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IRS Extends Deadline for Applicable Large Employers to Report Health Coverage Information.

(Parker Tax Publishing January 7, 2016)

The IRS has extended the due dates, for the 2015 tax year only, for applicable large employers to file Form 1095-B and Form 1095-C from February 1, 2016, to March 31, 2016. For taxpayers required to file Form 1094-B and Form 1094-C (generally insurers or self-insuring employers), the due dates have also been extended for 2015. Notice 2016-4.

Information Reporting Requirements under the Affordable Care Act

The Affordable Care Act added (1) Code Sec. 6055, which requires health insurance issuers, self-insuring employers, government agencies, and other providers of minimum essential coverage to file and furnish annual information returns and statements regarding coverage provided, and (2) Code Sec. 6056, which requires applicable large employers (ALEs) to file information returns with the IRS and provide statements to their full-time employees about the health insurance coverage offered. This information is used by the IRS to administer the employer shared responsibility provisions of Code Sec. 4980H and the premium tax credit under Code Sec. 36B.

An ALE is an employer that employed an average of at least 50 full-time employees during the preceding calendar year. A full-time employee generally includes any employee who was employed, on average, at least 30 hours per week and any full-time equivalents. For example, 40 full-time employees employed 30 or more hours per week on average plus 20 employees employed 15 hours per week on average are equivalent to 50 full-time employees.

The Code Sec. 6055 and Code Sec. 6056 information reporting requirements are first effective for coverage offered (or not offered) in 2015. Beginning in 2016, an ALE must file information returns with the IRS and furnish statements to employees to report information about its offers of health coverage to its full-time employees for 2015.

ALEs are required to file Form 1095-C, Employer-Provided Health Insurance Offer and Coverage, and Form 1094-C, Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns, with the IRS and must furnish a statement including the same information provided to the IRS to each full-time employee.

The information to be reported to the IRS includes identification of the ALE, identification of full-time employees to whom an offer of coverage is made, and duration of the offer.

The information contained in the employee statement includes identification of the employer and the same information required to be reported to the IRS for each full-time employee.

The regulations under Code Sec. 6056 impose similar requirements on providers of minimum essential coverage, to be reported on Form 1094-B, Transmittal of Health Coverage Information Returns, and Form 1095-B, Health Coverage.

Due Dates for ACA Information Returns Extended

Notice 2016-04 extends the due date for furnishing the 2015 Form 1095-B and the 2015 Form 1095-C from February 1, 2016, to March 31, 2016.

The notice also extends the due date for filing with the IRS the 2015 Form 1094-B and the 2015 Form 1094-C from February 29, 2016, to May 31, 2016, if not filing electronically, and from March 31, 2016, to June 30, 2016, if filing electronically.

According to the IRS, the provisions regarding automatic and permissive extensions of time for filing information returns and permissive extensions of time for furnishing statements do not apply to the extended due dates.

An ALE or other coverage provider that fails to comply with the information reporting requirements may be subject to the general reporting penalty provisions under Code Sec. 6721 (failure to file correct information returns) and Code Sec. 6722 (failure to furnish correct payee statement).

Caution: The information reporting penalties under Code Secs. 6721 and 6722 have increased from $100 to $250 per Form 1094-B, Form 1094-C, Form 1095-B, or Form 1095-C with respect to which a failure occurs. The maximum penalty that may be imposed has increased from $1,500,000 to $3,000,000.

The IRS notes that employers may be eligible for short-term relief from reporting penalties in certain circumstances. Specifically, under Code Sec. 6724, relief is provided from penalties under Code Secs. 6721 and 6722 for incorrect or incomplete information returns and statements filed and furnished in 2016 to report offers of coverage in 2015, provided the ALE can show that it made a good faith effort to comply with the requirements.

Transition Relief for Taxpayers Affected by Delayed Forms 1095

The IRS notes that 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.

Similarly, some individual taxpayers may be affected by the extension of the due date for providers of minimum essential coverage to furnish information under Code Sec. 6055 on either Form 1095-B or Form 1095-C. Individuals generally use this information to confirm that they had minimum essential coverage for purposes of Code Secs. 36B and 5000A. Because, as a result of the extension, individuals may not have received this information before they file their income tax returns, for 2015 only, individuals who rely upon other information received from their coverage providers about their coverage for purposes of filing their returns need not amend their returns once they receive the Form 1095-B or Form 1095-C or any corrections. Individuals need not send this information to the IRS when filing their returns but should keep it with their tax records.

For a discussion of the information reporting requirements under the ACA for applicable large employers, see Parker Tax ¶191,160. (Staff Editor Parker Tax Publishing)

Disclaimer: This publication does not, and is not intended to, provide legal, tax or accounting advice, and readers should consult their tax advisors concerning the application of tax laws to their particular situations. This analysis is not tax advice and is not intended or written to be used, and cannot be used, for purposes of avoiding tax penalties that may be imposed on any taxpayer. The information contained herein is general in nature and based on authorities that are subject to change. Parker Tax Publishing guarantees neither the accuracy nor completeness of any information and is not responsible for any errors or omissions, or for results obtained by others as a result of reliance upon such information. Parker Tax Publishing assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect information contained herein.

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