Filing Affordable Care Act (ACA) reports accurately is crucial to avoid compliance issues and potential penalties. However, many employers receive an IRS submission status of “Accepted with Errors.” While this may seem concerning, it is a common occurrence and can be corrected with the right steps. In this guide, we’ll explain what “Accepted with Errors” means, why it happens, and how to fix it efficiently.
ACA IRS submission statuses explained
Processing
This status means the IRS has received your transmission but has not yet reviewed it. Employers should monitor this status closely, as it should change within 48 hours. If the status remains in processing for more than two days, it is advisable to follow up with the IRS to ensure there are no underlying issues that may delay the review process.
Accepted
An “Accepted” status means that the IRS has processed your transmission without detecting any errors at the structural level. However, this does not mean that all employee records within the submission are error-free. Employers are still responsible for reviewing and correcting any employee-level errors that may arise, ensuring that all reported information is accurate and compliant with IRS requirements.
Partially accepted
When a submission is “Partially Accepted,” it means that some records within the transmission were successfully processed, while others were rejected. Employers must identify the rejected records, determine the cause of the errors, and submit corrections only for the affected records. This status allows employers to address issues without having to resubmit the entire file, streamlining the correction process.
Accepted with errors
This is the most common IRS submission status for ACA reporting. An ACA “Accepted with Errors” indicates that the IRS has processed the file but has found specific issues in certain employee records. These errors need to be addressed to ensure full compliance. Employers must review the IRS acknowledgment file, identify the problematic records, and correct the errors as required. While the submission itself has been processed, failing to address these errors could lead to compliance risks.
Rejected
A “Rejected” status is the most critical submission issue, indicating that the IRS found a structural file error that prevented the entire submission from being processed. Employers must identify the cause of rejection, correct all structural issues, and resubmit the entire transmission within 60 days. Failure to resubmit within this timeframe may result in penalties and non-compliance with ACA reporting requirements.
What does an ACA “Accepted with Errors” mean?
An “Accepted with Errors” status means that while the IRS processed the submission, certain records contain issues that require correction. The most common errors involve mismatches between employee names and Taxpayer Identification Numbers (TINs).
These mismatches occur when the data provided by the employer does not align with IRS or Social Security Administration (SSA) records. Additionally, errors may arise due to formatting mistakes or inconsistencies in reported data, such as incorrect dates or missing information. Employers must take immediate steps to identify and correct these errors to maintain compliance.
Step-by-step guide to correct an ACA “Accepted with Errors”
Step 1: retrieve and review acknowledgment file
The first step in addressing an ACA “Accepted with Errors” status is to download the IRS acknowledgment file. This file contains detailed information on the errors identified within the submission. Employers should carefully review the IRS error codes and match them to the affected employee records. To interpret these error codes, refer to IRS Publication 5165, which provides guidance on error types and necessary corrective actions. Thoroughly reviewing this file is essential for understanding the scope of the required corrections.
Step 2: investigate common errors
Once error codes have been identified, employers should investigate the root causes of the reported issues. One of the most frequent errors is a name/TIN mismatch. Employers should verify the accuracy of employee names and TINs by cross-checking internal records against official documents.
It is also important to check for typos, formatting mistakes, or name changes due to marriage or divorce. If necessary, employers should reach out to employees to confirm their personal information. All outreach and verification attempts should be documented to demonstrate compliance efforts in case of an audit.
Step 3: Follow the TIN solicitation process (IRS Publication 1586)
To ensure accurate reporting, employers must follow the IRS’s TIN solicitation process as outlined in IRS Publication 1586. The process includes three key steps. The first request for correct TIN information should be made at the time of an employee’s enrollment or shortly thereafter.
If the employee does not respond, a second request should be sent within 75 days. If there is still no response, a final request must be made by December 31 of the following year. By following this process, employers demonstrate due diligence in obtaining accurate employee information and reduce the risk of penalties.
Step 4: correct and resubmit forms
After investigating and resolving errors, employers must correct the affected forms and resubmit them to the IRS. This includes reissuing corrected Form 1095-C to the impacted employee and updating Form 1094-C if necessary. The corrected transmission must then be submitted using the appropriate IRS filing method.
Employers handling filings in-house should carefully follow IRS’ technical specifications for corrections to ensure compliance. Properly correcting and resubmitting these forms in a timely manner helps prevent penalties and ensures that employees receive accurate documentation.
Correction timelines and deadlines
Employers should prioritize correcting “Accepted with Errors” records as soon as possible to prevent compliance risks. Once corrections are made, updated 1095-C forms should be provided to employees promptly. For submissions that were rejected, employers must correct and resubmit the entire transmission within 60 days to retain the original filing date. Meeting these deadlines is critical for avoiding penalties and maintaining accurate ACA reporting.
Compliance and enforcement
With the IRS no longer offering good-faith relief for ACA reporting, employers must ensure that all reported information is accurate. The IRS strictly enforces ACA reporting requirements, and penalties may apply for various infractions. Late filing can result in significant fines, while failing to correct known errors may lead to additional penalties.
Submitting inaccurate information, even unintentionally, can also result in compliance violations. To mitigate risks, employers should document all compliance efforts, including error correction processes and employee communications. Maintaining detailed records demonstrates due diligence and helps protect against potential penalties.
Best practices
Employers can reduce the risk of ACA reporting errors by working with a knowledgeable ACA reporting partner or vendor. Choosing a vendor that offers comprehensive support for error resolution can significantly streamline the correction process.
Additionally, establishing a post-filing error correction protocol in advance allows employers to respond quickly to any issues that arise. By implementing these best practices, employers can improve reporting accuracy, minimize compliance risks, and ensure smooth ACA submissions.
Conclusion
Receiving an “Accepted with Errors” status on your ACA filing requires prompt attention, but it is a correctable issue. By following IRS protocols, addressing errors quickly, and documenting compliance efforts, employers can avoid penalties and ensure their reporting remains in good standing.
Taking proactive steps to verify employee information, follow IRS correction procedures, and meet submission deadlines will help maintain compliance and prevent potential enforcement actions.
The information contained in this article is provided for informational purposes only and should not be construed as legal advice on any subject matter. The reader should not act or refrain from acting on the basis of any content included in this article without seeking tax, legal, or other professional advice. The contents of this article contain general information and may not reflect current legal developments or address the reader’s situation. ebm disclaims all liability for actions the reader takes or fails to take based on any content within this article.
