Ever since the Employer Mandate has been passed, Applicable Large Employers (ALEs), that is, companies having at least fifty or more full-time employees or full-time equivalent employees, must offer health insurance plans that is not only affordable but also offers a minimum value to 95% of the full-time employees and their children (age limit 26 years). If any organization fails to do so, they’ll be subjected to penalties under IRS 4980H.
And when subject to the Employer Mandate, ACA filing is a very important IRS business. Every year, employers are required to file an annual ACA report containing all the relevant information about the employees as well as the employer.
ACA reporting is a serious matter, and it requires a full-fledged team effort. So, when preparing for ACA filing, make sure you have everyone on board, from your HR head to CEO and CFO to your company tax advisor and accountant.
Organizations can either choose to complete their ACA filing on paper or electronically. When the ACA filing is done electronically, organizations can receive any of the following six responses from the IRS:
Undoubtedly, the most preferred response of the entire lot, getting the “Accepted” response from the IRS is pretty much your green signal. It means that all the information provided by you was relevant and IRS could not find any discrepancy or inconsistency in your 1094/1095-C forms as well as in their internal databases.
• Accepted with Errors
Although it is not entirely the green signal, but it is definitely not a bad response to get from the IRS. “Accepted with Errors” essentially means that IRS has found some discrepancies or mismatch in some of your 1095-C forms. The most frequently committed error here is associated with Taxpayer Identification Numbers (TINs). However, you need not worry, since TIN errors can be fixed easily.
Processing is a temporary status that entails that the transmission process is still going on.
• Partially Accepted
With the “Partially Accepted” status IRS conveys the message that it has detected errors in the transmission process. It is not entirely red flag and usually IRS allows for some flexibility in correction instead of rejecting the form.
• Not Found
If your filing status says “Not Found” it means that your Unique Transmitter ID (UTID) or Receipt ID was not found during the transmission process. In such a situation, you need to cross check all the information carefully and resubmit the forms.
Now, this is definitely a major red flag. IRS can reject your forms if there are errors in the submission process or in the transmittal of the 1094-C form, for instance incorrect Employer Identification Number (EIN). If your form is “Rejected” there’s no option but to file fresh.
The correction process of both 1094/1095-C and 1094/1095-B forms has to be performed in keeping with particular guidelines.
Filing electronically certainly has an advantage over paper filing since you get to track the status of your form and take the requisite actions. On the other hand, companies that choose to file ACA report on paper can only know about errors – if any – after months have passed. Often in such a situation organizations/employers are sent a notice of warning under section IRC 6721/6722.
Once glitches occur, the correction process may tend to get tedious and complicated. And thus, it is highly recommended for organizations to hire professional tax filing services. Since professional tax services have an organized approach, they can ensure that all the relevant data for ACA filing is appropriately consolidated, thereby leaving no scope for errors in reporting.
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