One of the most common errors returned to employers who filed electronic ACA files was the AIRTN500 error. AIRTN500 occurs when an individual name and Taxpayer ID Number does not find a match in the IRS database. Sometimes, a single employer may receive a large number of AIRTN500 errors and this can be frustrating for several reasons.
First, the returned error from the IRS does not explain to the employer which TINs have the problems. Instead, the error names the Unique Record ID with the problem. Each 1095-C included in an employer’s file has a Unique Record ID, so it’s up to the employer to go through the submitted file to find those Unique Record IDs in order to identify the TINs that have problems.
It helps to understand how the IRS verifies the submitted TINs in the first place. Let’s use an example of a Form 1095-C filed for an employee with last name SMITH and TIN 222-33-1234. To verify this TIN, the IRS will take the first four characters of the last name -- SMIT -- and compare this against the TIN submitted. If there is SMIT with TIN 222-33-1234 found in the SSA database, the TIN will be verified. If there is no SMIT with TIN 222-33-1234 found in the SSA database, the employer will receive an AIRTN500 error.
Another point of frustration enters the scene when a self-insured employer is reporting covered individuals and not just employees. Looking for mismatched TINs in your list of employees might be difficult enough, but when you expand that list by including the TINs for covered dependents, identifying those AIRTN500s becomes much more complicated. Again, the AIRTN500 will only identify which Unique Record ID (which Form 1095-C) has the problem -- not which covered individual has the problem.
This brings us to the issue of employer solicitation obligations. How can the employer get the correct information to address AIRTN500 errors, especially when covered dependents are generating AIRTN500s?
- Informally ask your employee to verify names and social security numbers
- If the employee confirms your data and you still get AIRTN500, you must keep trying to get correct data.
- Formally try to obtain the correct TIN through a first annual solicitation on or before 12/31 of the year when the employer received the AIRTN500 error.
- If the first solicitation attempt failed, formally make a second attempt to obtain the correct TIN on or before 12/31 of the following year.
- This puts the burden on the employer, but as long as the employer can prove they are making the required solicitation attempts to obtain the valid TIN, the employer will avoid penalty from the IRS.
Disclaimer: Optimum Solutions does not claim to be an expert or a legal advisor as it relates to ACA. It is recommended your company refer to your Benefits Administrator or legal advisor if you need clarification or assistance with ACA interpretation.