The deadline for e-Filing 1094-C forms is coming up on June 30. In theory, e-Filing should accelerate the submission of these Affordable Care Act forms, but the reality we have observed is that many Applicable Large Employers are having difficulty filing forms electronically. The lesson here for employers is that anyone submitting ACA forms must expect some bumps in the road and leave ample time in the schedule to mitigate issues.
Here are a few tips to remember as you e-File 1094-C forms:
You can’t e-File 1094-C forms on the same system you use to e-File tax returns.
The IRS built a brand new platform for e-Filing, which is completely different from the platform used for e-Filing tax returns and W2s. The tax return e-File platform will not process ACA filings. Companies that file their tax filings electronically may think that they are all set because they’ve got a system set up for tax filings, but they are not set. The two systems are separate.
The multipart registration creates additional opportunity for errors and delays.
Prior to e-Filing, employers must register with the IRS. Registration seems benign, but it is actually a multipart system with many moving parts. Perfection is the goal for every step of this process, including registration. We are seeing the system rejecting registrations at a high rate, so allow time to register. Also, make sure one person is appointed the keeper of the TCC code. This is the PIN the IRS will send to you, and you need it for your filings. Steps should be taken to keep the PIN in a safe place.
The e-Filing system has little tolerance for error.
Your friends may overlook your faults, but the IRS won’t. Because the 1094-C form is being used to monitor compliance for individuals as well as businesses, the IRS is cross-referencing your files with individual employee records. This means the system is very sensitive to e-Files with errors in employee and dependents’ Social Security numbers, birth dates, and so on. The IRS may either reject a submission due to errors or label it “Accepted with Errors.” If you receive a designation of “Accepted” or “Accepted with Errors,” you have satisfied the June 30 deadline. If you receive a designation of “Rejected” it is back to the drawing board, and you need to correct the errors and re-submit to satisfy the deadline. If the IRS indicates “Accepted with Errors” or it rejects a submission, it doesn’t necessarily detail what the discrepancies are and leaves it to the employer to figure it out. It is a time consuming review. In either case, you must determine what the errors are, correct them, and re-submit.
Your employer ID name and number must be pristine.
As time goes by, companies may shorten or adjust their names. So for example, Pretty Peg’s Cookies and Sweet Treats, Inc. can evolve into Peg’s Cookies and Treats, Inc. This may be easier for employees and the employer, but the e-Filing system does not like this. The IRS e-Filing platform expects to see the company name exactly as it appears on the company’s EIN filing. If it is different, the system rejects the submission. Be sure that the name of the company and number are exactly the same as it was on your initial EIN registration.
Testing continues, but the burden of submission is still on the employer.
Are there bugs in the system? Yes. But the employer must forge on regardless. Some people are sending submissions 20 times before a submission is accepted. When there are problems, the employer must go back and reconfigure. No matter what happens, it is the employer’s responsibility to get it fixed.
The fundamental issue here is that the e-Filing system is brand new. There are many bumps in the road, but dedicating the time and resources needed to take appropriate precautions will improve your success. As always, Creative Benefits is here. If you need help with 1094-C forms or any aspect of compliance with ACA regulations, call us. As a capable and experienced partner, we can guide you through all aspects of benefits administration and compliance.
About the author: Ann Duke, Esq. is General Counsel with Creative Benefits, Inc. She provides consultative services to employers and their employees. She has an extensive background as both outside and in-house counsel in guiding companies through the understanding and implementation of complex regulatory system requirements. Ann currently concentrates on employment-related compliance, including ACA, ERISA, and Federal and State workplace requirements.