For Affordable Care Act reporting to the IRS, the process is separate from traditional data reporting. AIR, or the Affordable Care Act Information Return System was designed by the government in order to streamline the process of reporting to the IRS. Prior to AIR, two reporting systems were implemented by the IRS: Business Services Online program (“BSO”) and the Filing Information Returns Electronically (“FIRE”). These systems included all tax forms relevant to electronic payroll reporting. The former involves Forms W-2, W-2c, W-3 and W-3c, and the latter, Forms 1042-S, 1097, 1098, 1099, 3921, 3922, 5498, 8027, 8955-SSA, and W-2G. In order to report date via FIRE, a Transmitter Control Code (“TCC”) is required. However, neither BSO nor FIRE allow for Affordable Care Act reporting; hence, the implementation of AIR. So what exactly does AIR entail?
AIR is specific to the following forms: Form 1094-B, Transmittal of Health Coverage Information Returns, Form 1095-B, Health Coverage, Form 1094-C, Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns, and Form 1095-C, Employer-Provided Health Insurance Offer and Coverage. Much like FIRE, a TCC is required for electronic reporting, transmitted through either ISS-UI channel or ISS-A2A channel. An application must be filed for a TCC, yet eligibility is based upon companies being either Software Developers (per IRS specs), Transmitters, which report for a third party entity, and/or Issuers, which involves filing 250+ of the same information returns. It’s important to note an entity can be more than one of the aforementioned categories, but at least one of the categories is required for AIR filing eligibility. An error-free test submission through the ACA Assurance Testing System (“AATS”) will determine which channel will be used for transmitting.
In order to apply for an AIR TCC, there are several pieces of information required, including Adjusted Gross Income for the previous tax year, in this case, 2015. A “Responsible Official” must be identified, as they are the person managing the electronic filing as well as the lead point of contact. Any further communicators (identified as “Contacts”), must be identified, with a minimum of two names and a maximum of ten. Multiple TCCs may be allotted.
While AIR has made ACA data reporting a relatively seamless one, it should be noted that certain employers—particularly those who depend on outside vendors—have a fair share of difficulty achieving smooth reporting due to technological issues. It’s best to be proactive and manage your data reporting early to rectify any unforeseen glitches.