Large employers subject to the ACA Pay or Play Penalty were required to distribute 1095-Cs to each full-time employee by March 31, 2016. They had to then file the 1095-Cs with the IRS – along with a 1094-C transmittal form – by May 31, 2016 (if filing by mail) or June 31, 2016 (if filing electronically).
If you have taken these steps, are you all set? The answer is “no” if it is discovered later that any forms were incorrect or incomplete.
The IRS has recognized that completion of the forms is a formidable task.
The normal $250 per return penalty for filing incomplete or incorrect forms will be waived by the IRS for this first year for which the returns are required, provided the employer acts in good faith. If the employer hires a third party vendor to help prepare the forms, that is an indicator of good faith.
Having said that, the instructions to the forms also outline a correction procedure if the employer discovers that forms were prepared incorrectly. So an employer may not be able to rely on the good faith relief if it discovers any forms were prepared incorrectly, but takes no responsive action.
The instructions to the forms explain how to make the corrections and refile the forms with the IRS. If any 1095-Cs were incorrect and distributed to employees but new forms are prepared before filing with the IRS, only the correct forms need to be filed with the IRS. Otherwise, once filed with the IRS, refiling is required (in addition to redistribution to the employees).
Contributed by Mary Bauman, Miller Johnson.
Join us for the “ACA Update: Reporting, Penalties, Flex Carryover, Cadillac Tax” seminar on June 14, 2016 in Grand Rapids and on June 15, 2016 in Lansing with Mary Bauman, Catherine Rische and Tripp VanderWal.