New ACA Regulation Proposed; IRS Releases Webpage For Letter 227 Clarification

06.16.18

Expanding Mandatory Electronic Filing of Information Returns
The IRS has proposed a regulation to expand the mandatory electronic filing of most information returns. Currently, the threshold that requires employers to file an information return electronically is 250 or more returns (per type of return) during a calendar year.

The proposed change would remove the rule that requires each type of form to be counted separately.  Thus, all forms would be grouped together and totaled to calculate if the 250-return threshold applies.

Important factors to consider if the proposed regulation passes:

 

  • Forms affected include Forms 1095-B and 1095-C, forms in the 1099 series, and Form W-2
  • Corrected returns are not added to original returns when calculating the threshold.
  • If enacted, the proposed change will be effective for information returns and corrected returns filed after December 31, 2018.

 

The IRS sites economic factors as the reason for this proposed change.  It also asserts that waivers will continually be available for employers lacking access to electronic filing at a reasonable cost.

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IRS​ Releases Webpage on Letter 227 
Certain applicable large employers (ALEs) now have a comprehensive digital resource for understanding Letter 227. Samples are provided for each version of the letter.

What is Letter 227?
If an ALE is notified via Letter 226J that they may be liable for an Employer Shared Responsibility Payment (ESRP), they must submit their agreement or disagreement of the proposed penalty to the IRS.  The ALE will receive a version of Letter 227 confirming the IRS’ reception of their response.  Letter 227 explains the outcome of the IRS’s review of the penalty and the next steps to be taken resolve the penalty assessment.

It is important to note that Letter 227 is not a bill; a notice will be sent to ALEs to collect the ESRP.

If you have any questions regarding this announcement or to learn how Baker Tilly Vantagen experts can help with ACA filing and compliance, contact our team.