We’ve all heard the phrase, “Third Time is the Charm” and you’ve likely used it countless times over the years. The derivation of the phrase is somewhat unknown, but most everyone traces it back to the 1830s, when Elizabeth Barrett Browning wrote: “The luck of the third adventure is proverbial.” This phrase is primarily used today when someone hopes/wishes that the third time something is to be attempted, it will be successful – and luck will play a key role. As it relates to our industry and as we stand here in April 2017 and look backwards at calendar years 2015 and 2016, this phrase will likely be uttered a few thousand times throughout 2017 by HR and Employee Benefit professionals as it relates to Affordable Care Act Reporting. The theory will be that we’ve had two years to get it right and we hope/pray that the 3rd year will be the charm – and that luck will be a key component of this strategy. At MillsonJames, we actually believe the opposite to be true – that luck was on our side for the first two years and that luck will not play a role in this 3rd year. This belief is based primarily on the past actions by our friends at the Internal Revenue Service. A little trip down memory lane would seem to be in order to help refresh our memories and support our position.
- 2015 – From an employer reporting perspective, the 2015 reporting year had luck oozing out of every hole and loophole. It may not have felt that way in the midst of 2015 as employers were sent scrambling to find technical and service solutions to produce Forms 1094/1095 for the very first time. However, as the dates drew near, our industry received luck in the form of (significant) deadline extensions and broad IRS grace. From the get-go, the IRS announced that as long as an employer showed “good faith efforts” to comply with the reporting requirements, then the IRS would be lenient in their review of the forms. Of course, we then received the biggest dose of luck when the IRS extended the deadline to file (paper and electronic) by several months. 2015 ACA Reporting was mostly certainly saved by luck.
- 2016 – When 2016 rolled around, we anticipated that luck had run its course and the IRS would not be so gracious with 2016 ACA Reporting. However, towards the end of the year we received word that the IRS would, once again, extend a fair amount of grace for employers that put forth the proverbial good faith effort. Furthermore, a few months down the road, they also found it in their heart to extend the deadline once again. Obviously, the 2016 reporting extension was not anywhere near the 2015 extension, but every little bit helped as we still worked to get our arms around these complex IRS forms.
- 2017 – At the risk of opening up a healing wound, many people felt that the Nov 2016 election would bring about a 3rd round of immense luck and ACA reporting would go the way of the buffalo. Obviously, this was not the case and it now appears that ACA Reporting will remain in effect for the foreseeable future.
It is with the above timeline and historically lucky events in mind that we believe that the 2017 ACA Reporting Year will neither rely on nor require luck. Based on the information we’re hearing, 2017 seems to be shaping up to be “Go Time” for ACA Reporting. It is our understanding that the IRS will hold firm to deadlines and will begin to strip away “good faith effort” language, which will require employers to submit clean and accurate forms to the IRS by originally established deadlines (Jan 31 – to employees; Jan 31 for paper filers; Feb 28 for electronic filers). If the above assumptions are accurate, we would encourage you to get in front of this with your clients throughout this year and be sure they are well prepared to accurately and timely transmit ACA Reporting data to the IRS by the established timeframes. Let’s not rely on the luck promised in “third time is the charm,” – let’s help our clients buckle down and perfect these forms!