Now that employers are finally submitting electronic ACA files through the IRS AIR System, they are learning what can go wrong. A very commonly reported error returned by AIRS is the TIN Validation Error AIRTN500.
Usually a TIN Validation Error AIRTN500 indicates to the employer that the reported employee’s last name and Social Security Number do not match IRS records. This is similar to a W2 mismatch and can happen for several reasons. A female may be working under her new married name, but her SSN still shows her maiden name. In cases of very long or hyphenated last names, the employer may only be reporting a portion of the name that the IRS has on file. If you are reporting covered dependents, the mismatch might be caused by such a situation with one of them. Anyone you report in the file can cause a TIN Validation Error AIRTN500. This also includes the employer; be sure to confirm that the FEIN you report for every ALE included on the 1094-C is correct.
If you are notified of a TIN Validation Error AIRTN500, the first thing you need to do as an employer is confirm that the information you reported matches the information that the employee furnished to you when hired. Check that I-9!
If you reported what they gave you, the IRS is not going to be much help. They can only say that there was a mismatch – no more. You may need to ask the employee to contact the IRS at (800) 829-1040 to find out exactly what name is listed for their SSN, or they can visit their local SSA or IRS office. Remember, you cannot do this for the employee.
If you want to make new attempts at submitting files, you can try some creative options like reversing the order on those hyphenated last names, or submitting a SSN Verification file to the SSA to rule out mismatches on employees. For covered individuals, you do not have to report SSN; you might want to just report birth dates if that is where the problem lies.
Unfortunately, there will be some instances when you will not be able to resolve some TIN Validation Error AIRTN500s. Terminated employees that you cannot reach for confirmation of information are the most common problem. When this happens, the IRS expects you to have the data collected when the employee was hired. If that was wrong according to IRS, then by December 31 of the year when you received the TIN Validation Error, they expect you to solicit the employee for correct data. If you do not receive correct data, a second request is expected by December 31 of the following year. If you still do not receive correct data, the IRS does not expect any further action on the employer’s part.