Creating ACA Electronic Replacement and Correction Files

Many customers have been waiting to generate correction files.  The latest update to the Human Resources Management program includes this feature.  You can use the Tools->Check For Updates option to install the latest version of HRM (7.72.0.436.)  For your reference, we will provide an overview of both the Replacement and the Correction processes here, and  step-by-step instructions will be posted later on the Datatech Support/Training page on our Website.

The online help file for the HRM program has also been updated with detailed information on creating replacement and correction files, as well as printing corrected forms in cases where this is needed.

Last year we added an option to generate a replacement file.  The correction file is a new option.  To start with, this post will explain the purpose for each type of file and in what situations they should be used.

ACA Electronic Replacement Files

What exactly is a Replacement file? This is an Electronic 1094-C/1095-C file that replaces an original file that was rejected by the IRS when they were previously uploaded to the IRS e-Services website. After an original submission is rejected,  you have 60 days from the date of the original submission to submit a replacement file. This effectively gives you a 60-day extension on the electronic filing deadline! This is because when you finally do submit the replacement file (within the 60 day limit) and obtain an Accepted or Accepted With Errors status, the IRS views that submission as occurring as of the original submission date.

For example, the current deadline for filing ACA information returns is March 31, 2017. If you upload your original file on March 15 and it is rejected, you then have until May 14, 2017 (60 Days) to submit a replacement file and get your Accepted status. Even though you did not submit the replacement file before the March 31 deadline, the submission is still treated as having been submitted on time. How do you go about submitting a replacement file?

First you must repair the data or documents that caused the original submission to be Rejected. In some cases, after doing this you may need to edit or create a new 1094-C transaction. After you have made these corrections, a new electronic file will need to be generated, and you must reference the original Receipt ID of the rejected file when submitting the replacement file. This identifies the original file transmission that the the replacement file is meant to replace. The IRS is then able to reference the date of the original submission to determine if it was filed prior to the deadline, and then apply that date to the replacement file.

As shown in the following Generate Electronic File window in the Datatech HRM Software,  you should begin by selecting the correct 1094-C Transaction number. Next you must select the Replacement radio button to indicate that you are generating a replacement file. Doing so activates the Original Receipt ID entry field, where you must enter the Rejected Receipt ID. Ensure all other fields and boxes are correctly marked, and click the Generate button.

After the new file has been generated, you can then proceed to upload the manifest and form files to the IRS e-Services website.  As with an original file, make a note of the Receipt ID that the IRS gives you after uploading the replacement file.

Capture

What if the Replacement file also gets a rejected status? You must still upload a replacement file prior to the 60-day deadline from the original submission date.  When submitting another replacement file, you should always reference the Receipt ID of the original file that was rejected, not the Receipt ID of any other replacement files that get rejected.

If you have previously submitted files that were rejected, and then you generated a new set of files using the Original transmission type setting and submitted them prior to the March 31, 2017 deadline, and they were Accepted (or Accepted with Errors), it is not necessary to go back and submit a set of Replacement files.  That is because you submitted a file that was accepted prior to the deadline.

ACA Electronic Correction Files

What exactly is an ACA electronic correction file? This is an Electronic 1094-C/1095-C reporting file that reports corrections to information that was previously sent in an original set of files and that were Accepted or Accepted with Errors by the IRS website.  A correction file updates information previously accepted by the IRS.  It is not necessary to include all of the same records that were in the original file; only records that need corrections are included.  Also, you cannot report new information in a correction file, it can only provide an update to previously reported information.

After an original set of files gets Accepted Status, you could discover that some information you reported wasn’t correct or was incomplete. Or if your original submission got an Accepted with Errors Status, you may have been given a list of TIN Validation Errors in your IRS Acknowledgement File, detailing a number of employees whose name, name control, or S.S. # number does not match the IRS database.

