This article contains information you need to know if:
- You were an applicable large employer” (ALE) in 2015 (i.e., you had on average at least 50 full-time employees or full-time equivalents in 2014), and
- You plan to file your own 1094C/1095Cs electronically, rather than hire a third-party transmitter to file on your behalf.
If you meet the above two criteria, you are what the IRS calls an “issuer.” If you will file not only for your own company, but also for others in your controlled group who have different EINs, you are also a “transmitter.” When you apply for a Transmitter Control Code (TCC), you will have to get one as an issuer and one as a transmitter. (This is explained later in this article.) You need to get your IT or Programming Department involved early in the electronic filing process, because you probably will need their help in filing the information returns.
The IRS has specific rules on what is required to compose and successfully transmit compliant information returns to the IRS, and the IRS has issued several lengthy documents detailing these rules. You can access these and other documents at the ACA Information Return (AIR) Program webpage. Click here. (https://www.irs.gov/for-Tax-Pros/Software-Developers/Information-Returns/Affordable-Care-Act-Information-Return-AIR-Program)
The Main Documents You Should Review
If you plan to file for yourself, you definitely should read this article and the applicable documents. If you then decide to hire a third-party transmitter (such as your own payroll provider or a third-party information return filer), you probably still have time to do so, because on December 28, 2015, the IRS delayed the deadlines for furnishing 1095-Cs and for filing 1094-Cs and 1095/Cs. (See our article here on IRS Notice 2016-4.)
- AIR Submission Composition and Reference Guide (Jan. 2016 version) – click here.
- IRS Pub. 5164
- IRS Pub. 5165
- AIR Working Group powerpoints
AIR Submission Composition and Reference Guide
This 112-page document says it is intended to provide guidance to all three types of information return transmitters:
- Issuers: Businesses filing their own ACA Information Returns regardless of whether they are required to file electronically (because they transmit 250 or more of the same type of information return) or volunteer to file electronically.
- Transmitters: Third-parties sending the electronic information return data directly to the IRS on behalf of any business required to file. This includes employers who are issuers but also will file for other entities in their controlled group.
- Software Developers: Organizations writing either origination or transmission software according to IRS specifications.
Most recent is the AIR Submission Composition and Reference Guide, a 112-page document dated Jan. 2016 (updates the Nov. 2015 version). ( at https://www.irs.gov/PUP/for_taxpros/software_developers/information_returns/AIR%20Submission%20Composition%20and%20Reference%20Guide%20TY2015.pdf )
IRS Publication 5164. https://www.irs.gov/pub/irs-pdf/p5164.pdf
This 24-page document is for employers who are filing their own information returns electronically. It is entitled Test Package for Electronic Filers of ACA Information Returns for Tax Year 2015. It contains general and program specific testing information for use with ACA Assurance Testing System (AATS).
IRS Publication 5165. https://www.irs.gov/pub/irs-pdf/p5165.pdf
This is for Software Developers and Transmitters, so employers filing only for themselves can skip this one. Whew!
IRS Working Group powerpoints, at https://www.irs.gov/for-Tax-Pros/Software-Developers/Information-Returns/Affordable-Care-Act-Information-Returns-AIR-Program-Overview
Steps for Employers who will Report Electronically under the AIR System
For employers who plan to file electronically without a third-party transmitter:
1- Register at e-services. (https://www.irs.gov/Tax-Professionals/e-services—Online-Tools-for-Tax-Professionals ).
- After completing registration, you will receive an email from the IRS, and several days later you should receive a letter in the mail. When you get this letter, log in to e-services again and confirm your registration. You must log back into the e-Services web site within 28 days of your registration to enter your confirmation code you receive in the mail.
- You must have at least two responsible officials, and both (or all) of them must be registered on e-service or they can’t sign at the end of the TCC application in Step 2.
2- Apply for a TCC, Transmitter Control Code. You can only do this after completing the e-services registration process (step 1 above).
- Apply for a TCC as an issuer, if you will be filing only for one employer, under one EIN. If you have a Payroll or HR software provider who will be providing you the 1094C/1095C data in .xml format, that provider should already have a TCC as a software developer, and they should be doing the testing as the software developer.
- Apply also for a TCC as a transmitter, if you will be filing not only for your company but also for another entity in your controlled group.
- If you (the employer) are developing your own software, you will have to apply for a TCC as a software developer and also as an issuer.
- In your application for a TCC, you also must select a transmission method (either ISS-UI or ISS-A2A). If you are submitting only as an issuer and/or transmitter, you probably want to select ISS-UI (user interface), rather than ISS-A2A (Application 2 Application).
3- AATS testing. You should involve your Programming or IT Dept. in this phase. If you are only the issuer (and not also the transmitter), you need only do communication testing, not also other scenarios.
- The Communications test:
i. Go to the AATS link at the bottom of the IRS AIRS page: (https://www.irs.gov/for-Tax-Pros/Software-Developers/Information-Returns/Affordable-Care-Act-Assurance-Testing-System-Information ) Select one of the Scenarios and submit a test version of the forms you will be submitting, e.g., 1094-C and 1095-C. You will not be submitting real data based on your actual employees. Instead, you will submit data based on the AATS Scenario you selected. Each scenario lists information about the employer and about one or several employees. Scenario 7 includes only one employee, so you might want to use that for your test submission.
ii. The IRS has two separate sets of test scenarios: one for test submissions in 2015 and one for submissions in 2016. If you are submitting in 2016, be sure to use the 2016 Scenarios.
iii. You will submit the data in .xml format. You will not be submitting a pdf form that looks like the hard-copy forms 1094 or 1095.
iv. Note: If you are self-insured and you also will be sending 1095-Bs to participants, you also will have to submit a 1094-B. You cannot file a 1094-C to submit both 1095-Cs and 1095-Bs.
- Look at IRS Pubs. 5165 and 5164 to determine what you must submit, and how it should be composed and submitted.
- Transmitters and Issuers are required to complete communications testing to transmit information returns to the IRS the first year only.
After you complete your communications test, you will receive a Receipt ID from the IRS. You must then use this Receipt ID to request an Acknowledgement from the IRS for that transmission. The IRS Acknowledgement will inform you whether the test (or any transmission) is In Processing, Accepted, Accepted with Errors, or Rejected. If it is not Accepted, you will need to file corrections. Once your communications test is Accepted, you must call the IRS and request that your filing status be moved from “T (test) to “P” (production).
Next Steps for Employers
After reading this article and the applicable documents (or parts of them), you may wish to contact an information reporting vendor to file electronically on your behalf. If not, be sure to get your programming department involved to help you file electronically.