Employers and other organizations got some good news from the IRS for the start of the new year. The tax agency announced that it’s extending the due dates for filing 2015 Affordable Care Act (ACA) information returns. This gives employers extra time to complete two tasks:
1. Provide the forms to the recipients and
2. File the forms with the IRS.
What’s the Difference Between the Forms?
Background information. Under Internal Revenue Code Section 6055, health coverage issuers, certain employers, and others that provide “minimum essential coverage” to individuals are required to file information returns containing the type and period of coverage. They’re also required to furnish related information statements to covered individuals, beginning with calendar year 2015. If your entity is subject to these reporting requirements, you must file IRS Forms 1094-B, “Transmittal of Health Coverage Information Returns,” and 1095-B, “Health Coverage.”
Code Section 6056 requires applicable large employers (ALEs) to report to the IRS information about the health care coverage, if any, they offered to full-time employees (for example, an individual who is employed on average for at least 30 hours of service per week). This information is needed in order to administer the employer shared responsibility provisions of the ACA and to assist in determining eligibility for the premium tax credit. ALEs are generally defined as employers with at least 50 full-time employees (including full-time equivalent employees) in the previous year.
ALEs are required to file Form 1094-C, “Transmittal of Employer Provided Health Insurance Offer and Coverage Information Returns,” and Form 1095-C, “Employer Provided Health Insurance Offer and Coverage,” with information about the health care coverage, if any, they offered to full-time employees.
How Much Extra Time Do You Get?
The original deadlines for filing 2015 ACA information returns were the same as for filing W-2 and 1099 forms. In other words, they were required be filed with the IRS no later than February 29, 2016 (March 31, 2016, if filed electronically). Employers could apply for a 30-day extension of the deadline by filing an IRS form.
In addition, employers were originally required to provide 2015 ACA statements to employees no later than February 1, 2016 (because January 31, 2016 is a Sunday).
If you’re not filing electronically, the IRS has now extended the due date:
- To March 31, 2016 for furnishing to individuals 2015 Forms 1095-B and 1095-C (from February 1, 2016).
- To May 31, 2016 for filing with the IRS 2015 Forms 1094-B, 1095-B, 1094-C, and Form 1095-C (from February 29, 2016). If you’re filing electronically, the deadline is now June 30, 2016 (from March 31, 2016).
The IRS is prepared to accept the information returns on Forms 1094-B, 1095-B, 1094-C, and 1095-C beginning in January 2016. However, following consultation with stakeholders, the U.S. Department of the Treasury and the IRS determined that some employers, insurers, and other providers of minimum essential coverage need additional time to adapt and implement systems and procedures to gather and report the required information.
Will You Be Able to Get Further Extensions after these Deadlines?
In view of the extensions announced recently by the IRS, the provisions regarding automatic and permissive extensions of time for filing information returns and permissive extensions of time for furnishing statements won’t apply to the extended due dates. In other words, there will be no further extensions.
Are There Penalties for Not Filing?
Employers or other coverage providers that don’t comply with the new deadlines will be subject to penalties for failure to timely furnish and file. However, employers and other coverage providers that don’t meet the extended due dates are still encouraged to furnish and file, and the IRS will take such furnishing and filing into consideration when determining whether to abate the penalties for reasonable cause.
In addition, 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. These efforts include gathering and transmitting the necessary data to an agent to prepare the data for submission to the IRS, or testing an employer’s ability to transmit information to the IRS. The tax agency will also consider the extent to which the employer or other coverage provider is taking steps to ensure that it’s able to comply with the reporting requirements for 2016.
What about Individual Taxpayers?
The new IRS notice also provides guidance to individuals who might not receive Form 1095-B or Form 1095-C by the time they file their 2015 personal income tax returns (because their employers took advantage of the extension opportunity).
In these cases, according to the IRS Notice, “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 don’t need to send this information to the IRS when filing their returns but should keep it with their tax records.
Contact your tax adviser if you need more information or assistance to comply with the Form 1094/1095 filing requirements.