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The Taxpayer First efile provisions go into effect January 1, 2024.
Prior to 2024, employers with fewer than 250 forms of any type could mail forms to the IRS. That means if an employer had fewer than 250 W2s, they could mail them; fewer than 250 1095s, they could mail them, etc. With the new IRS rules, an employer must electronically file ALL forms if they have a combined total of 10 forms – that’s TEN W2s, 1099s, and 1095s COMBINED!
If you have more than 10 employees, the new file provision will effect your business and will require you to efile all W2s, 1095s, and 1099s with the IRS.
Employers who average more than 50 Full-time and Full-Time Equivalent employees per month across the previous tax year are considered Applicable Large Employers (ALEs) and are required to complete ACA end-of-year reporting using the 1095-C form.
The IRS has a specific required calculation for determining employer monthly size. Not sure whether your company was an ALE? Use our calculator -- linked at the bottom of this page -- to find out.
In addition to ALEs, all employers who offer a self- or level-funded insurance plan, regardless of size must complete end-of-year reporting. Groups with fewer than 50 FT or FTE employees per month use form 1095-B, while ALEs with self- or level-funded plans use form 1095-C with Part III completed.
The IRS provides the following definitions for Full-time and Full Time Equivalent employees for the purposes of determining Large Employer Status:
A full-time employee for any calendar month is an employee who has on average at least 30 hours of service per week during the calendar month, or at least 130 hours of service during the calendar month.
A full-time equivalent employee is a combination of employees, each of whom individually is not a full-time employee, but who, in combination, are equivalent to a full-time employee. An employer determines its number of full-time-equivalent employees for a month in the two steps that follow:
An employer’s number of full-time equivalent employees (or part-time employees) is only relevant to determining whether an employer is an ALE. An ALE need not offer minimum essential coverage to its part-time employees to avoid an employer shared responsibility payment. A part-time employee’s receipt of the premium tax credit for purchasing coverage through the Marketplace cannot trigger an employer shared responsibility payment.
Need help determining your Full Time Equivalent Employee count? Use our complimentary ALE calculator (linked below)
Federal* Employee Distribution Deadline: March 2, 2024
IRS Mail Deadline: February 28, 2024
IRS Efile deadline: March 31, 2024
*CA has a state-level Individual Mandate, and the employee distribution deadline is January 31
Employers can use IRS Form 8809 to request an automation 30-day extension to the IRS deadline. In most cases, his is a one-time 30-day extension which pushes the Efile deadline to April 30.
There is no extension available for the Employee distribution deadline.
This is the IRS definition of Large Employer status:
Use our complimentary ALE calculator (linked at the bottom of this page) to determine whether your company is considered an ALE
Companies with common ownership of more than 50% must combine the employee averages for all companies to determine ALE status.
In 2023, coverage is considered affordable for an employee if the employee portion of the premium does not exceed 9.12% -- the threshold percentage for 2024 was lowered to 8.39%
The IRS provides three Safe-Harbor calculations for employers to use to determine whether their plan is considered affordable for the employee: FPL, Rate of Pay, and W2
Question 39 in the IRS FAQ describes the three calculations.
Use our complimentary Safe Harbor Calculator to determine whether your plan is affordable (Downloads section at the bottom of the page).
The main requirements of ACA for Applicable Large Employers (ALEs) are:
The Federal Individual Mandate was repealed, but several states have implemented a state-level individual mandate that carry additional reporting requirements for employers, in some instances.
These states are:
For most Fully Insured plans, the carrier will provide all enrolled participants with a 1095-B form. The 1095-B form shows only who was enrolled and for what months.
If you are an ALE, the 1095-B form does not fulfill your Employer reporting requirement.
In addition to the 1095-B form provided by the insurance carrier, employers must complete the 1095-C form, provide a copy of the form to their employees and submit copies to the IRS.
If you were an ALE, you will need to produce the 1095-C forms and submit them to the IRS.
If you have received a 5699 letter from the IRS, respond to the IRS within the timeline defined in the letter. We provide assistance with IRS response letters, so contact me ASAP if you receive a letter.
These amounts will increase in 2024: Penalty A - $2,970 and Penalty B - $4,460
If you receive an ACA related penalty letter from the IRS, give us a call.
If you have seasonal, temporary, or part time employees who work 30+ hours per week, it may be a good idea to establish a look back measurement period. y for benefits. These range anywhere from Date of Hire to 90-days.
Under ACA, Large Employers must also track the hours of the seasonal and variable hour employees to determine whether they meet the requirements for benefits eligibility.
There are two measurement period options:
If you don’t have a look back measurement period in place, the default is monthly measurement, meaning you review all variable employee’s hours each month the determine their eligibility in the following month.
If you have seasonal, temporary, or part time employees who work 30+ hours per week, it may be a good idea to establish a lookback measurement period.
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