Slidedeck from February 21, 2017 webinar on ACA - filing replacements and corrections.

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Handling Affordable Care Act
Replacements and Corrections
Presented by Sovos Compliance
February 21, 2017

2. Proprietary and Confidential the information and materials in this document are not for use or disclosure outside of Sovos Compliance, LLC. except under express written consent.
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Agenda
Introductions
The difference between corrections and replacements.
Most likely cause of errors – handled how?
What the solicitation process looks like.
How and why to file corrections in a good-faith year.
What the penalties are.
Latest news from “The Hill”

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Introducing Sovos
Leader in Business-to-Government Tax Compliance
 4,500 clients operating in 120
different countries from SMB to
Fortune 500 organizations
 #1 private filer of 10-series forms
with over 340M forms and more
than 1 billion transactions filed to
the IRS last tax year.
 30 years of dedicated focus to Tax
Information Reporting
Sales & Use Tax
1099 Reporting
Beverage Alcohol
ACA
AEOI
E-Commerce Tax Automation
LatAm
Compliance
VAT Reporting

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Sovos Compliance Presenters
Ray Littlefield
Director of ACA Sales
Sovos Compliance
Gerry Nelligan
Junior Tax Council
Sovos Compliance
John Kreger
Senior Product Manager
Sovos Compliance

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Corrections & Replacements

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Differences? Corrections vs. Replacements
A Replacement is used when an entire transmission is Rejected
by AIR, or if a submission within a transmission, is rejected.
The entire transmission or the entire submission will be
retransmitted to replace the original filing.
A Correction is used when a submission within a transmission,
has been Accepted or Accepted with Errors. One or more
forms needs to be retransmitted as a Correction to fix an
error.

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Corrections vs. Replacements
Timeline for Returns
• Replacements within 60 days of receiving the transmission status
• Corrections must be sent as soon as possible
Transmission Status
• Accepted – and all submissions within the transmission were accepted and
no errors were found during processing
• Accepted with Errors – No submissions were rejected
• Partially Accepted – Transmission was accepted with at least one
submission being rejected and one submission being accepted
• Rejected – Each and Every Submission within the Transmission was
rejected due to a fatal error

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Changes in the Correction & Replacement Process
Correction and replacement process remains unchanged from the 2015
reporting year
IRS made some changes to help reporting organizations:
• Identifying individuals associated with errors

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Changes in the Correction & Replacement Process
• Identifying IRS business rules directly

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Regulatory Changes

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Regulatory Changes
Pub 5164 – early edition and final edition revised 9/2016
Pub 5165 – early edition and revisions 12/2016 and 1/2017
Pub 5258 – early edition and final edition revised 10/2016
AIR Schemas and Business Rules
- Known Issues and Solutions: 8/2016, 10/2016, 12/2016, 1/2017, 2/2017
- Schemas V1.0 (9/2016) V3.3 (1/30/2017)
- *2015 Schemas also updated and revised 1/13/2017

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Regulatory Changes
• New forms and instructions for 2016. Revised Pubs (5164, 5165, 5258) and
new and updated schemas and business rules
• New due dates for furnishing recipient copies: March 2, 2017
• 1095-Bs – now allow for other TIN Types
• Qualifying offer method transition relief removed from form
• Number of code changes to 1095-C including adding some new codes and
removing others
• Plan start month box still optional
• 100 MB Threshold
• New instructions for reporting offers of COBRA continuation
• Tax year – can file 2015 and 2016 returns. Must follow the 2015
specifications for 2015 and 2016 information

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Error… Error… Error…

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The Big 3 Reasons for Issues (so far)
Incorrect or invalid
TIN on covered
individuals
Bad Name /
TIN
combination
Simply
missing for
dependents
ALE EIN/Name
Mismatch
Filing under a
DBA name
Months of
coverage
validations
Offer of
coverage
code not
matching form
coverage data

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ALE EIN/Name Mismatch
National Passenger
Railroad Corporation
-vs-
dba: Amtrak

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Proprietary and Confidential the information and materials in this document are not for use or disclosure outside of Sovos Compliance, LLC. except under express written consent.
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TIN Solicitation Process
Initial solicitations are required when the account is
opened
• The filer receives a substantially complete application for
new coverage, or a substantially complete application to add
an individual to existing coverage.
• You should note that this rule will also apply for purposes of
the initial solicitation for incorrect TINs.
The first annual solicitation (second actual
solicitation) must occur within 75 days after the
account was opened
• For any individual enrolled in coverage on any day before July
29, 2016, the account is considered open July 29, 2016
TIN solicitations made to the responsible individual
for a policy or plan are treated as solicitations for
every covered individual on the policy or plan

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Good Faith?
Transition Relief?

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What makes a good faith effort?
1. Must have provided the returns in a timely manner
2. A reasonable cause waiver was obtained
• Any failure was due to causes outside your control
• You can show that you had acted responsibly before the cause occurred
• You have significant mitigating factors such as:
• A history of properly and timely submission of information returns
• You were not previously required to file this particular type of return
• You were a victim of a fire or other casualty that made relevant business records unavailable
3. Rumors include:
• File at least one correction
• Automatic waiver since the Good Faith Transition Relief was extended for 2016 filing

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What do penalties look like?
• $50 per return
• $532,000 /yr. Large Business
• $186,000 /yr. Small Business
Filed correctly within 30
days of due date
• $100 per return
• $1,596,500 /yr. Large Business
• $532,000 /yr. Small Business
Filed correctly after 30
days but before August 1st
• $260 per return
• $3,193,000 /yr. Large Business
• $1,064,000 /yr. Small Business
Filed correctly after
August 1st or not filed
• $530 per return
• No limitationIntentional disregard

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Hear Ye, Hear Ye!
What’s the latest news from “The Hill”?
The State of the Affordable Care ActThe State of the Affordable Care Act
Executive Order No. 13765
Budget Reconciliation Process
“Repeal and Replace” Plans
The “Repair” Approach
Department of Health and Human Services
Proposals
Changes to Reporting Obligations

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Executive Order: Minimizing the Economic Burden of the
Patient Protection and Affordable Care Act Pending Repeal
 Direction to Dept. of Human Health Services (DHHS)
 Targets: Individual Mandate & Essential Benefits
 IRS penalties vs. DHHS penalties
 Focuses on areas in which the DHHS Secretary has discretion
 Actual repeal timing may come as late as 2018

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The Budget Reconciliation Process
 Congress defunding what?
 Republicans plan to utilize a Reconciliation Bill
 Congress set a benchmark of January 27th
 Congressional concern about replacement
 “Repeal” versus “Repair”

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Three Approaches to Healthcare Reform
 Simultaneous “Repeal and Replace”
 Piecemeal “Repeal and Replace”
 The “Repair” Approach

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Prospective Changes to Reporting Obligations
 States could retain ACA: thus new reporting
 Associated Health Plans and Independent Health Pools: thus new
reporting
 Alternative State plans subject to federal assistance may require
reporting
 Expanded HSA reporting obligations and new requirements
 Physician tax deductions for charitable or uncompensated care
 Individual filing requirements when auto-enrolled
 Premium deduction and tax credits
Each of the proposed plans may entail modifications to filing requirements and entirely new obligations:

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Thanks for attending!
Visit www.sovos.com/ACA for more information
on Affordable Care Act reporting.