Form 1094-C is proof of your compliance strategy. It’s the document that declares your corporate structure and compliance status to the IRS.
While 1095-Cs report on individuals, the 1094-C defines employers. For companies navigating multiple Employee Identification Numbers (EIN) or decentralized payrolls, the 1094-C acts as an authoritative source that consolidates your entire compliance profile.
Making a mistake here carries a high risk; it could flag your organization for an audit, regardless of how accurate your individual employee forms may be.
Choose Your Authoritative Transmittal
Fragmented data, although uncommon, can be incredibly difficult to correctly represent on the 1094-C form. Different internal groups and divisions may be using different SaaS platforms or legacy on-premises software. And an acquired company could be using an entirely different set of software. All of these systems must present accurate data for the Authoritative Transmittal (Line 19).
Even though employers can submit multiple 1094-C batches, they must designate only one 1094-C per EIN as the form that aggregates data for the entire employer with a final summary of:
- Total full time employee counts
- Total headcount
- Aggregated group membership
If Line 19 is checked twice, the IRS could add both totals, incorrectly increasing your employee counts and potentially triggering penalties.
If you don’t check Line 19 for any filings, the IRS will consider your 1094-C incomplete and may reject it.
Aggregated ALE Group (Part IV of the 1094-C)
Controlled groups (separate companies with common ownership) are treated as a single employer under IRS Section 414. In Part IV of the 1094-C, this can create compliance errors.
IRS Section 414 must align with your corporate tax filings. Here’s an example:
- Scenario: Your corporate tax return lists three subsidiary EINs as a controlled group, but your ACA filings list them as independent entities.
- Result: The IRS automated matching system may flag this inconsistency, leading to inquiries about whether you are fragmenting your workforce to avoid ALE status.
Showing accuracy in Part IV shows the IRS that you understand your own corporate structure and are reporting transparently.
How to Avoid “A Penalty”
The most sensitive data point on the 1094-C is Part III, Column (a) ”Minimum Essential Coverage Offer Indicator”
This check box is used by the IRS to determine if you trigger the “A Penalty” – the ACA’s most severe fine.
Because this is an all-or-nothing assessment, failing to meet the 95% threshold allows the IRS to fine you for your entire full-time workforce (minus the first 30), not just the specific employees who were not offered coverage.
The Common Error: Part III, Column (b): Full-Time Employee Count.
Another mistake employers can make is pulling a total headcount (including part-time, seasonal, and variable-hour employees) into Column (b) instead of the ACA Full-Time count.
If you mistakenly include part-timers in this count, you make the total number of accessible ACA Full-Time employees larger than it should be. With this inflated number, your offer percentage drops.
- Example: You have 100 Full-Time employees and offer coverage to 98 of them (98% = Compliant).
- Error: You accidentally marked “Minimum Essential Coverage Offer Indicator” as“No” and reported 150 employees in Column (b) because you included part-timers.
- Result: The IRS assesses the 4980H penalty based on the inflated count of 150 (minus 30 Freebies per ALE Group) multiplied by the 4980H(a) penalty amount triggering an expensive penalty letter (Letter 226J).
- If “Minimum Essential Coverage Offer Indicator” is marked “Yes;” there will be no 4980H(a) penalty.
- If “Minimum Essential Coverage Offer Indicator” is marked “No;” 150-30 x $2900 (annual 4980H(a) penalty) = 348,000
Validating the math in Part III is not just about data entry; it is about protecting your organization from incorrect penalty assessments.
Build a Stronger Audit Defense with Trusaic
The 1094-C is the foundation of an organization’s audit defense. It connects all the disparate parts into a single cohesive narrative for the IRS.
Trusaic’s ACA Complete® is the solution to create a strong compliance foundation. The platform ingests data from multiple sources, cross-references it against corporate structures, and generates a single, accurate Authoritative Transmittal. We validate your data before it ever reaches the IRS and help organizations prevent errors that trigger audit letters.
Ensure your Authoritative Transmittal is audit-ready. Contact Trusaic to consolidate your complex data into a single, accurate strategy for the 2026 filing season.
