Electronic Filing Requirements for Large Employers

Applicable Large Employers subject to ACA reporting obligations under Internal Revenue Code Sections 6055 and 6056 must meet specific electronic filing thresholds when submitting Forms 1094-C and 1095-C to the Internal Revenue Service. These thresholds shifted significantly under the Taxpayer First Act of 2019 and subsequent Treasury regulations, lowering the cutoff from 250 returns to 10 returns for tax years beginning after December 31, 2023. Understanding when electronic filing is mandatory — and what the IRS's ACA Information Returns (AIR) system requires — is foundational to ACA compliance for employer benefit programs.

Definition and scope

Electronic filing requirements for large employers refer to the IRS mandate that organizations filing 10 or more information returns of a single type — or 10 or more returns in aggregate across all return types — must submit those returns electronically rather than on paper (IRS Rev. Proc. 2023-12; Treasury Decision 9972).

For ACA purposes, this rule applies directly to Applicable Large Employers (ALEs) filing Forms 1094-C and 1095-C. An ALE is any employer that employed an average of at least 50 full-time employees, including full-time equivalents, during the prior calendar year (IRC §4980H; IRS Publication 5196). The scope of the electronic filing mandate extends to:

• Form 1095-C individual statements transmitted under a Form 1094-C transmittal
• Form 1094-C itself, which accompanies the batch submission
• Corrected returns filed for any prior year if the total volume of corrected and original returns triggers the 10-return threshold

The threshold count is calculated by aggregating all information returns of all types filed by the entity — not just ACA forms. An employer filing 6 Forms W-2 and 5 Forms 1095-C has 11 total returns and must file all of them electronically under the post-2023 rule.

How it works

Electronic submission to the IRS occurs through the ACA Information Returns (AIR) program, the dedicated IRS e-filing system for ACA employer reporting (IRS AIR Program, Publication 5165). The process involves the following discrete phases:

1. System access registration — The employer or Transmitter Control Code (TCC) holder applies through the IRS Information Returns Intake System (IRIS) or the legacy e-Services portal to obtain a TCC, which authorizes electronic transmission.
2. Software testing — Filers must test against IRS AIR Assurance Testing System (ATS) specifications before live production filing. The IRS publishes annual schemas and business rules for each tax year.
3. File construction — Returns are formatted in XML according to the IRS-published schema. The 1094-C acts as the authoritative transmittal, and individual 1095-C records are nested within the submission.
4. Transmission — Files are submitted via HTTPS using the IRS MeF (Modernized e-File) infrastructure. Submissions are acknowledged with a Receipt ID and a status code (Accepted, Accepted with Errors, or Rejected).
5. Error remediation — Rejected transmissions must be corrected and resubmitted before the filing deadline. Accepted-with-Errors submissions may require corrected returns depending on the error category and IRS processing outcomes.
6. Acknowledgment retention — Employers retain transmission receipts and acknowledgment files as documentation of timely filing.

Failure to file electronically when required — absent an approved hardship waiver — subjects the employer to the same penalties applicable to failure to file, which under IRC §6721 can reach $310 per return for returns filed more than 30 days late, with an annual cap that varies by employer size (IRS, IRC §6721).

Common scenarios

Employer with 52 full-time employees filing for the first time. An ALE with 52 full-time employees files 52 Forms 1095-C plus 1 Form 1094-C — a total of 53 ACA information returns. This exceeds the 10-return threshold, making electronic filing mandatory. The employer must obtain a TCC and submit through the AIR system.

Employer near the threshold due to business contraction. A company that employed 55 full-time employees in calendar year 2023 but reduced to 48 full-time employees by mid-2024 remains an ALE for 2024 reporting, because ALE status is determined by the prior calendar year workforce. The electronic filing requirement applies regardless of the workforce reduction.

Controlled group filing. Under controlled group rules, entities treated as a single employer for ALE purposes each file their own Forms 1094-C and 1095-C separately. Each entity evaluates its own total return count independently for the electronic filing threshold. A subsidiary with only 8 employees filing 8 Forms 1095-C may still be required to file electronically if its total aggregate return count across all form types reaches 10.

Third-party administrator filing on behalf of an employer. Many ALEs use payroll processors or benefits administrators as Designated Government Entities (DGEs) or authorized agents. The TCC belongs to the transmitter, but the ALE remains legally responsible for timely and accurate filing. The employer mandate framework does not transfer liability to the third party.

Decision boundaries

The distinction between mandatory and permissive electronic filing rests on the aggregate return count, not the ACA form count alone. The table below frames the primary decision points:

Paper hardship waiver. Filers who cannot comply with electronic filing due to technological hardship may request a waiver using Form 8508 (IRS Form 8508). Waivers are not automatic; the IRS evaluates each request individually and requires submission before the filing deadline.

Corrected returns. A corrected Form 1095-C filed electronically follows the same AIR submission structure as original returns, with a Corrected indicator set to true in the XML. If original returns were filed on paper (permissibly, under prior thresholds), corrections that independently trigger the 10-return threshold must be filed electronically.

State filing obligations. California, New Jersey, Massachusetts, Rhode Island, and Washington, D.C. impose independent ACA reporting mandates with their own electronic submission portals and deadlines separate from IRS AIR. ALEs operating in those jurisdictions must evaluate state-specific thresholds independently of the federal rule. The broader ACA compliance resource index covers state-level variation in additional detail.

References

• IRS Treasury Decision 9972 — Electronic Filing Requirements
• IRS Publication 5196 — Reporting of Offers of Health Insurance Coverage by Employers
• IRS Publication 5165 — Guide for Electronically Filing ACA Information Returns
• IRS ACA Information Returns (AIR) Program
• IRS Form 8508 — Request for Waiver from Filing Information Returns Electronically
• Internal Revenue Code §4980H — Shared Responsibility for Employers (via Cornell LII)
• Internal Revenue Code §6721 — Failure to File Correct Information Returns (via Cornell LII)
• Taxpayer First Act of 2019, Pub. L. 116-25 (Congress.gov)

The law belongs to the people. Georgia v. Public.Resource.Org, 590 U.S. (2020)