2015 ESRP Responses in Review

With the 2016 employer mandate tax assessment letters hitting employer desks this week, it seems like a good time to summarize our experience with the 2015 ESRP process.  We can’t identify clients or disclose specifics of any 2015 Employer Shared Responsibility Payment matter that we have handled; this is just our overall view.

• The IRS occasionally got something wrong, but employers usually got 2015 Letter 226J because the employers or their AIR Transmitters reported something incorrectly or incompletely on 2015 Form 1094-C and/or 2015 Form 1095-C.  Lots of HR and payroll people did the best they could with few resources and little time to get it right.
•  Maybe because the IRS understands that, or because the IRS also is under-resourced and time-crunched, employers were granted reasonable extensions to submit their 2015 ESRP Responses.  We’re aware of only one instance in which IRS denied a request for an extension of the 30-day deadline.
• Employers have been getting IRS replies to their ESRP responses about two months after submission.  Reasonable explanations of their reporting errors, submitted with corroborating evidence and appropriate corrections, have been accepted.

Here’s what we don’t know.

• To what extent will IRS assess reporting penalties for Form 1095-C corrections first made in 2015 ESRP responses.
•  Will the 2016 process be automated (as previously announced) or will it be, like 2015, a manual, paper process?  The 2016 Letter 226J looks to us just like the 2015 Letter 226J.  So, for 2016, as for 2015, correcting Form 1095-C mistakes to avoid an improper ESRP assessment will be simple but correcting Form 1094-C mistakes probably won’t be.

If you were among those under-resourced, time-crunched HR and payroll people who made 2015 reporting errors, you should be troubleshooting 2016 filings now.