Affordable Care Act: Processes to Identify Employers Subject to the Employer Shared Responsibility Payment Need Improvement - Insurance News | InsuranceNewsNet

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April 1, 2018 Newswires
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Affordable Care Act: Processes to Identify Employers Subject to the Employer Shared Responsibility Payment Need Improvement

Targeted News Service

WASHINGTON, March 21 -- The U.S. Department of the Treasury's Inspector General for Tax Administration issued the following audit report highlights:

Highlights

Final Report issued on March 21, 2018

Highlights of Reference Number: 2018-43-022 to the Internal Revenue Service Deputy Commissioner for Services and Enforcement.

IMPACT ON TAXPAYERS

The Affordable Care Act's Employer Shared Responsibility Provision requires employers with an average of 50 or more full-time employees (including full-time equivalent employees) to offer health insurance coverage to full-time employees and their dependents beginning in January 2015. Employers that did not offer health insurance coverage, or offered health insurance coverage that did not meet minimum requirements or was not affordable, may be subject to an Employer Shared Responsibility Payment.

WHY TIGTA DID THE AUDIT

This audit was initiated as part of our coverage of the IRS's implementation of key Affordable Care Act tax provisions. This audit evaluated the IRS's implementation of processes to ensure compliance with the Employer Shared Responsibility Provision and related information reporting requirements.

WHAT TIGTA FOUND

The Employer Shared Responsibility Provision of the Affordable Care Act became applicable for tax periods after December 31, 2013. On July 9, 2013, the IRS issued notification providing transition relief for Calendar Year 2014 and making Calendar Year 2015 the first year the Employer Shared Responsibility Payment was applicable. On November 1, 2017, the IRS began sending letters advising Applicable Large Employers of their potential assessments of the

Employer Shared Responsibility Payment for Tax Year 2015.

Our review of the IRS's process to identify Tax Year 2015 Applicable Large Employers potentially liable for the Employer Shared Responsibility Payment found that the IRS did not identify 840 employers potentially subject to more than $113 million in Employer Shared Responsibility Payments. The difference in identified Applicable Large Employers occurred because the data used by the IRS were not complete or accurate.

In addition, TIGTA found that additional improvements are needed to ensure that paper Affordable Care Act information returns are accurately processed. We identified that unclear form instructions and processing procedures contributed to unprocessable forms and unnecessary correspondence and that procedures for extracting and sorting mail caused unnecessary taxpayer correspondence.

Finally, a Service-wide strategy is needed to reduce resources expended on maintaining multiple Taxpayer Identification Number validation processes. TIGTA's review identified seven stand-alone systems and 28 different programs that perform validation processes. For the 15 systems and programs for which it could provide maintenance costs, the IRS indicated that it spent a total of $2.8 million in Fiscal Year 2016.

WHAT TIGTA RECOMMENDED

TIGTA made five recommendations to improve processes to identify employers subject to the Employer Shared Responsibility Payment, including ensuring that the data used to identify employers are complete and accurate and developing a Service-wide Taxpayer Identification Number validation strategy to reduce and streamline validation efforts.

IRS management agreed with all five of our recommendations.

Click here to full report here (https://www.treasury.gov/tigta/auditreports/2018reports/201843022fr.pdf).

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