AIR System 101: Testing and Preparing for the First Year of Required Reporting, Transmittals to the IRS
Who Must Use the New IRS AIR System? Starting in 2016, applicable large employers (ALE), those with 50 full-time employees or more who work at least 30 hours a week (or FTE equivalent), have a whole new tax reporting obligation for Tax Year 2015 under the Affordable Care Act. ALEs must report whether an FTE is covered by minimum essential coverage. They also have to show that an offer of minimum essential coverage that provides minimum value was made to each qualifying full-time employee and their dependents, such as spouses and children, if applicable. Finally, ALEs must provide this proof for employees to use in completing their tax returns. As the instructions note and the IRS cautions, “Code definitions for Offer of Coverage Codes and Safe Harbor Codes are defined in the instructions and are not provided in the narrative but must be included within your submission where appropriate.” Therefore, when developers are building code, they must make sure to account for this information properly so it populates the forms correctly and the transmittal is clean. What is Transmitted Through This Portal? All of this information must be transmitted using the portal that the IRS has created known as the Affordable Care Act Information Returns (AIR) Assurance Testing system. This information cannot be transmitted through the FIRE system, which is the portal the IRS uses for other 10 series filings such as 1099s. This new AIR system will only receive ACA forms, including 1094-B, 1094-C, 1095-B and 1095-C. The finalized publication of ACA Information Return Forms for Tax Year 2015 (mandatory year) have been posted to IRS.gov. Any employers filing 250 or more information returns must do so electronically using this new AIR system. The AIR System Testing Environment is Open The Internal Revenue Service has now opened up the opportunity for ALEs and others to conduct a trial run of their electronic form filing for reporting requirements under the Affordable Care Act. This gives employers, their benefit advisers, IT departments and software developers, a way to test for readiness in advance of the reporting deadlines. This AIR testing environment allows employers to see if their reporting software is correctly transmitting all the appropriate information that is required in the fields using the data from their Tax Year 2014 Forms 1094 and 1095. The ability to use AIR Testing (AATS) for Tax Year 2014 returns (voluntary year) as a beta environment began July 29, 2015 and is currently in progress. The Who, the How, the What of the AIR Testing System Environment However, before you are allowed into this testing environment, the designated responsible official from an ALE or must have e-provider number issued by the IRS and then apply for an ACA information return transmitter control code (TCC.) There are three types of TCCs, including one for developers, one for submitters and one for filers. These TCC codes will be used in both the testing and real portals to help identify who is sending information returns. The application for all of these are now available online and once completed will be sent to the applicant in the mail. The IRS submission requirements for using the AIR Testing system advises software developers to “read the instructions carefully prior to preparing the submission” because there are file size and format specifications that must be followed. You must complete an error-free communication test in this environment before you will be granted access to the real AIR system to send in transmittals for Tax Year 2015. This involves sending a successful transmission in an XML format for processing, receiving a receipt ID from the AIR system and obtaining the required acknowledgement with an attached error file, if applicable. The deadline for electronic filing for Tax Year 2015 information ACA forms, through the AIR system once it opens, is March 31, 2016. Get prepared now.
