Letter 5699: Missing Information Return Form 1094/1095-C
This post is for Applicable Large Employers (ALEs) required to comply with the Affordable Care Act. The following was written by Adam Miller, Passport Software’s HR Compliance Manager. We hope you find it useful.
Passport Software has recently seen a marked increase in the number of clients who need to file their ACA returns for prior years.
Many of these companies have received IRS Letter 5699, the letter the IRS uses to makes initial contact regarding missing data. Essentially, ALEs are requested to transmit their 1094-C/1095-Cs within 30 days and/or provide an explanation.
Businesses frequently receive these as much as a week after their postmark, so recipients may have even less time to respond. If your company should have filed, or has already received a 5699 letter, we recommend that you begin preparations now.
Gather your documentation
In most cases, the people we talked to said their company had tried to comply with the Affordable Care Act. Generally, they had met their offer obligation, but were overwhelmed by the complexities of filing, particularly if they were required to file electronically.
To get started, pull together your records of coverage offer dates, enrollment dates, and contribution amounts. Be able to demonstrate that affordability thresholds were met and that full-time employees were correctly identified.
Decide if you can handle this internally
Do you have someone on staff who understands what all the fields of the 1095-C mean? For example, contribution Line 15 is the theoretical amount of the employee’s share of the cheapest qualifying plan covering the employee only.
It is not what the employee is actually paying for a deluxe plan or whole family coverage. Make sure you understand the nuances of the special codes on Lines 14 and 16: IRS Instructions
Having someone in-house who can efficiently assemble and prepare the reports needed will be a big step. If you do not have someone who is knowledgeable, we can help.
Understanding the requirements and assembling the data to report are a big part of the compliance process. Having the ability to create the electronic files and transmit them are additional, vital steps.
We’ve seen a company spend months unsuccessfully trying to create XML files on their own. They came to us and within a day we were able to submit their test files for Transmitter Control Code approval and file for them.
Our team knows the finer points of ACA compliance and filing procedures and is prepared to solve many kinds of issues for you in an organized and pain-free manner.
Responding to your 5699 Letter
The IRS will expect your response to be one of the following:
1. You already complied with reporting.
If so, you should provide a certified mail receipt/tracking information, or Receipt ID for electronic files.
2. The ACA did not apply to your company (fewer than 50 full-time equivalents and not part of an ALE group).
Make sure you understand the Full-time Equivalent calculation and it was applied properly.
3. You will be complying in a timely manner.
Include a timeline for your form submission. If you cannot meet the IRS deadline, explain why.
4. Your company was not an ALE for that particular year.
This typically involves complete understanding of the FTE calculation and timing of that rule.
5. Other explanation of what happened and what you plan to do about it.
If your company failed to file and cannot do so even now, there had better be a good reason.
If you acknowledge the past oversight and intend to comply with the ACA obligations (option #3), then we can help:
· Prepare an accurate filing with confirmed transmission prior to your deadline
· Address why the prior year lapse occurred
· Address what you have done to correct it
· Address the steps you’ve taken to ensure future filings are on time.
Whether you have received one of these demand letters, a 226J penalty notice, or want to be proactive in filing for neglected years before you receive Letter 5699, we can guide you through compliance and help you avoid potentially devastating fines.
Passport Software’s ACA Reporting Services include ACA Full Service, and we are IRS-approved for optional proxy submission for our software users. We also provide penalty relief consultation.
Our consultation services for penalty notices have helped many clients completely avoid, or greatly reduce penalties. Our knowledgeable support team can help guide you through compliance if you have failed to file in prior years.
In addition to our ACA Reporting Services, our IRS-certified ACA Software can help simplify your reporting and manage compliance throughout the year going forward.