Staying compliant with Affordable Care Act (ACA) reporting requirements continues to challenge employers each year. For companies with 50+ full-time employees (including full-time equivalents), there are mandatory ACA reporting deadlines to furnish forms 1094-C/1095-C and file with the IRS. Miss these tight deadlines and steep penalties apply, oftentimes per employee!
This may seem overwhelming, but when armed with the right ACA reporting tips, you will have the knowledge to help you navigate these requirements.
Perform an ACA Audit
An ACA compliance audit allows you to fix mistakes proactively so you can furnish accurate 1095-Cs to employees and file compliant returns with the IRS. This prevents duplicating errors and avoids potentially steep IRS penalties for noncompliance.
Here is the beginnings of a checklist for you to use for your audit:
- Collect 1094-C and 1095-C filings along with supporting employee data on enrollment status, affordability, and identifying details.
- Review all collected information thoroughly for errors like typos, missing or incorrect data, and affordability miscalculations. Look for mismatches with W-2s.
- Verify employee identifying information matches social security numbers to avoid SSN mismatch penalties.
- Check 1095-C forms were furnished to each applicable employee by prior deadlines.
- Confirm 1094-C transmittals and 1095-C copies were accurately filed with the IRS by deadlines.
- Correct any flaws, mistakes, or gaps uncovered during the audit.
- Keep detailed records of the audit process.
Do not overlook seemingly minor information. Even small details such as unmatched data like a social security number (SSN) can trigger a penalty.
Watch for IRS Penalties
The IRS mandates steep financial penalties for ACA reporting noncompliance. Here's what can incur penalties and how to stay compliant:
- Late Filing: Missing the March 31st deadline to file 1094-C and 1095-C forms leads to penalties per return. Act now to furnish and file on time.
- Inaccurate Reporting: Incomplete, incorrect, or negligent reporting of employee data on 1095-Cs results in a fee per return. Thoroughly review all data before submitting.
- Inadequate Recordkeeping: Disorganized or missing reporting records may incur a per return penalty. Maintain detailed ACA compliance records.
- SSN Mismatch: If employee SSNs on 1095-Cs don't match W-2s, you can receive a penalty per form. Confirm SSN accuracy across filings.
- Don’t forget to leverage the three IRS Affordability Safe Harbors to prove that you follow ACA affordability.
Stay penalty-free by acting early on reporting, closely reviewing all data, and keeping meticulous records. Remember that prevention is your best approach when it comes to compliance and remember these ACA tax compliance tips!
Be Aware of ACA Reporting Extensions
While ACA reporting extensions provide welcome relief, you must plan sufficiently to request them on time. Here are some steps to help you navigate the process:
- Mark your calendar with these key IRS deadlines:
- Feb 28 - paper file deadline
- March 2 - for 1095 distribution
- March 31 - e-file deadline
- Submit Form 8809 requesting an extension before the normal filing date.
- File extended 1094-C and 1095-C returns with the IRS
- Maintain records of extension requests.
Build in time to request ACA reporting extensions well ahead of deadlines. With strategic planning, you can avoid hurried, stressful last minute requests.
Check All Details to Prevent Errors
Ensuring data accuracy across W-2s, 1095-Cs, and social security records takes some seriously meticulous review. Attempting this solo leaves room for overlooking small but costly errors that lead to IRS penalties that can stack up per report or employee.
Rather than risking mistakes, partnering with an ACA compliance team provides essential quality assurance through:
- Extensive employee data validation across all required forms and records.
- Ongoing guidance from ACA experts on reporting requirements, including completing forms correctly. Experts stay on top of changing rules so you don't have to.
- Peace of mind that comes with having experienced professionals handle this complex monitoring on your behalf.
Even minor employee data mismatches can bring steep IRS fines. While you can learn to manage these on your own, the peace of mind that comes with using a trusted partner is always worth considering so that you can focus on other crucial tasks.
Bonus Tip: Use ACA Reporter for Simplified Compliance
ACA reporting can be challenging for companies of any size. Missing deadlines can lead to significant penalties, and the stress of those penalties can be overwhelming. To stay compliant, remember to file on time, review data meticulously, and consider partnering with ACA compliance experts. Plan ahead and stay organized to avoid issues or mistakes.
To simplify this process, consider a software solution like ACA Reporter. Our platform can help simplify your ACA compliance by providing you with easy, streamlined data management, analysis, tracking, and reporting through a simple dashboard. Get started today!
