Q: I received an email from our payroll company indicating employers with less than 250 employees may have to start filing their Affordable Care Act (ACA) forms electronically with the IRS starting next year. They are encouraging clients to sign up early for their enhanced ACA reporting service, which includes a lookback measurement process, completion of the necessary ACA forms (1095-Cs and 1094-C), mailing the forms to employees, and electronic filing with the IRS.
Currently, we complete all of our forms manually and mail them to employees and the IRS. While I would like to transition to electronic filing, I’m concerned about finding a vendor and implementing it in time for next year’s filing. Do you have a vendor we could use for this purpose?
A: You are correct that the IRS has proposed regulations that could require employers with as few as 50 employees* to file their ACA reporting forms (1095-Cs and 1094-C) – as well as their W-2s and some other tax filings – electronically in 2022. The current threshold for the requirement to file ACA forms electronically is 250 forms.
First, I want to say that clients don’t need to panic about this potential new requirement. These are only proposed regulations. They specifically say that the new electronic filing requirement won’t take effect until the year after they are finalized. While it’s theoretically possible that final regulations could be issued this year, I think it’s unlikely.
Second, even if the new requirement takes effect for filings in 2022, we have identified several possible solutions for clients who are not yet filing electronically:
- For clients using a vendor to produce the ACA forms but filing them by mail, we recommend contacting their current vendor regarding the availability of electronic filing.
- For clients that are completing and mailing their forms manually, we have potential solutions through Employee Navigator and an external vendor called ACA Prime.
- Most major payroll providers should also be able to provide a solution.
*Although regulations say electronic filing will be required for employers that file 100 or more returns, this includes both ACA forms (1095-Cs) and W-2s, as well as some other types of returns. So an employer with 50 full-time employees would be filing at least 100 forms (50 1095’s and 50 W-2s) in 2022 and therefore be required to file both electronically.