We’re approaching that time of the year where the smell of spices fills the air, where holiday decorations come down from the attic to be put up around the house, where families come together in celebration, and, of course, when brokers and consultants must remind their clients that ACA reporting is upon us.
The broker community should again be poised to advise Applicable Large Employers (ALEs) that they need a plan for preparing and filing their 2024 Form 1094-C and Forms 1095-C. As this has become a bit of an arduous task for many ALEs, it is incumbent upon brokers/advisors to assist in making the process efficient and comprehensive so that the possibility of penalties for an incorrect or incomplete filing is reduced or eliminated.
MZQ Consulting, as we have done for years now, can provide service and guidance to the broker community and their ALEs. In the spirit of giving, we offer a few ACA reporting tips and reminders:
- Reduced e-Filing Threshold: For 2023 forms due in 2024, the IRS began requiring electronic submissions for any employer who filed ten or more tax forms in aggregate. That requirement remains in place for this year’s filings, which means that most employers are going to need to file all of their tax forms, including Forms 1094/1095-C, electronically via the IRS’ e-Filing system. Employers that inadvertently mail their forms when they should be e-Filed may end up receiving late filing penalties if their mistake isn’t corrected until after the e-Filing deadline has passed. We err on the side of caution and e-File all of the ACA filings we prepare, regardless of the client’s size.
- Adjusted Furnishing Deadline: Forms 1095-C usually need to be furnished to employees by March 1st, but that date is a little different this year because the 1st falls on a Saturday. ALEs need to ensure that their 2024 Forms 1095-C are provided to recipients by March 3, 2025. There is no extension available for this furnishing deadline. Forms 1095-C can be provided by hand delivery, mail, or electronically if consent is obtained.
- Timely e-Filing: Each ALE’s Form 1094-C and Forms 1095-C must be successfully e-Filed and accepted by the IRS by March 31st, 2025. We like to emphasize the “accepted” component of this requirement because many ALEs don’t realize that the closer to the e-Filing deadline we get, the longer it can take for the IRS to process a submission. Even if a filing is submitted by March 31st, an employer could still receive a late filing penalty if their forms aren’t actually accepted until after that date. We encourage ALEs to prepare their ACA filing as much in advance of the e-Filing deadline as they can so that there’s no concern about missing the date by a day or two. Automatic 30-day extensions are available for the e-Filing deadline, and employers interested in applying for one need to ensure they submit the application by March 31st, 2025 to qualify.
- Filing Accuracy is Critical: Creating accurate Forms 1094/1095-C can be challenging, especially for employers with lots of variable hour employees, employee turnover, complicated employee contributions, etc. But, particularly because the IRS eliminated the “good faith” filing standard a few years ago that protected employers from various filing penalties, it’s important for ALEs to ensure their ACA filings are as correct and comprehensive as possible. In the years since the “good faith” standard was eliminated, we have seen the IRS begin to challenge the affordability of an employer’s offer (even when a safe harbor was used), require more extensive justifications for code corrections submitted in response to a proposed employer mandate penalty Letter 226-J, assess filing penalties when Forms 1095-C that an employer accidentally left out of the timely initial submission were subsequently e-Filed after the deadline, and more. We won’t be surprised if the IRS continues to develop stricter and stricter compliance requirements as the years pass.
- State Filing Requirements: In response to the reduction of the individual mandate penalty to $0 that occurred many years ago, California, New Jersey, Rhode Island, and Washington, D.C. created their own individual mandates that include an employer reporting component. Brokers with clients or participants in those states should know that MZQ Consulting assists with those state filings too.
So, with the new year soon upon us, brokers and advisors should gently remind their ALE clients that ACA reporting remains an annual requirement, and that expediency and accuracy are key factors in avoiding any Grinch-like repercussions. Please reach out to engage@mzqconsulting.com if you or your clients would like information about our ACA reporting or our IRS employer mandate/information return penalty remediation services.
