The passage of two recent acts of legislation modify ACA furnishing obligations for Applicable Large Employers (ALEs) and could make compliance more onerous.
Under the Employer Reporting and Improvement Act and the Paperwork Burden Reduction Act, Applicable Large Employers (ALEs) have a new option to meet their furnishing obligations that no longer requires them to automatically furnish Form 1095-C to full-time employees. Instead, employers can opt to provide these forms only upon employee request, provided they meet certain conditions:
- Employee Notification: Employers must provide clear, conspicuous, and accessible notice to employees, informing them of their right to request Form 1095-C. The IRS may provide specific guidelines on the timing and manner of this notification.
- Timely Furnishing Upon Request: Upon receiving a request, employers must furnish the employees Form 1095-C by the later of:
- Jan. 31 of the year following the calendar year in which coverage was provided, or
- 30 days after the date of the request, whichever is later.
It is important to note that ALEs still have the option to furnish through mail distribution and/or get employee opt in to receive electronic distribution. In addition to the new furnishing option, the legislation extends the deadline from 30 to 90 days for ALEs to respond to IRS Letter 226J. This is a letter informing employers of a proposed assessment of the employer shared responsibility payment (ESRP) before the IRS takes further action. Lastly, it set a six-year statute of limitations for the IRS to assess the ESRP where previously there was no statute of limitations.
How to Comply With ACA Furnishing Laws
While the legislation appears to lessen the burden of compliance on the surface, there are various compliance hurdles employers should consider before opting to forego their traditional furnishing method and adopting this new notification process.
A few complications could arise, such as:
- Tracking issues: If employees request their 1095-C form, how will you keep track of those instances? Without a formalized furnishing process in place, you risk data inconsistencies over time. The burden of proof falls on the employer to establish compliance for seven years after a form has been furnished.
- State ACA requirements: If an employee lives in or moves to a state with its own ACA requirements and never received a 1095-C form during a specific tax year, you could be out of compliance with that state’s furnishing requirements. Of the four jurisdictions — California, New Jersey, Rhode Island, and Washington D.C. — that have implemented their own individual mandate and separate Employer ACA filing and furnishing requirements, only one, Washington D.C., has specific guidance that says compliance with federal distribution standards satisfies that jurisdiction’s furnishing requirement.
- Employee turnover: Every employer has turnover. If you utilize the “upon request” method, it becomes more difficult to track and manage when 1095-C forms were furnished and to whom, which becomes an unnecessary compliance risk over time.
The deadline for furnishing Form 1095-C to employees for the 2024 tax year is March 3. To comply with the new furnishing requirements, employers have three options:
- Print and mail 1095-C forms
- e-Distribute forms (with employee consent)
- Furnish 1095-C forms only upon request, ensuring proper notifications are in place.
And if you are an ALE operating in a state with its own ACA reporting requirement (California, New Jersey and Rhode Island), you still must comply with standard furnishing requirements and deadlines in those jurisdictions.
How Trusaic Simplifies the 1095-C Furnishing Process
Trusaic’s ACA compliance service enables you to offload 1095-C furnishing and filing responsibilities. Our designated support team prepares and distributes your 1095-C forms on-time to applicable employees by U.S. mail or electronically on demand.
Given the new legislation, we offer our clients two options to choose from:
- e-Distribution + Print and Mail (CA, RI, NJ only)
- Print and Mail only
Option 1 is our recommended approach and organizations can e-distribute with ease utilizing Trusaic’s platform. Our e-distribution platform makes it easy for an employer to notify their employees of the option to receive their forms while providing them with a link where they can access the form electronically.
This also simplifies any employee follow-up requests for a form as the employer can simply resend the link to their employee giving them digital access to their forms. This ensures all your forms are distributed on-time and can be easily tracked for compliance purposes.
Book a meeting to learn how other companies are adopting this approach to Form 1095-C furnishing.
