SSN/TIN Validation Failed and How To Correct for ACA (1095) Reporting

We actually have some good news:

After reviewing the guidance from IRS and reviewing notes from our legal partner, a national law firm with recognized experts on the Affordable Care Act, we can say:

“No solicitation effort is triggered for an incorrect TIN by an AIRTN500 error message.”  This basically means that if you have already solicited for SSN/TINs from your employees, you are not required to again.  That said, it is still a good idea to review these errors and make corrections.

 

Per our legal partner, Marathas Barrow Weatherhead Lent LLP, their official guidance:

The following IRS guidance on soliciting SSNs or TINs based on the AIRTN500 error message, which indicates that an SSN or TIN provided on the return do not match IRS records, applies regardless of whether the employer is reporting under Section 6055 and/or Section 6056.  In these situations, a filing status of “accepted with errors” due to an AIRTN500 message does not trigger an additional SSN or TIN solicitation requirement.  An AIRTN error message is neither a Notice 972CG (Notice of Proposed Civil Penalty), nor a requirement that the employer must solicit an SSN or TIN in response to the error message.[1]  Therefore, an employer is not required to make additional SSN or TIN solicitations if the previous solicitation produced an AIRTN500 message, unless the employer receives Notice 972CG from the IRS.

[1] 81 FR 50671 at 50676, footnote 2 (https://www.federalregister.gov/d/2016-18100).

Initial TIN / SSN Solicitation:

In general, employers that report under Section 6055 (i.e., those that sponsor self-insured plans) and insurance carriers must obtain SSNs or TINs for their covered participants.  Under Section 6055, the requirement to obtain an SSN or TIN may be satisfied by making an initial solicitation when the individual first enrolls.  If an SSN or TIN is not provided at the time of initial enrollment, a second solicitation (the first annual solicitation) must be made at a reasonable time thereafter (generally within 75 days). If the second solicitation is unsuccessful, a third solicitation (the second annual solicitation) must be made by December 31 of the year following the initial solicitation.

Employers reporting on full-time employees under Section 6056 have an existing requirement to collect an employee’s SSN at time of hire (a discussion of which exceeds the scope of this client guide).  Therefore, the guidance above regarding when to make an SSN or TIN solicitation applies in the context of obtaining an SSN or TIN from an enrollee in a group health plan.

 

FAQ:

“TIN Validation Failure” is by far the most common error reported back from the IRS Efile system for ACA (also called AIR).  Many employers have this issue, even when they believe they have provided what they believe to be accurate Name/TIN data.

What is a TIN?

Taxpayer Identification Number.  When referring to an employee or individual, this is commonly their social security number (SSN).

How do I know which name or TIN on the form is incorrect?

Unfortunately, the IRS does not provide specific information on TIN validation errors. For company(ies) with self insured plans, the only information that is provided is the name and TIN of the recipient, however the TIN validation error could be the name/TIN combination for the recipient, or a covered individual of the recipient, or both. Since it is impossible to know which name/TIN combination caused the error, it will be necessary to validate all name/TINs for both the recipient and covered individuals as applicable. Also note that if you find that the name/TIN field on the recipient is incorrect, you may also need to correct their information in the Covered Individuals section.

Note that for dependents, rather than using SSN (TIN), we can use a valid Date of Birth (DOB).

Follow these steps to ensure you have met all requirements to obtain the correct Name/TIN information:

  • Check your records (HR/Benefits, Payroll data) to verify that all Name/TIN combinations are correct.
  • Contact the employee or employer to validate the Recipient Name/TIN Combination and Covered Individuals Name(s)/TIN(s).
  • Check with the sponsoring employer or responsible individual to validate the name/TIN information.
  • Check with your employee to validate the name/TIN information
  • Contact your local Social Security Administration (SSA) office to determine if your information matches SSA’s information. Once you have identified the incorrect Name/TIN fields and have obtained the correct data, contact us securely to make the correction.

What if I can’t resolve a TIN issue?

You may be unable to resolve a TIN issue if you can’t reach a particular employer or individual to validate their TIN or obtain their date of birth. It is also possible that you have taken all required steps and believe that your data is accurate. In these cases, make sure you have documented your process thoroughly to avoid potential fines and penalties. The IRS has outlined the following process for 1095 forms:

  • Make an initial solicitation of Recipient and Covered Individuals’ TINs at an individual’s first enrollment or, if already enrolled by September 17, 2015, the next open season.
  • If you do not receive the TINs, make the second solicitation at a reasonable time thereafter.
  • If TINs are still not provided, make a third solicitation by December 31 of the year following the initial solicitation. You are not required to solicit a TIN from an individual whose coverage is terminated.

What is the deadline to correct TIN Validation errors?

You should correct your forms as soon as possible.

Relevant guidance from the IRS from May 2016:

http://www.irsvideos.gov/Governments/AffordableCareAct/AffordableCareActInformationReturnsCorrectionsProcess

The above link has a video and transcript of the IRS guidance around returns corrections for the ACA.  Of specific relevance is the following guidance taken directly from the IRS transcript (emphasis ours) :

“Errors or omissions that are never inconsequential include TIN and/or surname of the recipient or other covered individuals.

In addition, it is never inconsequential if the return furnished to the recipient is not the appropriate form or an appropriate substitute.

There is also an exception to the penalty for a de minimis number of failures to include correct information if the filer corrects that information by August 1st of the calendar year, to which the information relates, or November 1st for 2016.

For a calendar year, this penalty will not apply to the greater of 10 information returns or one half of 1% of the total number of returns the filer is required to file or furnish.

Additionally, filers may be subjected to increased penalties for intentional disregard of the requirement to file and furnish timely and accurate information returns.

For additional information on the exceptions and the intentional disregard standards, see publication 1586.

Finally, there is only one penalty per record, even if the record has multiple errors, such as incorrect TIN and incorrect months of coverage.

There is relief for 2015 returns filed in 2016.

As previously mentioned, the IRS will not impose penalties for filing incorrect or incomplete information returns, including TINs or date of birth, when reporting entities show they made good-faith efforts to comply.

However, this relief is not available for returns that are not timely filed.”

Our take:  Document your effort to comply!  As your ACA Services Provider and Transmitter, all of your company’s correspondence, data, and documentation with ACA Prime is stored securely and is available to you to demonstrate your effort to comply.

 

Further Information: