By now, all ACA 1095 forms should have been mailed or electronically filed to the IRS, so it’s a good time to reflect on how to improve the process for the 2016 reporting season.
It was a hectic few months, but Keller worked with our large clients to ensure that Forms 1095-C were successfully distributed and filed on time. Next year, we will not have the luxury of extended due dates – employers will have only four weeks from the end of the year to the deadline for employee distribution. What have we learned that will make next year a smoother and more time efficient process?
- Last names and social security numbers may need to be verified with employees, especially women. The IRS’s AIR filing system issued a number of “TIN Validation Errors” if last names and SSNs did not precisely match the SSA’s files. One cited problem was women with maiden or former married last names still on record with the SSA. About half of our clients using Keller-based systems had validation errors and we re-filed “corrections” when possible. If corrections are not possible because the employer believes the data is accurate for these invalid forms, the IRS has instructed employers to “keep the information that confirms the SSN and name is correct in case it is requested in the future.” It is important to verify and document this information directly with the employee, including dependent last names and SSNs if the plan is self-insured. These errors can be reduced by verifying this information prior to filing.
- Most payroll vendors were unprepared. Each major vendor seemed to have a different methodology with a lack of flexibility in reviewing forms and making corrections. Keller worked closely with many of our clients to set up implementation and reviewed forms for accuracy. Hopefully, systems will be improved and coding will be embedded in payroll systems for 2016.
- Software systems with downloaded template information worked well. For our clients without a payroll vendor, Keller used FT William and Employee Navigator systems. With employer-supplied data, we found these systems and the correction modules were relatively easy to use. Employees received copies of forms on time using the fulfillment systems and the IRS accepted all filings. If using a template-based system, use your December 2015 data as a starting point and track changes throughout 2016.
In the near future, the IRS will start notifying employers of any issues, with potential penalties for incomplete or incorrect filings. (The IRS will also eventually contact employers with potential penalties for full-time employees not offered coverage who received premium tax credits for Marketplace coverage.)
If you are contacted by the IRS regarding your forms, or if you need assistance with ACA reporting for 2016, please call your Keller account team.