IRS: ‘Accepted with Errors’ Acceptable for TIN Validation Failures

It’s not often that you hear “good news” in the same sentence as the Affordable Care Act, but lo and behold, recent news from the IRS made this a reality for those experiencing TIN (Tax Identification Number) validation failures when transmitting 1095-C data.

Yesterday morning, the IRS confirmed that when a company receives an “Accepted with Errors” status because of TIN validation, the company may leave its transmission as “Accepted with Errors.” What’s the catch? There are two: One, the employer must have made a good faith effort to validate the information. Two, the TIN failure must be the only type of error they are not able to correct. (What constitutes a “good faith effort”? Consult your legal or tax advisor for guidance.)

The announcement is welcome news for thousands of employers who have run into roadblocks when transmitting 1095-C data to the IRS. Many employers have received an “Accepted with Errors” status because of failures in validating employee and dependent TINs (usually the Social Security Number). When such failures occur with dependents, employers may transmit a DOB in place of an SSN. However, with a TIN validation failure on the responsible individual, employers must work with that individual to ensure the information they’re providing to the IRS is accurate. We have uncovered a few situations with our own clients where an individual says their SSN is correct, yet the TIN validation failures keep coming back from the IRS, leaving everyone frustrated—and unsure how to proceed.

Fortunately, this latest announcement is good news that should help HR pros who are in the same situation. It’s important to note that although “Accepted with Errors” is now, well, acceptable, it’s still extremely important that employers clearly document and maintain their efforts to validate this information as penalties may still be assessed. IRS Publication 1586 is a great place to confirm you have met the appropriate requirements. If you have questions on what constitutes a good faith effort, it is recommended to consult with your legal or tax advisor.

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