1095, 1096, 1098, 1099, W-2, 1042, and 1042-S.

Michael advises large employers on their employment tax compliance obligations, including the special FICA and FUTA rules for nonqualified deferred compensation, the successor employer rules, and executive perquisites, such as the taxation of company cars, corporate aircraft (including the use of SIFL valuations), and employer-provided housing. In addition, he has worked with clients to submit voluntary corrections of employment tax mistakes and seek abatement of late deposit and information reporting penalties. Michael has extensive controversy experience representing clients in IRS examinations and before the IRS Independent Office of Appeals in employment tax, late deposit, and information reporting penalty cases.

As part of Covington’s Global Workforce Solutions practice, Michael counsels clients on all aspects of mobile workforce issues including state income tax withholding for remote workers and mobile employees. He also advises on treaty claims and various tax issues related to expatriate and inpatriates.

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