This GMS Flash Alert reports that the U.S. Internal Revenue Service recently extended the due dates for 2015 information reporting requirements under the Affordable Care Act for insurers, self-insurers, and others providing minimum essential coverage.
The U.S. Internal Revenue Service (IRS) recently extended the due dates for 2015 information reporting requirements under the Affordable Care Act for insurers, self-insurers, and others providing minimum essential coverage.1 IRS Notice 2016-4 extends the due dates for: 1) furnishing to individuals the 2015 Form 1095-B and the 2015 Form 1095-C from February 1, 2015 to March 31, 2015; and for, 2) filing with the IRS the 2015 Form 1094-B, the 2015 Form 1095-B, the 2015 Form 1094-C, and the 2015 Form 1095-C, from February 29, 2016 to May 31, 2016, if not filing electronically, and from March 31, 2016 to June 30, 2016, if filing electronically.
Many questions have arisen in respect of the information reporting and provision of proper forms by employers with globally mobile employees covered by health insurance plans. Such employers will benefit from the guidance in Notice 2016-4 as the due dates for the above-mentioned information returns required under the Affordable Care Act have been extended. The additional time to make provision for the annual information returns and statements regarding coverage provided should therefore be welcome news.
The guidance provides that an individual will not need to wait to file her 2015 tax returns until she has received the above forms, and does not need to amend her filed tax return once she receives Forms 1095-B or 1095-C. This information does not need to be filed with the IRS for 2015, but the taxpayer should keep a copy of any information forms received for her records.
On March 23, 2010, the U.S. Congress enacted the Patient Protection and Affordable Care Act (“ACA”), which added section 6055 and section 6056 to the Internal Revenue Code (I.R.C.).2 Both sections imposed filing requirements for annual information returns and statements. Section 6055 requires issuers of health insurance, self-insuring employers, government agencies, and other providers of minimum essential coverage to file and provide information returns relating to the coverage provided to covered persons.
Section 6056 requires applicable large employers (“ALE”) to file and provide information returns concerning the health insurance the ALE offers to its full-time employees or full-time equivalents.
The IRS issued final regulations on March 10, 2014, relating to the due dates for reporting requirements of information returns and statements required under section 6055 and section 6056.3 The final regulations stipulate that under section 6055, any person providing certain individuals with minimum essential coverage must file an information return with the IRS for that calendar year on or before February 28, or March 31 if filing electronically, of the following year. The provider of the minimum essential coverage should also supply the individual with a statement indicating the coverage provided on or before January 31 of the following year.
The final regulations require, as per section 6056, every entity that is considered an applicable large employer (generally defined as an employer with 50 or more full-time employees or full-time equivalents), or if the employer is a member of a group of entities that is considered an applicable large employer (ALE member), to file an information return with the IRS for that calendar year on or before February 28, or March 31 if filling electronically, of the following year.
As transitional relief in the first year of mandatory information reporting, for 2015 reporting only, the IRS included in the preambles to the sections 6055 and 6056 regulations that no penalties, specified under sections 6721 and 6722, would be imposed on required filers who furnish and file incorrect or incomplete information on an information return if the reporting entity can demonstrate it made a good faith effort to comply with all information reporting requirements.4
According to Notice 2016-4, while the IRS is equipped to accept information returns under the ACA beginning in January 2016, the IRS determined certain employers, insurers, and other providers of minimum essential coverage needed additional time to adapt and implement systems and procedures to gather, analyze, and report the necessary information required under sections 6055 and 6056.
As a result, Notice 2016-4 provides the following extensions:
IRS Notice 2016-4 does not appear to extend the transition relief outlined in the preambles to sections 6055 and 6056 to the new due dates. Thus, employers and other providers of coverage are encouraged to file any required information returns on or before the extended due dates. Otherwise, certain filing penalties are likely to apply.
With the additional time for employers to provide employees with Form 1095-C, as well as an extension for providers of minimum essential coverage to furnish coverage information to covered individuals on either Form 1095-B or Form 1095-C, the IRS recognized that some individual taxpayers may be affected by the extended due dates when filing a 2015 individual income tax return.
In general, individuals who enrolled in health coverage through the Marketplace, but who did not receive a determination from the Marketplace that an offer of employer-sponsored coverage was unaffordable, could be affected by the extension as the individual may not receive Form 1095-C by the time she files a 2015 individual income tax return. Likewise, individuals who would generally rely on Form 1095-B or Form 1095-C to confirm minimum essential coverage information when filing an individual tax return, as required under I.R.C. sections 36B and 5000A, could be affected by the extended due dates.
Thus, for the 2015 tax year only, the IRS specified that individuals who rely on other information received from coverage providers concerning individual coverage for purposes of completing a 2015 tax return, will not need to wait to file a 2015 tax return until they have received either Form 1095-B or Form 1095-C. Further, individuals will not need to amend a tax return once they receive Form 1095-B or Form 1095-C. However, the IRS suggests that individuals keep a copy of the information returns with their tax records once received.
1 See Notice 2016-4 (PDF 163 KB). Notice 2016-4 will be published in the Internal Revenue Bulletin 2016-3, dated January 19, 2016.
2 Patient Protection and Affordable Care Act (PDF 2.41 MB). Pub. L. No. 111-148. 124 Stat. 119-1024. March 23, 2010. For text of the legislation, click here.
3 Information Reporting of Minimum Essential Coverage, 79 Fed. Reg. 46. March 10, 2014; Information Reporting by Applicable Large Employers on Health Insurance Coverage Offered Under Employer-Sponsored Plans, 79 Fed. Reg. 46. March 10, 2014.
The above information is not intended to be "written advice concerning one or more Federal tax matters" subject to the requirements of section 10.37(a)(2) of Treasury Department Circular 230 as the content of this document is issued for general informational purposes only.
The information contained in this newsletter was submitted by the KPMG International member firm in the United States.
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