Webinar Recap – ACA IRS Reporting with Intuit and Equifax
Two weeks ago, Equifax published a survey with PwC on employers’ preparedness for ACA IRS reporting. The results were intriguing, and we wanted to learn more. So during a recent webinar with Intuit, the provider of Turbo Tax® software, we polled the audience and the outcome further proved that employers need an expert in their corner to help prepare for ACA compliance.
We opened with a polling question: How would you rate your organization’s current readiness for ACA compliance and reporting? The majority of respondents (85%) categorized their preparedness as intermediate or beginner. Only 2% considered themselves an expert.
After walking through the potential consequences of failure to comply with the regulations, we asked, “An employer cannot be fined under 4980H(a) or 4980H(b) unless…” and 46% of the respondents answered correctly with “An employee receives a subsidy”. It’s important to note that subsidies, or premium tax credits, play a pivotal role in risk exposure since they trigger penalties.
One of the huge challenges an employer faces when preparing for ACA IRS reporting is the sheer amount of data that has to be integrated, calculated, and translated. With this in mind, we asked attendees “Which of the following data sources is not required to properly prepare forms 1094-C and 1095-C?” The answer was that time and attendance data is not needed to complete these forms whereas payroll, HRIS, benefits, and absence management are all required.
We then discussed real-world examples of 1095-C preparation. The first example included the application of indicator codes for a designated full-time employee. This scenario proved that reporting on a full-time employee under the monthly measurement method can be much more complex than most organizations think.
The second scenario included a variable-hour employee that was deemed eligible during her 12-month look-back period but whose coverage went into effect just one day late. This example showed that when coverage is offered late, the limited non-assessment period is negated and a fine will be retroactively assessed for the entire look-back period.
Next we asked attendees, “A self-insured ALE is not responsible for providing form 1095-C to…” and only 44% of respondents answered it correctly with “dependents”. Although employers do need to list dependents in section three of 1095-C, they are not responsible for providing each individual with a form.
But penalties do not apply only to employers. Employees can be subject to fines under the individual mandate for failure to have coverage. In addition, those who mistakenly received a subsidy will have to repay the amount they were awarded. As you can imagine, employers are expected to receive an overwhelming amount of questions from their employees on these forms.
The key take away from the webinar and survey questions is that IRS reporting and the ACA will affect employers and employees alike and it’s more complicated than most think. Click here to watch our webinars on-demand and learn more about the latest reporting requirements and best practices for managing ACA compliance.
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