August 11, 2015
Affordable Care Act Information Reporting (AIR) Electronic Filing Requirements
By Michael D'Addio, Principal, Tax & Business Services
The Affordable Care Act (ACA) imposes annual information reporting requirements on issuers of health insurance, including employers with self-funded plans, under IRC section 6055, and applicable large employers under IRC section 6056. Health plan issuers generally report using forms 1094-B and 1095-B, while applicable large employers use forms 1094-C and 1095-C. An applicable large employer with a self-funded plan can satisfy its reporting obligations under both sections by filing forms 1094-C and 1095-C.
The ACA rules for applicable large employers are generally effective for 2015. Several transition rules provide a delay in the responsibility for the employer "shared responsibility payment" (i.e., the employer mandate penalty) until 2016 for those meeting certain requirements. However, this does not exempt such employers from their obligations to file the ACA information returns for the 2015 tax year.
Employers filing 250 or more of these returns are required to file electronically. Other employers can elect to voluntarily file electronic returns.
IRS has posted information concerning the filing of Affordable Care Act Information Returns (AIR). It has published in draft form:
- Publication 5164: Test Package for Electronic Filers of Affordable Care Act Information Returns.
- Publication 5165: Guide for Electronically Filing Affordable Care Act Information Returns (AIR) for Software Developers and Transmitters.
- An Air Submission and Reference Guide.
Each of these are to be finalized later in the year.
IRS is in the process of creating a separate system for electronic filing of these ACA Information Returns, called the AIR system. Filers will be required to qualify to be able to transmit returns under this system. The IRS Filing Information Returns Electronically system, referred to as FIRE, which is used for the electronic filing of many other information returns, cannot be used for the ACA forms. The FIRE system will not support the ACA returns. AIR refers specifically to the electronic system developed to accept electronic filings of the Forms 1094-B, 1095-B, 1094-C and 1095-C.
Electronic filing of these forms can be done through a "transmitter," a third party sending the electronic information return data directly to IRS on behalf of a business. Alternatively, the business can be an "issuer" filing its own ACA information. In either situation, the party with the responsibility to file these forms must follow a process to qualify with the IRS.
- Transmitters and issuers must identify responsible persons, who must register in IRS e-services with their personal information.
- A responsible official for the organization must initiate and sign the ACA information return application for the transmitter's or issuer's ACA Transmitter Control Code (TCC).
- Testing is required. Under draft Publication 5164, test files must be submitted in the XML format, and the submitter must verify that IRS processed the transmission and returned a receipt ID, acknowledgement and associated error file.
IRS has stated that the testing system should be finalized soon.
All businesses should decide the process by which they will satisfy the ACA filing requirement. If a third party transmitter is used, there may be little to do other than confirming the role and qualification of the transmitter. However, if a business is going to file its own returns electronically, then it should begin the process of qualification and assure that it has the appropriate technological capabilities.
If you have any questions concerning the filing of these ACA forms, do not hesitate to contact your Marcum professional.