Businesses large and small got some good news recently from the IRS. Some employers and other entities, which are required to file information returns for 2015 on Forms 1094 and 1095, now have an extension on the deadlines. This gives employers extra time to complete two tasks:
- Provide the forms to recipients; and
- File the forms with the IRS.
How Much Extra Time Do You Get?
|2015 Reporting Requirement||Original Deadline||Extended Deadline|
|Forms Sent to Individuals or Employees|
|Form 1095-B (Health coverage)
Form 1095-C (Employer-provided offer)
|February 1, 2016||March 31, 2016|
|Forms Filed with the IRS|
|Form 1094-B (Transmittal) and 1095-B
Form 1094-C (Transmittal) and 1095-C
|Paper | February 29, 2016
Electronic | March 31, 2016
|Paper | May 31, 2016
Electronic | June 30, 2016
Under Internal Revenue Code Section 6055, health coverage issuers, certain employers, and others that provide “minimum essential coverage” to individuals are required to file information returns containing the type and period of coverage. They’re also required to furnish related information statements to covered individuals, beginning with calendar year 2015
Applicable Large Employers (ALEs) are generally defined as employers with at least 50 full-time employees (including “full-time equivalent” employees) in the previous year.
The original deadlines for filing 2015 ACA information returns were the same as for filing W-2 and 1099 forms. In other words, they were required be filed with the IRS no later than February 29, 2016 (March 31, 2016, if filed electronically). Employers could apply for a 30-day extension of the deadline by filing an IRS form.
The IRS is prepared to accept the information returns on Forms 1094-B, 1095-B, 1094-C, and 1095-C beginning in January 2016. However, following consultation with stakeholders, the U.S. Department of the Treasury and the IRS determined that some employers, insurers, and other providers of minimum essential coverage need additional time to adapt and implement systems and procedures to gather and report the required information.
What’s the Difference Between the Forms?
- Providers of health coverage, including insurers, some self-insuring employers and others must file IRS Forms 1094-B, “Transmittal of Health Coverage Information Returns,” and 1095-B, “Health Coverage.”
- Applicable large employers (ALEs) are required to file Form 1094-C, “Transmittal of Employer Provided Health Insurance Offer and Coverage Information Returns,” and Form 1095-C, “Employer Provided Health Insurance Offer and Coverage,” with information about the health care coverage, if any, they offered to full-time employees.
Will There Be Further Extensions After These Deadlines?
In view of the extensions announced recently by the IRS, the provisions regarding automatic and permissive extensions of time for filing information returns and permissive extensions of time for furnishing statements won’t apply to the extended due dates. In other words, there will be no further extensions.
Are There Penalties for Not Filing?
Be aware that with this extension, penalties are more than doubled. Penalties for failing to file correct and complete statements before August 1 are now up to $250 per form (previously $100 per form), not to exceed $3M/year (previously $1.5 M/year). If forms are filed within 30 days of the due date, the penalty is reduced to $50 per return, and if filed after 30 days but before August 1, to $100 per return.
Employers or other coverage providers that don’t comply with the new deadlines will be subject to penalties for failure to timely furnish and file. However, employers and other coverage providers that don’t meet the extended due dates are still encouraged to furnish and file, and the IRS will take such furnishing and filing into consideration when determining whether to abate the penalties for reasonable cause.
In addition, the IRS will take into account whether an employer or other coverage provider made reasonable efforts to prepare for reporting the required information to the IRS and furnishing it to employees and covered individuals. These efforts include gathering and transmitting the necessary data to an agent to prepare the data for submission to the IRS, or testing an employer’s ability to transmit information to the IRS. The tax agency will also consider the extent to which the employer or other coverage provider is taking steps to ensure that it’s able to comply with the reporting requirements for 2016.
What About Individual Taxpayers?
The new IRS notice also provides guidance to individuals who might not receive Form 1095-B or Form 1095-C by the time they file their 2015 personal income tax returns (because their employers took advantage of the extension opportunity).
In these cases, according to the IRS Notice, “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 don’t need to send this information to the IRS when filing their returns but should keep it with their tax records.
Most employees who had health insurance throughout the year can simply check the box indicating full-year coverage on their Forms 1040(-X) and do not need to attach Form 1095-C to their returns. Employees need to file a Form 1095-C only in two situations when filing their tax returns for 2015: when there are three or more months of gaps in coverage, or when the employee received health coverage through a marketplace organization with a premium tax credit. In those cases, the employee will need to file a Form 1095-C with their tax return. Other forms of documentation that would provide proof of insurance coverage may be accepted in lieu of Form 1095-C.
Need Further Assistance?
Contact us if you need more information or assistance to comply with the Form 1094/1095 filing requirements.