On December 28, 2015, by way of Notice 2016-4, the Department of the Treasury and the Internal Revenue Service (“IRS”) extended the due dates for 2015 information reporting pursuant to the Affordable Care Act (“ACA”). Noting that some insurers and employers need additional time to meet the requirements of the Internal Revenue Code (“IRC”) Sections 6055 and 6056, the following changes were made to the deadlines:
Furnishing to individuals Forms 1095-B and 1095-C
February 1, 2016
March 31, 2016
Filing with the IRS
Forms 1094-B, 1095-B, 1094-C, and 1095-C
(paper) February 29, 2016
(electronic) March 31, 2016
May 31, 2016
June 30, 2016
Entities subject to Section 6055 are required to file Forms 1094-B and 1095-B with the IRS and to provide individuals with a copy of Form 1095-B. Applicable large employers (employers with 50 or more full-time and full-time equivalent employees) are subject to Section 6056 and are required to file Forms 1094-C and 1095-C with the IRS and to provide full-time employees with a copy of Form 1095-C.
Before Notice 2016-4 was issued, entities subject to the reporting requirements were allowed automatic and permissive extensions of time in certain circumstances, but those extensions are no longer applicable, in light of the extended deadlines. The new deadlines will provide some relief to employers who have been making efforts to comply with the looming deadlines and have already been granted a less generous extension or were considering whether to request an extension.
The IRC imposes penalties for a failure to timely file with the IRS and for a failure to furnish individuals with the required forms. Those penalties remain in place for entities that do not meet the new due dates. The IRS noted that even if entities are not going to meet the new deadlines, they should still file and furnish individuals with the required forms as soon as they are able because the IRS will take that into consideration when determining whether to reduce a penalty. The IRS will also consider whether the entity made reasonable efforts to meet the requirements, including, for example, gathering necessary data and testing transmission to the IRS, as well as whether the entity is taking steps to ensure compliance for 2016.
Impact on Individuals
Pursuant to the ACA, individuals may be eligible for a premium tax credit if their employer did not offer coverage or the coverage offered is deemed unaffordable, and they purchase insurance through a state or federal exchange. A federal income tax return must be filed in order to receive a premium tax credit. Individuals who enrolled in coverage through an exchange but did not receive a determination from the exchange about whether the coverage offered by their employer was affordable, may be impacted by the extensions because they may not know before filing their tax returns whether the coverage offered by their employer is considered affordable. The IRS notes that for 2015 only, individuals may rely on other information provided by the employer when filing their income tax returns and need not amend their returns when the employer furnishes them with Form 1095-C. The IRS further notes that individuals should keep that information with their tax records.
Also, all individuals are subject to the individual mandate imposed by the ACA, which requires them to maintain minimum essential coverage, and must report compliance (or non-compliance) on their income tax returns. Some individuals may be affected by the extensions because they may not receive Forms 1095-B or 1095-C before filing their tax returns and therefore may not know whether they had minimum essential coverage. The IRS similarly noted that for 2015 only, individuals may rely on other information provided by their coverage providers when filing their income tax returns and need not amend their returns, but should keep that information with their tax records.