December 8, 2022
The 2022 Affordable Care Act (ACA) reporting season will be the 8th year employers are required to submit the Forms 1094-C and 1095-C to the IRS. Since its inception, the ACA reporting requirements have left many employers confused and frustrated. The solution to the ACA reporting obligation for many employers was to outsource the task to an “expert ACA reporting service” with a deep understanding of the rules and regulations. This certainly appears like a sound strategy. However, after years of ACA reporting and the IRS finally getting around to assessing penalties under the ACA, it has become apparent that many of the “ACA reporting experts” turned out to be "all hat, no cattle". This has left employers exposed to the penalties associated with the ACA. In an effort to help employers report accurately to the IRS, Accord Systems is now offering an audit service, which had previously only been available as part of our standard package to Accord clients, to everyone! The remainder of this article discusses some of the issues employers have encountered with ACA reporting and how Accord Systems' audit system can assist any employer.
How Have So Many Employers Received Bad Reporting Services?
Almost all payroll vendors offered to provide ACA reporting services to their existing clients. Unfortunately, many of the payroll vendors did not realize they did not have access to all the data needed to complete the Forms 1094-C and 1095-C accurately. Additionally, many service providers underestimated how complicated the Forms were to complete accurately. This frequently led to incomplete and/or inaccurate Forms being submitted to the IRS which resulted in the employer receiving a Letter 226J proposing a penalty. Often times these penalties could have been avoided if the Forms 1094-C and 1095-C would have been completed accurately. Disappointingly, employers have not learned of the errant reporting until many years after the fact because the IRS is so backlogged with its enforcement of ACA penalties. This has caused many employers to report erroneously for multiple years. Unfortunately, as the years have progressed, the IRS has become much more stringent with its enforcement position. This makes meticulous reporting imperative.
A Brief Overview of Our Audit Tool
To ensure meticulous compliance, Accord Systems audits each and every one of the line 14, 15, and 16 monthly code combinations its clients submit to the IRS through its automated audit tool, Form Patrol. Form Patrol allows us to review and correct potentially problematic scenarios with our clients before the data is submitted to the IRS. Form Patrol not only looks at each month’s line 14, 15, and 16 code combinations, but also audits the line 14, 15, and 16 code combinations in three month increments to flag any odd or potentially problematic coding scenarios. Our clients then receive an organized list to review and correct, if necessary, any of the problematic codes. Tools like Form Patrol have led to Accord’s flawless record of keeping its clients clear from letters and notices from the IRS related to the ACA.
For the first time ever, Accord Systems is offering its audit service to everyone. As a result, if an employer is using another service provider to complete its Forms 1094-C and 1095-C, Accord Systems can run the data through its audit software and assist employers with spotting potential landmines. While the audit will not be able to solve all of the employer’s problems, it should be able to easily spot any code combinations that could lead to a section 4980H penalty. This will allow the employer to avoid unnecessary section 4980H penalties. It is important to remember that the IRS' good faith relief ended with the 2020 ACA reporting season. As a result, inaccurate returns could be extremely costly for employers. Accord Systems' audit tool should be able to assist employers avoid these penalties as well.
Conclusion
To date, Accord Systems' proprietary software has provided tremendous value to its clients. Accord Systems has not had a single full-service client receive a penalty related to IRC sections 6721, 6722 or 4980H. This is not only a testament to our clients' compliance efforts, but also Accord Systems being able to easily review potential problematic line 14 and 16 code combinations before submitting the Forms 1094-C and 1095-C to the IRS. All employers need this type of software to prevent massive penalties being assessed under IRC sections 6721 and 6722 moving forward. If you are interested in learning more about Accord System’s audit tool and sparing yourself the stress of unnecessary IRS letters, please contact us.
About the author – Ryan Moulder serves as General Counsel at Accord Systems, LLC and is a Partner at Health Care Attorneys P.C. Ryan received his LL.M. from Georgetown University Law Center and his J.D. from Saint Louis University School of Law. He has distinguished himself as a leader in the Affordable Care Act arena and has written and spoken on a variety of ACA topics as it relates to compliance for companies.
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