IRS Issues Forms Specific to ACA Reporting for Employers

The IRS Issues Forms Specific to ACA Reporting for Employers

 

ACA Forms

The IRS issued the last forms on February 8, 2015. They have issued both 1094-C and 1095-C for 2014. Employers will use these forms to report coverage offered under health insurance employer-sponsored plans as required by the Internal Revenue Code on Section 6056. They have also issued the final instructions which did have some noteworthy revisions from an otherwise unchanged form from draft.

 

Requirements of the IRC Code

Under the IRC Code Section 6056, applicable large employers are required to report to the IRS whether they offer minimal essential coverage to full-time employees and their dependents. If the employer has an average of 50 full-time workers or more, then they are applicable. If an employee works at least 30 hours a week, they are full-time. If the employee otherwise works at least 130 hours a month, he is considered full time.

Full-Time Employees Identified by Form

Form 1095-C is used to find out who was working full-time for a company for at least one month. Each month will be reported with details of health care coverage. Employees must be given the 1095-C by January 31, 2014 for 2015. The forms are to be filed with the IRS as it relates to the deadlines for W-2.

 

Form 1095-B

Form 1095-B

Form 1095-B identifies all of the covered people and their coverage months. Insurers and health care providers will fill out forms 1095-B in order to report every individual who is insured to the IRS. ALEs that are self-insured will issue and file reports 6055/6056. The third part of Form 1095-C deals with the reporting elements of Section 6055. Form 1095-C arranges the information in three rows for each full-time employee by the month.

The First Row

The first row deals with whether or not the ALE offered MEC to his employees and any family or dependent. The dependents and spouse must be qualified to receive the coverage. The provided coverage must have the minimum value.

The Second Row

The second row is where the share of the employees monthly premium when it comes to self only coverage. This is often the lowest cost monthly premium service plan. There are no dependents on this health insurance plan.

 

IRS Form 1095-C

The Third Row

The third row deals with whether or not the employer may have a shared responsibility payment. One example of this is the identification of employees who did not work full-time. There are codes that deal with the relief known as a “safe-harbor”.

Noticeable Revisions to Instructions

Among the noteworthy revisions is coverage for non-employees. The draft instructions have stated that the self-insured ALEs could use 1095-C in order to satisfy the reporting obligations of sections 6055 and 6056. The final instructions allow for use of 1095-B as well as C for reporting.

Non-Employee Coverage

Self-insured employers are required to report on anyone who signs up for a plan sponsored by an employer. It doesn’t matter whether or not the person is a full time employee. 1095-C is going to be required for employees who work part-time. Non-employees that are covered need to fill out the same form.

Authoritative Transmittal

ALEs can file more than just one Form 1094-C transmittal. They just have to make sure that the one transmittal is made to be the authoritative transmittal. It is clear in the final instructions that the authoritative transmittal reports are the only ones that report details for the ALE. The other transmittal forms should leave everything blank.

 

Employee Coverage under the ACA

Employee Numbers

ALEs are required to report the total number of their employees. There are two methods of counting for drafts. The employees could either be counted on the first day of each month or the last day of the month. The final draft of these instructions allow for the first or last day counting of first payroll period of the month.

Full-Time Employee Numbers

The employees are clarified to not be full-time employees if they are in Limited Non-Assessment Periods. They are not to be included in the number of full-time employees being reported. Forms 1095-C require employees in Limited Non-Assessment Periods to be reported with Code 2D for the 16th line on any month which has the employee on this designation.

Deemed Coverage Offer

ALEs can offer certain employees some coverage in the case that there is no actual coverage offered. This is reported on Part 3 of Form 1094-C. According to the final instructions, ALEs can only report actual offers of coverage on Form 1095-C. Each ALE has the responsibility and liability for reporting with the option of using a third party.

