In a belated Christmas present, the IRS on December 28th extended the deadlines for large employers and health insurers to comply with certain reporting requirements imposed by the Affordable Care Act (“ACA”). Notice 2016-4 grants an additional two months to provide statements to employees, and an additional three months to transmit those statements to the IRS.
As explained in our March 13, 2014, article, the ACA requires “applicable large employers” (those with 50 or more full-time employees, including full-time equivalents, during the prior calendar year) to report to their full-time employees on the type of health coverage, if any, they were offered during a calendar year. These reports are to be made on IRS Form 1095-C, with copies transmitted to the IRS using Form 1094-C.
In addition, both insurance companies and self-funded employers must report any health coverage actually provided to employees (and other insured individuals, such as retirees). These reports are generally made on Form 1095-B, although self-funded employers may elect to combine this reporting with the information provided to full-time employees on the Form 1095-C. In either event, copies of these individual reports must then be transmitted to the IRS using either Form 1094-B or 1094-C.
Prior to this recent extension, the calendar-year 2015 reports to employees were due by February 1, 2016. The IRS transmittals were then due by either February 29, 2016 (if filed on paper), or March 31, 2016 (if filed electronically). Although employers and insurers were able to request extensions of these deadlines, those extension procedures have now been overridden by these extended deadlines.
Thus, large employers must now report on health coverage offered to their full-time employees during 2015 by no later than March 31, 2016. That same deadline applies to insurers or self-funded employers reporting health coverage provided to employees and other individuals.
Copies of those individual reports must then be transmitted to the IRS by either May 31, 2016 (if done on paper), or June 30, 2016 (if filing electronically). As before, any employer required to file 250 or more individual reports must file electronically. Smaller employers are also permitted to file electronically, thereby gaining the additional month in which to file.
The primary reason for the original February 1 deadline for providing statements to employees was to allow them to use the information provided on those statements when preparing their individual tax returns. Recognizing that this two-month extension of time to provide those statements could make it difficult for employees to file their returns as early as they might like (for instance, to obtain a tax refund), Notice 2016-4 also grants relief to employees who file their returns prior to receiving these ACA-related statements. If an employee relied on other information provided by an employer or health insurer when filing a tax return, there is no need to amend that return after receiving a Form 1095-C or 1095-B that contains inconsistent information.
Although these extended deadlines should come as welcome relief to employers who had been scrambling to meet the original deadlines, they would be well-advised to maintain their compliance efforts. The Notice reiterates that late filers will still be subject to penalty assessments. The IRS may abate those penalties for “reasonable cause,” and they will consider the steps taken by an employer to meet its filing obligations when considering an abatement request. The IRS will also take into account steps taken by the employer to ensure that it can comply with these ACA-reporting requirements for coverage provided during calendar-year 2016.