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IRS Extends Distribution Deadline for ACA Reporting - Here's What to Know

Topics: ACA Compliance

December 9, 2016 /
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HR personnel who have been struggling to sift through IRS guidelines on ACA reporting have been given extra time to prepare the necessary reporting forms for employees. The government has temporarily adjusted reporting guidelines under Code 6055 and 6056.  After they determined that significant numbers of employers and insurance providers were having difficulty "gathering and interpreting" the information needed to provide Forms 1095-B and 1095-C to employees, the IRS and the Treasury Department have granted them some leeway.  

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  • The government has extended the ACA distribution deadline from January 31, 2017 to March 2.  The extension applies to Forms 1095-C (Employer-Provided Health Insurance Offer and Coverage) and 1095-B (Health Coverage).
  • The deadline for filing these forms with the IRS, however, remains the same.  The submission deadline for paper forms is February 28, 2017.   Electronic submissions are due on March 31, 2017.  Electronic filing is required for an employer submitting 250 or more forms.
  • If you need more time to file, you can apply for a 30-day extension.  You'll need to complete Form 8809 (Application for Extension of Time to File Information Returns) by the applicable filing deadline.  Hence, employers shouldn't anticipate an automatic extension for filing 2016 Form 1094-B with copies of 1095-B, and Form 1094-C, which must be submitted with copies of Form 1095-C.  
  • The ACA distribution deadline was adjusted to help employers coordinate preparation of ACA and W-2 forms.  
  • HR staff should let employees know that they can file their income taxes without attaching Form 1095.  However, workers should keep track of these and other relevant documents in case they are audited.
  • Although this is the second consecutive year the IRS has granted an ACA distribution deadline extension, it applies only to the 2016 tax year.  An extension for 2017 is not anticipated.

Reporting Requirements

The ACA's employer mandate is required for applicable large employers with 50 or more full-time employees (or equivalents).  Large employers must adhere to tracking and reporting requirements.  

Small businesses (those with fewer than 50 employees) are still subject to some of the ACA reporting requirements.  For example, entities with a self-insured health plan are required to submit Forms 1095-B and 1094-B.  They also have to provide workers with a copy of Form 1095-B.  For small businesses that are members of a controlled or affiliated service group that collectively has at least 50 employees, completion of Forms 1095-C and 1094-C is required.  

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Penalties

HR teams should be aware that employers will be penalized if they do not submit required paperwork by the appropriate deadlines.  The IRS states in Notice 2016-70 that it will apply a "reasonable cause analysis" to determine penalty amounts for delinquent filers.  The IRS will consider factors such as whether employers made reasonable efforts to prepare for filing by attempting to submit information to an agent or test their own ability to gather and submit required data.  The IRS will also evaluate whether employers are taking reasonable steps to comply with 2017 filing requirements.

Good Faith Compliance

The IRS will continue its "good faith compliance" standard for the second year of ACA reporting (2016).  According to that provision, inaccurate or incomplete information on reporting forms won't result in a penalty, provided the forms were filed on time and the employer can demonstrate that they were completed in good faith.  

While many are hopeful that President-elect Donald Trump will repeal the ACA upon taking office, the law currently remains in place.  Employers and HR departments are advised to closely monitor their processes, observe the ACA distribution deadline, and submit required forms on time.

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