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2024 ACA Reporting Requirements: Most Employers Must File Electronically

Woman at desk smiling and learning about ACA reporting.The Affordable Care Act created reporting requirements under Internal Revenue Code Sections 6055 and 6056. Under these rules, certain employers must provide information to the IRS about their employees' health plan coverage (or that the organization does not offer health plan coverage). However, things are set to change in the new 2024 ACA reporting requirements.

In the original rules, any reporting entity that was required to file at least 250 individual statements under Sections 6055 or 6056 had to file electronically. However, on Feb. 23, 2023, the IRS released a final rule implementing a law change in the Taxpayer First Act of 2019, which lowers the 250-return threshold for mandatory electronic reporting to 10 returns. This means most reporting entities will be required to complete their ACA reporting electronically starting in 2024.

This ACA blog describes the process for reporting electronically under Sections 6055 and 6056.

Action steps

Employers that are subject to the ACA reporting rules should explore options for filing ACA reporting returns electronically. For example, they may be able to work with a third-party vendor.

Reporting entities that may be in a position to perform their own electronic reporting can review the IRS’ ACA Information Returns (AIR) Program webpage for more information on the standards for composing and successfully transmitting compliant submissions to the IRS.

Electronic reporting requirement

For 2022 returns filed in 2023, any reporting entity that was required to file at least 250 individual statements under Sections 6055 or 6056 had to file electronically, and this requirement applied separately to each type of individual statement.

Beginning in 2024, employers that file at least 10 returns during the calendar year must file their ACA returns electronically, and this threshold applies in the aggregate to certain information returns. This means that a reporting entity may be required to file fewer than 10 of the applicable Form 1094s and 1095s, but still have an electronic filing obligation based on other kinds of information returns filed, e.g., Forms W-2 and 1099.

Currently, electronic filing is done using the AIR Program. The IRS has provided guidance and information on electronic reporting under Section 6055 and Section 6056. However, this guidance is technical and intended for software developers and other entities that plan to provide electronic reporting services. Nonetheless, it can provide useful information on standards and procedures for returns transmitted through the AIR Program.

AIR Program overview

In general, the AIR Program is used by:

  • software developers who create electronic files for ACA information returns;
  • transmitters who will transmit information returns to the IRS on behalf of reporting entities; and
  • issuers who have the capability to transmit information returns directly to the IRS on their own behalf.

In most cases, issuers, employers and other reporting entities will use a third-party vendor to file electronically with the IRS on their behalf. As a result, these entities will not directly use the AIR Program themselves.

Electronic reporting process

Entities that submit electronic returns through the AIR Program must complete the following steps:

Step one: Register to use IRS e-Services tools and apply for the ACA Application for Transmitter Control Code. Reporting entities that are using third-party vendors — and are not transmitting information returns directly to the IRS — should not apply for a TCC.

Step two: Pass all applicable test scenarios. Software developers are required to annually pass ACA Assurance Testing System testing to transmit information returns to the IRS. Those who passed testing for any tax year ending after Dec. 31, 2014, do not need to test for the current tax year. Transmitters and issuers must use approved software to perform the communications test, which must be successfully completed once.

Waiver from electronic filing requirement

A hardship waiver may be requested from the electronic filing requirement by submitting Form 8508, Application for Waiver from Electronic Filing of Information Returns, to the IRS. Reporting entities are encouraged to submit Form 8508 at least 45 days before the due date of the returns, but no later than the due date of the returns. The IRS does not process waiver requests until Jan. 1 of the calendar year the returns are due.

Reporting entities cannot apply for a waiver for more than one tax year at a time and must reapply at the appropriate time for each year a waiver is required. Any approved waivers should be kept for the reporting entity’s records only. A copy of an approved waiver should not be sent to the service center where paper returns are filed.

If a waiver for original returns is approved, any corrections for the same types of returns will be covered under the waiver. However, if original returns are submitted electronically, but the reporting entity wants to submit corrections on paper, a waiver must be approved for the corrections if the reporting entity must file 10 or more corrections.

Without an approved waiver, a reporting entity that is required to file electronically but fails to do so may be subject to a penalty of up to $310 per return (as adjusted annually) unless it can establish reasonable cause. However, reporting entities can file up to nine returns on paper. Those returns will not be subject to a penalty for failure to file electronically. The penalty applies separately to original returns and corrected returns.

Have questions on ACA reporting?

If you’re unsure about ACA rules and reporting requirements, contact TruePlan today! Our team of experts can help answer any questions you may have about this blog or employee benefits plan.

This Compliance Bulletin is not intended to be exhaustive, nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel for legal advice. ©2024 Zywave, Inc. All rights reserved.

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