Article provided by The American Benefits Council

Affordable Care Act

The Information Reporting Program Advisory Committee (IRPAC) of the Internal Revenue Service (IRS) issued its 2016 report to IRS Commissioner John Koskinen on October 26. The report includes a number of recommendations to improve compliance with the Affordable Care Act (ACA) employer reporting requirements under Internal Revenue Code sections 6055 and 6056.

The IRPAC is a federal advisory committee that provides an organized public forum for discussion of information reporting issues. The committee is comprised of individuals drawn from the tax professional community, financial institutions, small and large businesses, universities and colleges, as well as securities and payroll firms. The report covers existing employer information reporting burdens, emerging compliance issues and international reporting and withholding matters.

Generally, the panel observes that “there are barriers preventing the information reporting process from working as simply and effectively as it should” and notes that “an ongoing wave of new information reports shifts new and substantial burdens to payers and financial intermediaries.”

To address challenges presented by the ACA employer reporting requirements, IRPAC specifically recommends that IRS:

  • Continue to work with filers to provide education about problems with the new ACA Information Returns (AIR) system, namely through webinars that focus on the most common errors.
  • Address confusion about certain aspects of the new Form 1095-B and Forms 1095-C, particularly as regards date of birth reporting and truncated Social Security numbers.
  • Extend “good faith efforts” penalty relief for incorrect or incomplete 2016 Forms 1095-B and Forms 1095-C filed in 2017.
  • Permit an Applicable Large Employer (ALE) group member that undergoes a corporate transaction in a calendar year to provide separate reporting to employees based on a change in group membership during the year. Or, if the IRS will not provide a special exception to the current reporting rules requiring a single Form 1095-C, it should provide clear guidance to large employers that such reporting is unacceptable through specific guidance in the instructions to Forms 1094-C and 1095-C.
  • Consider guidance specifying what constitutes “inconsequential” errors with respect to reporting under tax code sections 6055 and 6056.

The American Benefits Council recently participated in a full-day “listening session” with Koskinen and ACA implementation staff from the IRS on the successes and challenges of ACA reporting. At that meeting, Council staff raised a number of matters echoed by the IRPAC, including the issue of error messages from accepted 2015 filings, the vast majority being related to mismatches in Taxpayer Identification Numbers (TINs).

For more information, contact Kathryn Wilber, council senior counsel, health policy, at 202. 289.6700.

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