What happened to your Form 1095’s?
For two years, employers have plugged away at filing and distributing Form 1095’s in order to comply with the offers of coverage reporting requirement under the ACA. The idea behind the detailed month-by-month reporting was that when an individual with Marketplace coverage claimed a monthly tax credit, the IRS could check its 1095 database to see if the employer offered affordable coverage or not for the month. With that information in hand, the IRS could then assess the 4980H employer penalties as applicable. But as of today, the IRS has yet to issue any employer penalties related to the mandate, and doesn’t appear to be able to access the necessary information on its system. Check out the recent TIGTA report, which states among other issues, that “some of the processes did not function as intended, which resulted in the IRS not having accurate and complete data for use in its compliance strategy to identify noncompliant employers potentially subject to the Employer Shared Responsibility Payment.”
Note, however, that the IRS’s FAQ (see 55-58) on the employer mandate, it has announced it expects to send out penalty letters in 2017 based on 1095 data received, for penalties associated with the 2015 calendar year. More to come!