aca compliance in microsoft dynamics® gp · • employee took coverage and left company on...

© Integrity Data 2016. All rights reserved

ACA Compliance in Microsoft Dynamics® GPKeith SchmidtSenior Customer Care Representative / Consultant

May 22, 2018


Integrity Data’s leadership inhuman capital management for 20 years

More than 8,000 organizations worldwide use our technology to improve businesses processes, specifically for payroll

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Engaged by Microsoft to author payroll and human resources upgrades to the ERP system known as Microsoft Dynamics® GP

Original authors of: • Core Payroll Extensions

• Overtime Rate Manager• Deductions In Arrears• Payroll Integration to Payables

• HRP Extended Pack• PTO Manager• Advanced Payroll • Advanced HR• Benefit Self Service

MICROSOFT DYNAMICS GP

PARTNER20 YEARS!


Agenda

• GP ACA• 226J - Employer Shared Responsibility Payment • Reasonable Cause Regulations & Requirements for Missing and Incorrect

Name/TINs (Taxpayer Identification Numbers)• Special ACA Scenarios to consider when using GP ACA

• Sources: Credits On slide at end of PowerPoint. 3


GP ACA

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© Integrity Data 2016. All rights reserved5

GP ACA

• Fairly manual, but gets the job done• Recording of all the special scenarios in ACA is done by Human Resources or Payroll• Tracking of hours for eligibility, i.e. the lookback method, is done by Human Resources or

Payroll


Considerations

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A company may exceed the ACA minimum standards

Offer insurance coverage to employees regardless of hours worked to be competitive in your industry/market

Offer insurance coverage to employees as a company policy

© Integrity Data 2016. All rights reserved.


226J AND MISSING AND INCORRECT NAME/TINS

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The 226J - Employer Shared Responsibility Payment Process

1. IRS sends the Employer letter 226J - Employer Shared Responsibility Payment • Based on 1095-C and 1094-C information sent to IRS

2. Employer sends Form 14764 (response letter to 226J)• Lists Employees receiving subsidized coverage • Corrected data to previously reported Forms 1095-C

3. IRS sends Notice 220J• Confirms penalty owed

• Could state no amount is owed after final audit (Best Faith Effort)

Most common error concerns SSN


Reasonable Cause Regulations & Requirements for Missing and

Incorrect Name/TINs

IRS Publication 1586

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EMPLOYERS RESPONSIBILITY FOR MISSING TINS AND INCORRECT NAME/TIN COMBINATIONS

Section 301.6724-1(d)(1)(ii) states that for an employer to meet the standards of the regulations it must undertake significant steps to avoid or mitigate the failure, including where applicable:

• Requesting, appropriate extensions of time to file, when practicable, in order to avoid the failure;

• Attempting to prevent an impediment or a failure, if it was foreseeable,• Acting to remove an impediment or the cause of the failure, once it occurred, and• Rectifying the failure as promptly as possible once the impediment was removed or the

failure was discovered.


PENALTY FOR MISSING TINS AND INCORRECT NAME/TIN COMBINATIONS

IRC 6721, Failure to File Correct Information Returns, imposes a penalty per return for each of the following infractions related to information returns that are defined under IRC 6724(d)(1):

• Filed with a missing/incorrect TIN (or other incorrect information), • Filed untimely, 2 • Filed on paper when electronic filing was required (incorrect media), • Filed in an incorrect format, or • Any combination of the above


REASONABLE CAUSE

To show that the failure to include a correct TIN was due to reasonable cause and not willful neglect, filers must establish that they acted in a responsible manner both before and after the failure occurred and that:

• there were significant mitigating factors with respect to the failure (for example, an established history of filing information returns with correct TINs), or • the failure was due to events beyond the filer’s control (for example, actions of the payee or any other person).

Except as otherwise stated in this publication, acting in a responsible manner for missing and incorrect TINs generally includes making an initial solicitation (request) for the payee’s name and TIN and, if required, annual solicitations. Upon receipt of the newly provided TIN, it must be used on any future information returns filed.


MANNER OF TIN SOLICITATIONS

• Generally, a solicitation is a request by an Employer for an Employee to furnish a correct TIN.

• An initial solicitation for a Employee’s correct TIN must be made at the time an account is opened (or a relationship initiated), unless the Employer has the Employee’s TIN and uses that TIN for all transactions with the Employer.

• The solicitations may be made by oral or written request or by electronic communications, depending on how the account is opened.

• Where a Employee’s TIN is missing or incorrect after the initial solicitation, the Employer generally will need to conduct annual solicitations for a correct TIN.


ACTIONS FOR MISSING TINS AND INCORRECT NAME/TIN COMBINATIONS

Initial and Annual Solicitations – General RulesMissing TINs Incorrect TINs


Example:


FORM 1095-C AND I-9 COMPLIANCE: HOW TO HANDLE "MISMATCHES“ -

COMPLICATIONS THAT ARISE ALONG THE WAY

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What if the employer cannot obtain information from the employee to correct the error?

