On April 7, 2017, The Treasury Inspector General for Tax Administration (TIGTA) released a report entitled “Affordable Care Act: Assessment of Efforts to Implement the Employer Shared Responsibility Provision.” TIGTA was tasked with assessing the IRS’ preparations for enforcing the employer mandate and reporting requirements.
As of Oct. 28, 2016, the IRS had processed 439,201 Forms 1094-C and over 110 million Forms 1095-C for the 2015 data year. However, 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.” One of the reported problems was an inability to process paper forms in a timely manner into the ACA Information Returns (AIR) System, which is the system for electronic returns. As of Oct. 28, 2016, the IRS had not processed 24 percent of the Forms 1094-C and 32 percent of the Forms 1095-C received by paper. Of the forms that were processed, TIGTA’s random sample of review discovered that 20 percent of the forms were scanned incorrectly into the AIR system with some data entries missing or incorrectly captured.
Employers who electronically file their returns with the IRS may receive an error message if an issue exists with the file. The most common error is related to a mismatch of an individual’s social security number. The report stated that the error codes caused confusion for employers and did not include enough information for the employer to correct the error (e.g.: identify the individual for whom there was a SSN mismatch).
TIGTA made several recommendations for improvement to which the IRS responded in detail with information on their ongoing corrective actions. Importantly, the report demonstrates the IRS continues to improve its processes and procedures in order to enforce the employer mandate and reporting requirements. Therefore, despite the IRS's technological struggles to properly determine employer mandate compliance, employers should continue their employer mandate compliance efforts (including reporting) since the IRS is committed to resolving the issues and enforcing the mandate.
TIGTA Report, “Affordable Care Act: Assessment of Efforts to Implement the Employer Shared Responsibility Provision »