Understanding Part IV of the 1094-C
Understanding Part IV of the 1094-C, how the IRS will be using the information therein, and who is required to complete it are all essential elements of ensuring your 1094-C is filed correctly.
In this blog we will be answering the following questions:
1. Who is required to complete Part IV of the 1094-C?
2. How will the IRS be using the information in Part IV of the 1094-C?
3. What information will employers need to complete Part IV of the 1094-C?
Here's the good news: it's simpler than you think. Information herein has been drawn from irs.gov.
Who is required to complete Part IV of the 1094-C?
This section, again, is only for those employers who identified themselves as part of an Aggregated ALE Group in box 21 of Part II of the form.
"Am I part of an Aggregated ALE Group," you ask? The answer depends on whether you are part of a group of companies under common ownership.The IRS offers the following on common ownership:
"Companies with a common owner or that are otherwise related under certain rules of section 414 of the Internal Revenue Code are generally combined and treated as a single employer for determining ALE status. If the combined number of full-time employees and full-time equivalent employees for the group is large enough to meet the definition of an ALE, then each employer in the group (called an ALE member) is part of an ALE and is subject to the employer shared responsibility provisions, even if separately the employer would not be an ALE."
For example, if an employer owns 10 factories, each with a separate EIN, in all likelihood those 10 companies would fall under common ownership. If "Plant A" of those 10 factories only employed 15 employees, they would be considered an Applicable Large Employer and subject to the play or pay portion of the ACA under the stipulation of common ownership. In this example, "Plant A" would have to complete a 1094-C, check off box 21 in Part II of the form, and complete Part IV of the form.
How will the IRS be using the information in Part IV of the 1094-C?
The IRS will be using Part IV of the 1094-C to ensure that employers are accurately reporting all of their employees, and not trying to skirt the regulation by partititioning their company into smaller units units that do not satisfy the ALE requirements. For example, an employer with 100 employees cannot divide his or her organization into 4 EINs of 25 employees in order to avoid classification as an ALE.
The IRS can reference Part IV, and knows to expect an authoritative 1094-C transmittal from each member of the Aggregate ALE group.
Related Blog: How to Complete the 1094-C for ACA IRS Reporting
What information will employers need to complete Part IV of the 1094-C?
In order to complete Part IV of the 1094-C, employers will need:
- The legal names of each group member
- The EIN of each group member
Of Note, the IRS specifically states that if there is a missing EIN for an ALE group member at the time of filing, the file will not be processed.
Listing from largest employee count to smallest, employers will list the name and EIN of the first 30 members of their ALE controlled-group. In the example above, Brown Towing, LLC is the largest of the ALE members and Brown Warehousing is the smallest. The employer who is filing will not include their own name and EIN on Part IV.
Related Blog: What to Look For in an ACA Software Solution
For more information on IRS Affordable Care Act Forms and Reporting, please download our ACA reporting white paper.