Ryan Moulder

There is not a great answer for this question. I actually wrote how the IRS should change the Form that would allow an employer to provide these details. You can read my thoughts here - https://accord-aca.com/articles/more-detail-and-further-clarity-required-for-part-iv-of-the-form-1094-c . If this is still an issue, send me an email and we can try to find a time to discuss over the phone rmoulder@healthcare-attorneys.com . It is an interesting question.

I have a few clients that are arguing they should not owe any penalty because they never received a section 1411 notice so therefore they cannot be penalized under section 4980H because the requirements of the provision have not been fulfilled. This is your best avenue in my opinion. Here is an insightful article on the 1411 notice written by ERIC - https://www.eric.org/eric-sends-irs-letter-on-aca-penalties/. Email me if you want to discuss this in more detail rmoulder@accord-aca.com

A little late to the game here but I agree that filing them as soon as you learn of error is the best course of action. It is likely that you will receive a Notice 972CG after you file the Forms 1094-C and 1095-C late. As Brian stated above, there is a way for employers to dispute the proposed penalties in a Notice 972CG. An employer should frame its response using the Treasury Regulations at 301.6724-1. I have had a lot of success completely abating the penalty for clients although the IRS may be more stringent moving forward. Each case is very fact specific. I wrote an article that explains the Notice 972CG that may be informative - https://accord-aca.com/articles/notice-972cg . Please don't hesitate to reach out if you need assistance.

The latest trend is for the IRS to send employers who received a Letter 5699 (usually back in 2018) a Notice 972CG. The Notice 972CG is proposing penalties for filing the Forms 1094-C and 1095-C with the IRS. For 2017 the proposed penalty for 2017 is typically $260 per late Form. So if an employer filed 100 Forms 1095-C late, the proposed penalty would be $26,000. It appears the IRS gave employers a free pass on filing late in 2015 and 2016. However, if the employer received a Letter 5699 for the 2016 tax year sometime in 2018 and then filed the Forms 1094-C and 1095-C for the 2015, 2016, and 2017 tax year, I have seen the Notice 972CG sent to the employer for the 2017 tax year late filing. Here is an article summarizing the issue - https://accord-aca.com/articles/notice-972cg

The IRS has been very generous with the clients I have assisted to date in allowing an extension to the original response date providing an additional 30 days to respond. We have just started to hear back from the IRS and so far have been successful in reducing the section 4980H penalties to $0 for each client. I think in future years and once the section 4980H(b) penalty begins to be assessed successful appeals will be much more challenging.

This can theoretically happen and apparently it is happening more often than you think. I had several clients contact me regarding the HHS appeal last summer. The situation was typically the employer offered an employee coverage but despite offering "affordable" minimum value coverage the employer received a section 1411 notice in the mail from CMS. In the end this was not a huge issue for the employer as described in this article - https://accord-aca.com/articles/losing-an-hhs-appeal-are-there-any-losers. I am pretty confident the Exchanges are just having trouble determining who is and who is not eligible for a premium tax credit as there is not a great safe guard for individuals lying (or just not understanding the term "affordable" as used in the ACA) to the Exchange. Hopefully, this is correct for future filing years but we will have to wait to see. While I don't think it would be possible to do on a large scale this article from 2013 discussed the possibility of an employer offering "affordable" coverage while still allowing all of its employees to be eligible for a premium tax credit - http://moulderlaw.com/can-employers-create-a-goldilocks-zone/. This article may be helpful in describing scenarios for your specific question. If you feel your scenario is different than the ones described, I'd be happy to chat rmoulder@healthcare-attorneys.com. I am always interested to hear about scenarios people are seeing.

Great discussion particularly in light of the ACA as I have been telling clients for years about the importance of an SPD. The cookie cutter SPDs I have reviewed fall woefully short of the ERISA regulations clear standards. One area I have almost universally seen SPDs fall short is in the area of eligibility conditions. The regulations require the SPD to "include a statement of the conditions pertaining to eligibility to receive benefits..." Almost no SPD I have seen is doing this in a thorough manner particularly if the employer has adopted the look back measurement method. I discuss why this is such a problem in this article https://accord-aca.com/articles/synchronizing-spd-and-look-back-measurement-method If the DOL ever decided to start enforcing the rules and regulations for plan documents and SPDs, almost every employer would be in trouble.

Interesting question. I have not seen the exact scenario you are describing. It is certainly frustrating the IRS software did not have better ways to verify the information ALE members inputted on the Form 1094-C. For example, column (a) on line 23 could have been verified using the Forms 1095-C the ALE member submitted along with the Form 1094-C. I am not holding my breath for these corrections moving forward and the accuracy of the Forms 1095-C in 2015 were poor so it may not have helped that much. The instructions on page 8 cross reference the "Section 4980H Transition Relief for 2015" section on page 15. So long as the ALE member meets the three conditions for the 50-99 transition relief provision (almost all do), I believe the "Yes" box should be checked in column (a) for line 23. Let me know if you have additional questions - rmoulder@healthcare-attorneys.com.

The IRS has taken several steps recently to signal that the employer mandate penalties are imminent. First, the Boston Business Journal cited unnamed IRS and White House officials saying the penalties would be issued in November 2017 - https://accord-aca.com/articles/business-journal-reports-employer-mandate-penalties-to-be-issued-in-november . Then, on November 2, 2017 the IRS updated its website detailing the procedures on how the employer mandate penalty will be assessed - https://accord-aca.com/articles/procedures-for-employer-mandate-enforcement/ . It is critical any employer who receives a Letter 226J from the IRS (the start of the employer mandate process) act immediately. I believe it is likely that many employers will incorrectly be assessed penalties but a timely response is still necessary.