 

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IRS Improves Resolution Times for Identity Theft Cases

IRS Improves the Timeline Needed to Resolve Identity Theft Cases

 

Identity Theft Problems

Identity Theft Problems

The problem

Identity theft victims have to endure major delays in receiving their income tax refunds. Additionally, these refunds commonly have many mistakes that further lengthen the time in which it takes to receive the refund. This is according to several governmental agencies that have devoted research to the subject. The delays and errors compound an often trying situation for the victims of identity theft and tax fraud. The issue has been gaining widespread attention lately.

An internal audit of the IRS in recent years revealed that the IRS lacked severely in customer service issues. Customer service is important because it relates the pertinent information that allows victims of this type of fraud to swiftly report and repair the issue. The audit was done to determine the effectiveness of recent IRS customer service changes. These changes were designed to improve the system greatly, but a system for measuring success was not in place.

The Supposed Resolution

The IRS takes almost 300 days to resolve the issues of victims of identity theft. However, they claim that this is an improvement over the previous 312 days that it took to resolve the same issues previously. Additionally, this time is predicated on the time it takes to rectify the situation. It does not take into account the time that it takes to formally alert the IRS of the problem. This adds a significant amount of time to the process. Some people report that their return issues were not rectified for a year’s time or more. These issues with the length of time have not been improved much.

The Reality

It is noted that innocent taxpayers bear the brunt of the financial hardships when this type of fraud is committed. The people that commit the fraud and the government’s slow response are not often penalized in the process. This means that a significant portion of the relief that these innocent taxpayers could receive can be from the government’s end. A start to this relief could come in the form of a rapid response and resolution from the government itself. This is especially true because these taxpayers help fund the system in which they are receiving no relief.

Additionally, the study reports that the IRS continues to make errors even with the repaired returns. This exponentially compounds the problem and often starts the entire 300 day process again. Ten percent of the over quarter-million people whose returns were defrauded contained punitive errors on their return. These taxpayers suffer the most from the ineptitude that the system displays. This represents over 25,000 returns, and the hardship is compounded exponentially. The problem could be greatly reduced with an effective response from the IRS both in thwarting the fraud and refining the process that governs the rectification of that fraud.

The number of these issues have reported by the IRS are also reported to be flawed when their metric for determining the numbers is utilized. This includes errors in reporting the time period consumed in processing these returns. It also includes errors in reporting the time period for resolution. This study proved that the IRS reported that the time for rectifying fraud issues only took 6 months. That is 180 days that the government is reporting compared to the 278 days that the study proves that returns actually took to be rectified and issued. This also speaks to the defrauded taxpayer’s frustration and complaints about the process.

 

Resolutions

Resolutions

Resolution? Maybe

Recommendations that have been made from credible authorities include that the IRS should develop the appropriate procedures and processes that will ensure that the actions that it takes to resolve the issues and the adjustments required to correct the issue are made accurate. This means accurately calculating the time that it takes to actually resolve the issues of taxpayer’s that have been damaged by the fraud. It also suggests accuracy in reporting the actual number of fraud cases that have been resolved because the IRS rectified their issues and issued a refund. Because the figures are conflagrated, the numbers that are actually resolved, the number that needs a resolution, and the time that all this will actually take is falsely reported.

 

Tax ID Theft

Tax ID Theft

The IRS concurs with the findings, but only in part. They accepted the first three recommendations that were issued by the study. However, many of the other recommendations the IRS did not agree with or determine that they will even address. This includes re-calculating the time that it takes to resolve the defrauded accounts fully. Their procedures and processes that are currently in place will remain their method of calculating the complete time for resolution. This means that the IRS will continue to skew the actual time of resolution by as much as 5 months. It also means that taxpayers that have to endure the process will continue to receive false information from their government. This will certainly continue to be a major cause of the poor customer service ratings that they are receiving.

 

About the Author:

Hi, I’m a Tax Professional based in California. I love to discuss Tax and Accounting issues. I’m an entrepreneur fundamentally, and like folks who desire to create business enterprises and add to the economy. I trust you enjoyed my blog post. Please do not hesitate to give me reviews.

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