Compensation & Benefits Alert - December 2016

December 2016

Affordable Care Act Reporting Still Required for 2016 but with Extended Deadlines for Participant Copies of Forms 1095-B and 1095-C



Summary

The IRS released Notice 2016-70 on November 18, 2016, granting an automatic extension of the due dates for the distribution deadlines for the 2016 Forms 1095-B and 1095-C for all those required to file under the Affordable Care Act (“ACA”). However, this Notice does not extend the due date for providing Forms 1094-B, 1095-B, 1094-C, or 1095-C to the IRS.

The extended due dates are:
  • 1095-Bs/1095-Cs that must be provided to individuals is extended from January 31, 2017, to March 2, 2017
Notice 2016-70 also extends good-faith transition relief for filing an incorrect or incomplete information return.


Discussion

Extension of Reporting Requirements
Under Code Section 6055, health coverage providers are required to file with the IRS, and distribute to covered individuals, forms showing the months in which the individuals were covered by “minimum essential coverage.”  Under Code Section 6056, applicable large employers (generally, those with 50 or more full-time employees and equivalents) are required to file with the IRS, and distribute to employees, forms containing detailed information regarding offers of, and enrollment in, health coverage.  The chart below shows the new deadline.
 
  Old Deadline New Deadline
     
Deadline to Distribute Forms to Employees and Covered Individuals Jan. 31, 2017 March 2, 2017

Further, the IRS noted that due to the new extended deadlines, no additional automatic or permissive extensions will be granted.

While the IRS states that they are ready to receive the forms, they understand that some employers, insurers, and other providers of the minimum essential coverage will need additional time to gather, analyze, and report the required information and prepare the 2016 Forms 1095-B and 1095-C to furnish to individuals.  Employers and other coverage providers are encouraged to furnish 2016 statements and file the information returns as soon as they are ready.

Extension of Good-Faith Transition Relief
Notice 2016-70 also provides short-term relief from penalties. This relief is granted to reporting entities that can show that they made good-faith efforts to comply with the information-reporting requirements for 2016, and applies to incorrect and incomplete information reported on the statement or return. Reporting entities that do not make a good-faith effort to comply with the regulations or that fail to file an information return or furnish a statement by the due date will not receive any relief.

Guidance to Individuals
Notice 2016-70 also provides guidance to individuals who might not receive a Form 1095-B or Form 1095-C by the time they file their 2016 tax returns.

For 2016 only, 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 need not send this information to the IRS when filing their returns, but should keep it with their tax records.

Similarly, some individual taxpayers may be affected by the extension of the due date for providers of minimum essential coverage to furnish information under Code Sec. 6055 on either Form 1095-B or Form 1095-C. As a result of the extension, individuals may not have received this information before they file their income tax returns. For 2016 only, individuals who rely upon other information received from their coverage providers about their coverage for purposes of filing their returns need not amend their returns once they receive the Form 1095-B or Form 1095-C or any corrections. Individuals need not send this information to the Service when filing their returns but should keep it with their tax records.


BDO Insights

Even though a substantial change to the ACA is expected from the Trump administration, it is not likely to remove these filing requirements for 2016. 
 

For more information please contact one of the following practice leaders: 
 
Joan Vines
Managing Director, National Tax Office
Compensation & Benefits 
  Carl Toppin
STS GES Senior Manager,
Compensation & Benefits
 

 
Kim Flett
Managing Director, Tax
Compensation & Benefits 
  Peter Klinger
Principal, National Tax - Compensation & Benefits