I wanted to post my latest two articles on this subject. Hopefully, these are my last two articles on the issue until the final regulations are released. The first article discusses the proposed regulations. https://accord-aca.com/articles/tin-solicitation-proposed-regulations The second article discusses what we learned in a conversation with the IRS regarding the issue. https://accord-aca.com/articles/incorrect-tin-solicitation-irs-clarification We hope this helps assist you with the AIRTN500 error messages.

I just want to clarify something about the TIN verification process and how it works after discussing the issue with our technology person. The first thing that would occur is the IRS would check to see if the TIN entered on the Form 1095-C exists. If the TIN does not exist, an AIRTN500 message would appear. If the TIN exists, the verification process would go to the second stage of comparing the first four characters entered on the Form 1095-C for that TIN with the first four characters of the last name in the social security administration (SSA) database. If the first four characters do not match, an AIRTN500 message would appear. If the first four characters match, the TIN would be verified. Apparently this is a lot more manageable from a data perspective. For example, if the IRS was going to verify my name, "Ryan P Moulder", the only characters that would matter are "MOUL". The IRS verification process would begin by checking the TIN entered for Ryan. If the SSA database does not have the TIN, an AIRTN500 error message would appear. However, if the TIN is in the SSA database, the first four characters of the individual's last name, in this case, "MOUL", would be checked against the first four characters of the individual's last name in the SSA database for the TIN entered. If the first four characters from the Form 1095-C and the SSA database do not match, an AIRTN500 message would appear. Alternatively, if the first four characters from the Form 1095-C and the SSA database match, the TIN will be verified.​

I wrote another article on this issue specifically addressing the TIN issue self-insured employers are encountering. We offer a potential solution that would also work for employers filing a Form 1095-C with only one TIN. http://www.healthcare-attorneys.com/incorrect-tin-errors-a-workable-solution-for-the-dreaded-airtn500-error-message/

The issue you are describing is the exact reason the government created the look back measurement method. If an employer elects to use the monthly measurement method and an employee accumulates 130 or more hours of service in a month, the employee will be counted as a full-time employee for that month and typically need to be offered coverage or the employer will risk paying a section 4980H penalty. An employer is only considered to have offered coverage to an employee if the employee was eligible to participate in coverage for each day of the calendar month. Please note this does not account for the first three calendar month limited non-assessment period an employer using the monthly measurement method may be able to utilize one time per employment period for each employee. In your example the question as to whether the employee needs to be offered coverage in July is solely based on the number of hours the employee accumulated in July and the employer will not know that until July 31. Similarly, the question as to whether the employee needs to be offered coverage in August is solely based on the number of hours the employee accumulated in August. If an employer is going to have employees with hours of service that fluctuate from month to month it has to adopt a look back measurement method policy or it is going to be at risk of a section 4980H penalty. Don’t take this the wrong way but I would highly recommend tracking down somebody that can assist you with this process as we are 18 months into the ACA having an active 4980H provision and you seem to be struggling to apply the basic rules for the 4980H penalty. While it will be difficult if not impossible to correct any errors you have made in the past that may lead to a section 4980H penalty, you can correctly apply the law moving forward. Email me if you want additional guidance rmoulder@healthcare-attorneys.com. Ryan

There is another thread discussing this issue and I have tried since the beginning of June to try to get somebody at the IRS to discuss this issue without much success. However, I believe you are mistaken on how the IRS is verifying TINs for electronic submissions. Please refer to page 17 of publication 1586 on how TINs are verified. For example, my name is Ryan Patrick Moulder. The only thing the IRS system would be looking at is "MOUL" and then verifying if my SSN was listed in the TINs for the "MOUL" combination. Theoretically, my brother's employer could list his name which would be searched as "MOUL" with my SSN and no error message would be reported because my SSN would be included in the SSN subset of numbers for "MOUL". I am working on another article on the issue because I have learned a lot about the issue since my last article on the subject earlier this month. http://www.healthcare-attorneys.com/dont-accept-accepted-with-errors-how-to-handle-incorrect-tins/ I will be sure to share it once it is complete as I think a lot of people are struggling with this issue. I hope this helps.

One of the baffling things regarding the incorrect TIN error issue is an employer (or software provider submitting on behalf of the employer) has no way of determining which dependent is triggering the incorrect TIN error. For example, if an employer has a self-insured plan the employer would submit the employee's TIN on line 2 and then each covered dependents TIN would be entered in column (b) on part III. Part III could have numerous TINs depending on the number of covered individuals. For the purposes of this example let's suppose this employee has a spouse and three dependent children covered by the plan. In that case there would be a total of five TINs. However, if the employer receives a TIN error related to the Form 1095-C for that employee, the IRS error notice does not notify the employer which TIN (or TINs) is causing the error notice. Therefore, the employer would have to solicit the TINs for all five TINs to fulfill its solicitation obligations under section 6724. Considering the IRS is comparing each TIN submitted to check for accuracy (it has to be to know if the TINs submitted are correct) this is an inexplicable mistake by the government which is causing employers to have greater solicitation obligations and is wasting a tremendous amount of time and paper.

Interesting question which I addressed in this article. http://www.healthcare-attorneys.com/dont-accept-accepted-with-errors-how-to-handle-incorrect-tins/ I also touch on the issue in this article http://www.healthcare-attorneys.com/corrected-returns-when-an-employer-needs-to-file-a-corrected-form-1095-c/ I agree it is not entirely clear what the responsibilities are for an employer who receives an accepted with errors response for an incorrect TIN. Ryan