What we learned from last year’s e-filing process
In 2016, ACA reporting was brand new. Companies had little idea of how the IRS would run the e-filing process, how to complete the forms involved, and how to navigate the e-filing website.
Unfortunately, the IRS was facing just as much uncertainty, leading to even more problems than originally expected. The website often was taken offline without notice or explanation, errors no one had planned for popped up, and true information was flagged as false.
Most employers experienced at least one of these issues. It was confusing, frustrating, and largely inconvenient. The worst part? This year may not be much better. Even with the current administration actively working to repeal the ACA, the filing process is still in place, most likely without many new fixes to old problems. To help you through this process, we’ve put together some of the must-know information for e-filing.
The process: File, fix errors, and file again
Even if everything were to run smoothly from start to finish, e-filing is a complex process.
For companies using an intelligent solution like SyncStream, the process begins by pre-validating the information that will be sent to the IRS, and ensuring it is all correct. If pre-validation errors exist, the IRS will notify you and ask you to fix the error.
Once through the pre-validation phase, the information gets filed with the IRS, and you receive a receipt ID. The data will then go through the IRS validation process. If any information is incorrect, you must go back to the beginning, find the error, fix it, and start again with pre-validation. Once all errors are removed and the data passes validation, the e-filing is accepted, and reporting is complete. The chart below gives a detailed explanation of the process:
In many cases, it is entirely possible to go through several rounds of editing errors. These edits are often hard to make without an intelligent solution, which will point you directly toward the mishap. Without a solution, you could be stuck sorting through hundreds of 1095-Cs to find an error that you missed during your first attempt at filing.
The problems: Unknown errors, bad information, and missing websites
Unfortunately, this process depends on the IRS. If its side of the equation isn’t running completely up to speed, you could have other issues. This was the case last year, and there’s no telling what might be improved – or not – this year.
Last year, the IRS faced three major problems: errors it hadn’t anticipated, incorrect information on its end, and the seemingly random removal of the ACA e-filing website, without explanation, by the IRS.
The most common of these issues were the nonexistent error codes. Because the system was so new, many errors turned up that the IRS wasn’t expecting. Hyphens or commas wouldn’t register with the system, and would be sent back as “rejected,” but with an error code that didn’t match any on record. These errors could be frustrating to sort out, as it took a lot of back-and-forth with the IRS to determine where things may have actually gone wrong.
In other cases, correct information (such as Social Security numbers) would be submitted, only to be rejected because it didn’t match the (incorrect) information that the IRS had. In this case, filing could never be completed—the Social Security numbers would never match up, and the forms would continue to come back with perpetual errors.
In the third case, the AIR Program for IRS ACA e-filing would simply become inaccessible without warning—whether for repairs, because it was receiving too much information, or due to other unknown errors—making it impossible to complete filing for long periods of time.
The solution: File early
The big lesson learned from all of this? Filing can take a lot of time, even if you’ve kept the best records in the world. If you haven’t already, start now to ensure that, even in the face of IRS problems or overlooked mistakes, you can finish the process on time (by March 31) and escape penalties. The ACA may be on its way toward repeal, but that hasn’t happened yet. In the meantime, it’s better to file early and ensure proper, timely compliance.