Submitting ACA Forms 1094-C and 1095-C is a major compliance milestone, but the process does not end once files are transmitted to the IRS. Employers must also understand how to interpret IRS responses, identify common errors, and take appropriate action when issues arise. Knowing what to expect can help avoid delays, reduce resubmissions, and minimize compliance risk.
Top Reasons ACA Files Are Rejected
The IRS reviews ACA submissions through its AIR system using strict validation rules. Files may be rejected for a variety of reasons, most of which relate to formatting or data accuracy.
One common issue is formatting errors. ACA files must meet specific IRS schema requirements, and even small inconsistencies in structure can result in rejection. Missing required fields or incorrect data formats, such as invalid date structures, are frequent causes.
Taxpayer Identification Number mismatches are another common problem. If an employee’s Social Security Number does not match IRS records, the file may be flagged or rejected. Similarly, incorrect employer identification numbers (EINs) can trigger issues at the transmission level.
Data inconsistencies can also lead to rejection. For example, conflicts between coverage codes, affordability indicators, or employment status across reporting periods may cause validation failures. These types of errors often stem from misalignment between HR, payroll, and benefits data.
How to Read and Respond to IRS Error Codes
After submission, the IRS provides acknowledgment reports that include error codes and status messages. These responses are critical and should be reviewed carefully.
An “Accepted” status means the file passed validation checks. A “Rejected” status indicates the file failed validation and must be corrected before resubmission. An “Accepted with Errors” status means the file was processed, but certain records may still contain issues that should be reviewed.
Each error code corresponds to a specific issue, such as a missing field, invalid value, or data mismatch. Understanding these codes allows employers or their administrators to identify the root cause of the issue and determine whether corrections are required.
When reviewing error codes, it is important to focus on patterns rather than isolated issues. Multiple errors may point to a broader data problem, such as incorrect coding logic or a system mapping issue, rather than individual record errors.
What to Do If Your Filing Is Accepted With Errors
An “Accepted with Errors” status can be confusing, as it indicates that the IRS has received the file but identified potential issues. In many cases, these errors relate to specific employee records rather than the entire submission.
Employers should review the error details and determine whether corrections are necessary or not. Some errors may not require correction, but others could impact compliance or lead to IRS notices if not addressed.
If corrections are needed, employers should prepare and submit corrected forms as soon as possible. This involves updating the underlying data, regenerating the affected records, and transmitting a corrected file through the AIR system.
Even when a file is accepted, it is important to treat error reports seriously. Addressing issues early can help prevent follow-up notices and reduce the risk of penalties.
Staying Ahead of Filing Issues
Most ACA filing errors can be traced back to data accuracy and coordination challenges. Ensuring that HR, payroll, and benefits data are aligned before submission is one of the most effective ways to reduce errors. Regular data reviews, validation checks, and clear internal processes can significantly improve filing outcomes.
BAS supports employers throughout the ACA filing process, including data preparation, transmission, and response review. If you have questions about your IRS acknowledgments, error codes, or corrections, please contact BAS at service@basusa.com or 1-888-945-5513.
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This article is for informational purposes only and is not intended as legal, tax, or benefits advice. Readers should not rely on this information for taking (or not taking) any action relating to employment, compliance, or benefits. Always consult with a qualified professional before making decisions based on this content.
