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Affordable Care Act Alert
New Electronic Filing System for Information Returns required to be filed under the ACA.
The IRS recently issued two publications setting forth new rules as to how employers must file 2015 electronic information returns under the “Affordable Care Act Information Return” system, or AIR system.
For the calendar year 2015, employers that file 250 or more ACA information returns (Forms 1094-B, 1095-B, 1094-C and 1095-C) must file the returns electronically. An employer’s existing system for filing electronic information returns with the IRS (for Forms W-2 and 1099) will not support, and cannot be used, for filing ACA information returns.
The IRS recently issued the following new publications:
• Publication 5165, “Guide for Electronic Filing Affordable Care Act (ACA) Information Returns for Software Developers and Transmitters (Processing Year 2015)” (46 pages in length) and
• Publication 5164, “Test Package for Electronic Filers of Affordable Care Act (ACA) Information Returns (AIR) (Processing Year 2015)” (19 pages in length).
These publications may be downloaded from irs.gov.
Employers that are required to file their own ACA information returns electronically will need to complete a series of steps prior to accessing the AIR system, and prior to filing returns in early 2016. Here is how the new AIR system works:
1. As the first step, each employer must identify its responsible officer(s) and contacts. The responsible officer has authority over the electronic filing of returns.
2. Responsible officers and contacts need to be registered and authenticated with the IRS. After completing the process in IRS e-Services, the IRS will mail a registration confirmation code. Upon receiving this code, the individual must log in to e-services and enter the confirmation code to complete the process.
3. Regarding ACA software that is being used by an employer, software developers must past an annual IRS test before the software package is approved.
4. Each “Issuer” or “Transmitter” that will be filing electronically must apply for a “Transmitter Control Code” (TCC). An Issuer refers to an employer that will be filing its own information returns. A Transmitter refers to a third-party who will be filing ACA information on behalf of another entity.
5. After receiving a TCC from the IRS, Issuers and Transmitters will need to complete an error-free communications test with the IRS. To pass a communications test, Issuers/Transmitters must prepare a transmission in XML (Extensible Markup Language) format, submit it for processing, receive a receipt ID, and obtain an “error” file”, if applicable.
Publications 5165 and 5164 are extremely complex, and contain many system constraints and rules that could cause rejected information returns. Thus, we recommend that employers start now on the registration and testing process.