Source: https://www.acareview.com/2015/01/who-are-your-form-1095-c-employees/
Timestamp: 2019-05-25 04:50:22
Document Index: 352373895

Matched Legal Cases: ['§ 6056', '§ 54', '§ 301', '§ 4980', '§ 54', '§ 54', '§ 54', '§ 54', '§ 31', '§ 54', '§ 31', '§ 414', '§ 6721', '§ 6056', '§ 6721', '§ 6722']

Who Are Your Form 1095-C Employees? | Affordable Care Act Review
Home > Affordable Care Act > Who Are Your Form 1095-C Employees?
Here’s the relevant IRS rule defining “full-time employee” under Code § 6056:
(6) Full-time employee. The term full-time employee has the same meaning as in section 4980H and § 54.4980H–1(a)(21) of this chapter, as applied to the determination and calculation of liability under section 4980H(a) and (b) with respect to any individual employee, and not as applied to the determination of status as an applicable large employer, if different.
26 CFR § 301.6056-1(b)(6). And here is the cited sub-section 21 of the § 4980H rules:
(21) Full-time employee—(i) In general. The term full-time employee means, with respect to a calendar month, an employee who is employed an average of at least 30 hours of service per week with an employer. For rules on the determination of whether an employee is a full-time employee, including a description of the look-back measurement method and the monthly measurement method, see § 54.4980H–3. The look-back measurement method for identifying full-time employees is available only for purposes of determining and computing liability under section 4980H and not for the purpose of determining status as an applicable large employer under § 54.4980H–2.
(iii) Determination of full-time employee status using weekly rule under the monthly measurement method. Under the optional weekly rule set forth in § 54.4980H–3(c)(3), full-time employee status for certain calendar months is based on hours of service over four weekly periods and for certain other calendar months is based on hours of service over five weekly periods. With respect to a month with four weekly periods, an employee with at least 120 hours of service is a full-time employee, and with respect to a month with five weekly periods, an employee with at least 150 hours of service is a full-time employee. For purposes of this rule, the seven continuous calendar days that constitute a week (for example Sunday through Saturday) must be consistently applied for all calendar months of the calendar year.
26 CFR § 54.4980H-1(a)(21). But that just tells you which “employees” are full-time. “Employee” is defined in the preceding sub-section 15:
(15) Employee. The term employee means an individual who is an employee under the common-law standard. See § 31.3401(c)–1(b). For purposes of this paragraph (a)(15), a leased employee (as defined in section 414(n)(2)), a sole proprietor, a partner in a partnership, a 2-percent S corporation shareholder, or a worker described in section 3508 is not an employee.
26 CFR § 54.4980H-1(a)(15). The IRS uses a multi-factor test to identify common-law employees who have been errantly omitted from an employer’s payroll. Most often, the outcome hinges on the employer’s right to control how, where and when the worker works. The referenced rule sums it up this way:
26 CFR § 31.3401-(c)(1)(b). Sub-section (e) then warns: “If the relationship of employer and employee exists, the designation or description of the relationship by the parties as anything other than that of employer and employee is immaterial. Thus, if such relationship exists, it is of no consequence that the employee is designated as a partner, coadventurer, agent, independent contractor, or the like.” Code § 414(n)(2), with our emphasis, reads:
Commonly, workers are leased for less than one year, such as in temp-to-perm staffing arrangements. Section 3508 relates to real estate agents.
A long slog, we realize, but a necessary one to show you why you may have Form 1095-C reporting obligations with respect to people who are not on your payroll. But so what? Here’s what. Code § § 6721 and 6722 state the penalties for failure to file and deliver your Forms 1095-C as required by Code § 6056. We quote just the main penalty statements from the statute:
26 U.S.C. § 6721(a).
26 U.S.C. § 6722(a). So, missing one common law employee when you generate your Forms 1095-C in early 2016 could cost as little as $200. Missing 100 could cost $20,000. You’d need to miss 15,000 to reach the $3,000,000 annual cap. But any audit of such errors might also identify payroll taxes that should have been withheld from the wages of people misclassified as independent contractors. There could be collateral damage under wage and hour laws and benefit plan participation rules.
Are you planning to complete, file and deliver your Forms 1095-C manually? Does your automated process cover all Form 1095-C employees? These are questions that large employers should answer in 2015.