Errors in Reporting on Forms 1094-C and Form 1095-C
There are 200 potential code combinations for line 14, 15, and 16.
However, of the 200 potential code combinations only 49 are theoretically possible.
The Form 1094-C and Form 1095-C tell the IRS a story which will help determine if the employer owes a penalty under section 4980H but also whether the employees of the employer are eligible for premium tax credits.
Entering incorrect code combinations will present a false narrative to the IRS which could impact the employer being assessed a section 4980H penalty but also may make an employee ineligible for a premium tax credit.
At this time it is unclear how the government will handle Forms that are submitted with impossible or inaccurate code combinations.
While the IRS has stated it will not impose penalties for employers who made “good faith efforts” it is not fully understood what that entails.
For instance, if an employer submits its Form 1095-Cs with a zero percent accuracy rate, can it really be argued that the employer acted with “good faith efforts”?