When generating a correction file, the program will scan the data that was included in the original file that you submitted and compare it to the current data in your system.  When it sees that there is a difference between what was originally reported and what is currently in the database, it will trigger that record to be included in the correction file.  This means that all you need to do to generate a corrected 1095-C form for an employee that has an incorrect S.S. # is correct the S.S. # on the employee’s account.  The program will see that there has been a change made and include that employee in the correction file.

Likewise, if you find an error in the codes reported on line 14/15/16 in Part II of the form, editing the information on the 1095-C entry/edit window will trigger that form to be included in the correction file.

The same goes for the Part III information if you have a self-insured plan.  If there is a difference in the individuals reported as being insured, or a change in the months that the individuals were covered, the form will be included in the correction file.

Please note that you MUST have associated the original Electronic File that you uploaded with the Receipt ID provided by the IRS on the e-Services website. This is done on the Electronic File Details window.  Without that Receipt ID association, the HRM Software will not be able to locate the original file that you uploaded.  Also, the original electronic file must be located in the folder assigned by the HRM Software. If you have moved or deleted the original file, the software will not be able to find the original file.

Workflow

First, run the ACA Acknowledgement File Report.  A change has been made to this report to flag all of the 1095-C records that have a TIN validation error reported by the IRS.  Even if you have run this report before, you will need to run it one more time with the current version of the program to flag the records with errors.  If a 1095-C has a TIN validation error and the employee name or S.S. # information has been changed on the employee account, then the program will automatically include that form in the correction file.

(If you have edited the name or S.S. # on an employee account since the original form was generated, and the IRS did not report a TIN Validation error, the system will not include that form in the correction file.)

Before creating a correction file, you must first create a new 1094-C record with your contact information only.  Go to the Enter/Print 1094-C Form window and enter the tax year being corrected along with your contact information.  Do not check the “authoritative transmittal” box.  It is also not necessary to enter the number of forms or any information in Parts II, III or IV.

NOTE: Do not check the Corrected box on the 1094-C window. This checkbox is used to indicate that the 1094-C itself is being corrected, and that scenario is not covered under this post. When you click the Save button, a new transaction number will be assigned to this form.  Click on the lookup button for the transaction number entry and make a note of the transaction number for the new form that you have just created.

Next, go to the Generate Electronic ACA Files window shown below. Enter the new 1094-C transaction number, and then click on the Correction radio button.  The Original Receipt ID entry will be enabled, and you then need to enter the Receipt ID associated with the original file that you submitted.

At this point you can click on the Preview button to get a report showing  which information was originally reported and the new, corrected information that will now be reported. One section of the report shows changes to employee name/SSN information in PART I of the 1095-C, and the other shows any changes to Lines 14, 15, and 16 in Part II. If applicable, a third section will list changes to Part III for self-insured plans. In each section the report will print a line showing the original information that was reported, followed by a line showing the corrected information. (See our Correction Reports Samples blog post for a detailed explanation of these features.)

Review this report to verify that you want to include all of the changes listed in your correction file.  If there are any changes that should not be reported, edit the 1095-C form and/or employee account to match the original information reported.  This will prevent that information from being reported as a correction.

After you have verified the changes being reported on one or more sections, simply click on the Generate button to create a new form file and a new manifest file.  You can then proceed to upload them to the IRS e-Services website.  As with an original file, make a note of the Receipt ID that the IRS gives you after uploading your correction file.

correction

After generating the correction file, the program will ask you if this file will be uploaded. If you are creating this file as a test, answer No. Otherwise, answer Yes. When you answer Yes, the program will flag all of the records that are being corrected in the 1095-C database. This is important! Suppose that after you upload a correction file, you have several employees provide you with updated name/S.S. # information and now need to generate another correction file for those employees.  When the second correction file is generated, the program will not include any records that have already been flagged as having been reported in the first correction file.

Since the IRS only allows one correction to be submitted for each original form, they may reject a correction file that contains corrections you have already submitted.

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