IRS Cracks Down on Affordable Care Act Reporting Requirements

The IRS is ramping up enforcement efforts of the information return requirements imposed by the Affordable Care Act (“ACA”) on applicable large employers. Under the ACA, if an employer has more than 50 employees in the previous year, it is an applicable large employer and required to file Form 1094-C, Transmittal of Employer Provided Health Insurance Offer and Coverage Information Return, and Form 1095-C, Employer-Provided Health Insurance Offer and Coverage, and furnish copies of the Forms 1095-C to its employees. These forms provide the IRS with details of the health coverage an employer offers its employees and employee enrollment information. If an employer is required to file more than 250 information returns, they must file electronically via a new filing system called the IRS Affordable Care Act Information Return System (the “IRS AIR System”). While the ACA was enacted in 2010, the information return requirements first applied for the 2015 tax year. Some employers have struggled to comply with the new requirements either because they were unaware of the new requirements or because they struggled to navigate the complicated IRS AIR System. The IRS AIR System requires employers to obtain a transmittal control code (“TCC”) to successfully file electronically, and the filings must be formatted to the system’s specifications, which have changed repeatedly since 2015.

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