IRS Extends Deadline to Furnish ACA Forms to Individuals and Good-Faith Relief from ACA Reporting Penalties

On November 18, 2016, the Internal Revenue Service gave employers averaging at least 50 full-time or full-time equivalent employees in 2015 (Applicable Large Employers or ALEs) an early holiday gift. The IRS extended the Affordable Care Act’s due date to furnish 2016 Forms 1095-C to individuals from January 31, 2017 to March 2, 2017. The IRS also extended last year’s transition relief to protect ALEs from penalties if they make a good-faith effort to comply with the ACA’s 2016 information and reporting requirements.

The IRS did NOT extend the due date for ALEs to file their 2016 Forms 1094-C and 1095-C, which must still be filed with the IRS by February 28, 2017 (March 31, 2017, if filed electronically).

Under the ACA, ALEs are required to annually furnish Form 1095-C (Employer-Provided Health Insurance Offer and Coverage) to individuals on or before January 31 of the following calendar year. ALEs must also file Forms 1095-C and 1094-C (Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns) with the IRS on or before February 28 (March 31 if filed electronically) of the following calendar year.

The IRS determined that a substantial number of employers need additional time beyond January 31, 2017 to prepare and furnish their 2016 Forms 1095-C to individuals, which is why the due date was extended to March 2, 2017. This extension does not require the submission of a request or other documentation. However, the IRS determined that employers do not need additional time to meet filing deadline, so the due date to file 2016 Forms 1095-C and 1094-C with the IRS remains February 28, 2017 (March 31, 2017, if filed electronically).

Perhaps more important is the extension of last year’s transition relief from penalties that may be imposed for failing to comply with the ACA’s 2016 information and reporting requirements, which can be substantial. The penalty for failing to timely furnish correct Forms 1095-C to individuals is generally $250 per individual. The penalty for failing to timely file correct Forms 1095-C with the IRS is generally $250 per form.

To avoid these penalties, an ALE must show that it made a good-faith effort to comply with the ACA’s 2016 requirements to furnish information about employer-provided health insurance coverage to individuals and file this information with the IRS. This relief only applies to forms with incorrect or incomplete information, such as missing or inaccurate taxpayer identification numbers, dates of birth, etc. It does not apply to ALEs that do not make a good-faith effort to comply with the reporting requirements or that fail to file or furnish forms by the due dates.

In determining good faith, the IRS will consider whether an ALE made reasonable preparation efforts to furnish and file the necessary forms, such as gathering and transmitting the necessary data to an agent to prepare the data for filing with the IRS or testing its ability to transmit information to the IRS. The IRS will also consider the extent to which an ALE is taking steps to ensure that it will be able to comply with the 2017 reporting requirements.

These extensions only apply to the ACA’s 2016 reporting requirements. The IRS does not anticipate extending this transition relief, either with respect to the due dates or with respect to good faith relief from penalties, to reporting for 2017.

Setnor Byer Insurance & Risk is committed to helping clients protect their businesses and navigate the ACA’s reporting requirements. Please contact us for more information about our online tool for preparing, furnishing and filing ACA forms.

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