December 28, 2015
IRS Guidance Announces Automatic Extension of Filing Deadlines for ACA Information Reporting
The Internal Revenue Service (IRS) has issued new guidance that significantly extends the due dates for 2015 ACA information reporting by insurers, self-insured employers and other reporting entities. The transition relief provided in The guidance applies to the furnishing statements to individuals as well as filing with the IRS as required under Internal Revenue Code sections 6055 and 6056, as added by the Affordable Care Act (ACA).
This guidance follows many months of conversations by the Council and others with U.S. Treasury Department and IRS officials, culminating in a very recent meeting with the IRS commissioner and his staff and a December 24 letter that again restated our recommendations for a more streamlined process for requesting extensions. In the written communication we cited the limited time employers have had to learn and understand the complex reporting rules as well as the many ongoing and unanswered questions regarding how certain scenarios should be reported.
Notice 2016-4, released on December 28, provides an “automatic” 60-day extension for furnishing Forms 1095-C and 1095-B to employees and an “automatic” 3 month extension for filing these forms with IRS. “Automatic” means that requests do not have to be sent to the IRS. Under the transition relief provided in Notice 2016-4:
- The due date for furnishing the 2015 Form 1095-B and the 2015 Form 1095-C to the insured and/or employees is extended from January 31, 2016, to March 31, 2016.
- The due date for health coverage providers and employers furnishing the 2015 Form 1094-B and the 2015 Form 1094-C to the IRS is extended from February 28, 2016, to May 31, 2016, if not filing electronically.
- The due date for health coverage providers and employers electronically filing the 2015 Form 1094-B and the 2015 Form 1094-C with the IRS is extended from March 31, 2016, to June 30, 2016.
Notice 2016-4 explains that while “The IRS is prepared to accept filings of the information returns on Forms 1094-B, 1095-B, 1094-C, and 1095-C beginning in January 2016, following consultation with stakeholders, however, the Department of the Treasury (Treasury) and the Service have determined that some employers, insurers, and other providers of minimum essential coverage need additional time to adapt and implement systems and procedures to gather, analyze, and report this information.” Notwithstanding the extensions provided in this notice, the IRS is encouraging employers and other coverage providers to furnish statements and file the information returns as soon as they are ready.
Notice 2016-4 also explains most individual taxpayers will generally not be affected by this extension and should file their tax returns as they normally would. Nonetheless, some employees (and related individuals) who enrolled in coverage through the Marketplace but did not receive a determination from the Marketplace that the offer of employer-sponsored coverage was not affordable could be affected by the extension if they do not receive their Forms 1095-C before they file their income tax returns. As a result, for 2015 only, individuals who rely upon other information received from employers about their offers of coverage for purposes of determining eligibility for the premium tax credit when filing their income tax returns need not amend their returns once they receive their Forms 1095-C or any corrected Forms 1095-C.
Individuals need not send this information to the IRS when filing their returns but should keep it with their tax records. Similar relief applies with respect to individuals who rely upon information from their employers or other coverage provider with respect to confirming whether they have “minimum essential coverage” for purposes of filing their tax returns.
Notice 2016-4 reiterates that employers or other coverage providers that do not comply with these extended due dates are subject to penalties under tax code sections 6722 or 6721 for failure to timely furnish and file. The guidance states, however, that “employers and other coverage providers that do not meet the extended due dates are still encouraged to furnish and file, and the Service will take such furnishing and filing into consideration when determining whether to abate penalties for reasonable cause.”
As explained in the guidance, the IRS will take into account whether an employer or other coverage provider made reasonable efforts to prepare for reporting the required information to the IRS and furnishing it to employees and covered individuals, such as gathering and transmitting the necessary data to an agent to prepare the data for submission to the IRS, or testing its ability to transmit information to the IRS. In addition, the IRS will take into account the extent to which the employer or other coverage provider is taking steps to ensure that it is able to comply with the reporting requirements for 2016.
Code Section 6056 requires every applicable large employer (generally, an employer that employed on average at least 50 full-time employees or equivalents) to file a return with the IRS that reports the terms and conditions of the health care coverage provided to the employer's full-time employees during the year. This information is reported on Form 1095-B. Section 6055 requires every health insurance issuer, sponsor of a self-insured health plan, government agency that administers government-sponsored health insurance programs and other entities that provide minimum essential coverage to file annual returns reporting certain information for each individual for whom minimum essential coverage (MEC) is provided and to provide a copy of the return to the individual. This information is reported on Form 1095-B. The IRS finalized these reporting forms and instructions earlier this year, as reported in the September 17 Benefits Byte.
Throughout the development of proposed rules, forms and guidance, the Council has sought to help plan sponsor members with questions about their unique and challenging reporting questions and we will continue to do so. For more information on ACA reporting and other compliance matters, contact Kathryn Wilber, senior counsel, health policy, at (202) 289-6700.