If the reason the employer cannot provide a correct SSN is that the employee has failed to provide it, the employee may be subject to his or her own $50 fine for each failure.

The employer may demonstrate reasonable cause and avoid the fines listed above, by:

• Making the initial request for the SSN timely;• Making subsequent annual requests no later than December 31 in the year in which the Notice 972CG is

received;• Making subsequent annual requests in a manner dictated by the regulations; and• If a corrected SSN is received as a result of the request, using the corrected number starting with the first

information report due after receipt of the corrected number.


If the employee does not respond to employee requests for a corrected SSN, what then?

From the IRS perspective, if the employer has followed its process, no fine should be issued.


Special Scenarios

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Hours of service – not just

paid hours

TIME TO INCLUDE:.

• Jury duty*

• Military deployment*

• FMLA absence*

• Leave of absence

• Vacation

• Holiday

• Illness

• Incapacity

• Layoff

The regulations define an hour of service to mean each hour for which an employee is paid, or entitled to payment, for the performance of duties for the employer, and each hour for which an employee is paid, or entitled to payment by the employer for a period of time during which no duties are performed due to vacation, holiday, illness, incapacity (including disability), layoff, jury duty, military duty or leave of absence

* These are special unpaid leave where you can either not factor the absence in your eligibility calculation or credit the employee with the average hours they worked while not on special unpaid leave. 24


ACA Service Hours

• IRS regulations for ACA enforcement require an employer to find a “reasonable” method for converting an employee’s time to an hours-of-service equivalent, so that all their time can be accounted for.

• By the Class – if you are in higher education and have adjunct faculty members• On-Call Workers• Piecework

• By the Catch – if you are in the fishing industry• By the Haul – if you are in the trucking industry• By the Bin – if you are in the fruit-picking industry• By the Visit – Home Healthcare Worker

• All Unpaid Leaves – FMLA, Jury Duty, Military• Working in Multiple Companies

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Special Rules

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Employee moves from full-time to part-time• Companies cannot automatically drop coverage when employee

classification changes• Employees that go from full-time to part-time will be tested as if they

were a variable-hour employee from the beginning


Employees move from part-time to full-time• Company must offer them coverage no later that the first day of the

month after their first three full months at the new full-time position


Rehire – break-in-service rules• The break-in-service rule applies to both the look-back and the monthly

measurement methods.• Returning employee can be classified a new hire provided they:

1. Had a break in service for 13 consecutive weeks, if the employer is not an educational institution

2. Had a break in service for 26 consecutive weeks, if the employer is an educational institution

3. Had previously been employed for at least 4 weeks and their absence of service was greater than their previous service – Rule of Parity

• Classifying employee as a rehire (new employee) or continuing them as an ongoing employee is at sole discretion of employer.

• The ACA rehire rules do not affect other areas of a company’s benefits. They are limited to health benefits.


Returning employees that would have been in a stability period

• If a returning employee had tested eligible for health coverage and they returned to service within the stability period they would have been entitled to, the company must honor that stability period.

• Company would have until the first day after the employee’s first three full months after return.

• Example:• Employee was in a stability period from 1/1/2016 to 12/31/2016• Employee took coverage and left company on 3/2/2016 • Employee returned 6/2/2016• Company must offer continue coverage no later than 10/1/2016• Company can terminate coverage 12/31/2016 and wait until the initial measurement

period test results if this is a variable-hour employee


Seasonal Workers

• A worker who performs labor or services on a seasonal basis• Retail workers employed exclusively during holiday seasons• Employers may apply a reasonable, good faith interpretation of the term seasonal

worker• Employed 120 days or less a year


Cobra – Self Insured Companies Only

• Cobra Employee and Dependents need to be identified by month as being covered for 1095-C Part II Line 16 and for dependents 1095-C Part III


Exclusions• Volunteer employees – Hours of bona fide volunteer service for a

government entity or tax-exempt organization do not count as hours of service.

• Students performing work-study • Members of religious • Compensation that is not U.S. source income (generally meaning

certain work overseas).

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Resources

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Contact [email protected]

Keith SchmidtSenior Customer Care Representative / ConsultantKeith [email protected]


Credits

IRS Publication 1586

https://www.irs.gov/pub/irs-utl/2017ntf-irsnoticesafterinformationreturns.pdf

https://www.federalregister.gov/documents/2014/02/12/2014-03082/shared-responsibility-for-employers-regarding-health-coverage

https://www.davisbrownlaw.com/davis-brown-employment-and-labor-law-blog-article.aspx?id=2277&Form+1095-C+and+I-9+Compliance%3A++How+to+handle+%22mismatches%22

https://www.irs.gov/pub/irs-utl/2017ntf-irsnoticesafterinformationreturns.pdf

https://www.federalregister.gov/documents/2014/02/12/2014-03082/shared-responsibility-for-employers-regarding-health-coverage

https://www.davisbrownlaw.com/davis-brown-employment-and-labor-law-blog-article.aspx?id=2277&Form+1095-C+and+I-9+Compliance:++How+to+handle+%22mismatches%22

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