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IRS delays ACA information reporting deadlines

RFP
The IRS has extended the 2017 due dates to report 2016 health care coverage information to employees and insured individuals from Jan. 31 to March 2, 2017.

The new reporting requirements were enacted as part of the Affordable Care Act (ACA) and became effective for the 2015 calendar year. Applicable large employers (employers with 50 or more full-time and full-time equivalent employees) use Form 1095-C to report health coverage information to employees and Form 1094-C to transmit information to the IRS. Other health insurance providers use Form 1095-B to report information to insured individuals and Form 1094-B to transmit information to the IRS. More information about these filing requirements is available from Grant Thornton LLP.

Forms 1095-C and 1095-B are generally due to employees and insured individuals by Jan. 31 of each year. Newly issued Notice 2016-70 extends the due date for furnishing the Forms 1095-C and 1095-B from Jan. 31, 2017, to March 2, 2017.  The IRS and Treasury determined that there is no similar need to extend the dates for transmitting returns to the IRS. So Forms 1094-B and 1094-C are still due to the IRS on Feb. 28 in 2017 if filed on paper or March 31 if filed electronically.

The notice points out that employees do not need to delay filing their personal income tax returns until they receive Forms 1095-C and/or 1095-B. Employees may rely on other information received from their employer or other coverage provider for purposes of filing their returns, including determining eligibility for the premium tax credit and confirming that they had health insurance coverage. Forms 1095-C and 1095-B and other information received regarding health insurance coverage are not attached to personal income tax returns or sent to the IRS by employees.  

Additional extensions
Employers and insurance providers are generally able to request an extension of time to furnish statements to employees and insured individuals, and there are additional provisions regarding automatic and permissive extensions of time for filing information returns with the IRS. Notice 2016-70 provides that no further extensions beyond the due dates established in the notice will be provided for furnishing Forms 1095-C and 1095-B to employees and insured individuals. Because no relief was provided for filing Forms 1094-B and 1094-C with the IRS, automatic extensions are still allowed for submitting these forms to the IRS by using Form 8809.

The IRS encourages employers and other insurance providers that do not meet the extended due dates to furnish and file the required forms, and the IRS will take into consideration the filer’s efforts when determining whether to abate penalties for reasonable cause.

Penalty relief
Notice 2016-70 specifically extends the 2015 penalty relief that was provided in the preambles to the reporting regulations under Sections 6055 and 6056. The penalty relief is available for inaccurate or incomplete information, such as inaccurate taxpayer identification numbers and dates of birth, if there was a good-faith effort to comply. The relief does not cover late returns. In determining good faith, the IRS will consider whether the taxpayer made reasonable efforts to prepare for the reporting requirements, such as gathering and transmitting the necessary data to an agent or testing its ability to transmit information to the IRS. The IRS will also consider whether the taxpayer is taking steps to ensure that it will be able to comply with the reporting requirements for 2017.

Next steps
These reporting requirements are complex and require a substantial investment by employers. The amount of information needed to complete these forms is immense. The recent election results boost the chances for eventual ACA repeal, but any legislation will take time before it is enacted and will likely phase in over time. Legislation is very unlikely to affect these 2016 reporting requirements. Employers should be preparing to comply, and should not view these extended due dates as an opportunity to delay taking action to complete the forms. Instead, employers should take advantage of the additional time to ensure the proper completion of the forms by the extended due dates and to avoid potential penalties. Contact a Grant Thornton professional if you would like to discuss these reporting requirements.

Contact
Eddie Adkins
Partner, Washington National Tax Office
T +1 202 521 1565

Jeff Martin
Senior Manager, Washington National Tax Office
T +1 202 521 1526


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