With the extended deadlines, you may have a few lingering questions regarding previous extension requests, failure to file penalties, and individual tax returns.
IRS notice 2016-4 extends the following ACA filing deadlines:
- Furnishing to individuals the 2015 Form 1095-B, Health Coverage, and the 2015 Form 1095-C, Employer-Provided Health Insurance Offer and Coverage, from February 1, 2016 to March 31, 2016
- Filing with the IRS the 2015 Form 1094-B, Transmittal of Health Coverage Information Returns, the 2015 Form 1095-B, Offer and Coverage Information Returns, and the 2015 Form 1095-C, Employer-Provided Health Insurance Offer and Coverage, from February 29, 2016 to May 31, 2016, if not filing electronically, and from March 31, 2016 to June 30, 2016 if filing electronically
This notice also provides guidance to individuals who might not receive a Form 1095-B or Form 1095-C by the time they file their 2015 tax returns.
Previously Requested Extensions
These extensions are relevant only for the 2015 reporting obligations and do not require the submission of a request or provision of other documentation to the IRS. As a result, the IRS has indicated that no other automatic or permissive extensions will be available for 2015. If you have requested a filing extension before this notice was published, that extension will not be granted.
Failure to File Penalties
There are penalties for failure to file these returns in a timely manner, as well as for the filing of incomplete or incorrect returns and/or for failure to timely furnish correct statements to individuals. Fines are generally $250 for each return or statement; this is in effect doubled, since the penalty would apply to both the employee and the IRS who fail to receive a form or receive an incorrect form.
The IRS previously stated that it would not impose penalties for 2015 for filing incomplete or incorrect information if the employer or other filer made a good faith effort to comply with the requirements. A good faith effort does now require that employers comply with the extended filing deadlines. IRS penalty relief for 2015 reporting does not apply to a failure to timely file or furnish the required filings or statements. When deciding whether to assess penalties, the IRS will take into account whether the employer or other filer made reasonable efforts to prepare for the reporting obligation and the extent to which the filer is taking steps to ensure that it will be able to comply with the 2016 reporting requirements.
Guidance on Individual Tax Returns
While these extensions are a welcome relief for employers, your employees might not understand why they are no longer receiving these forms at the end of January if you take advantage of the extensions. You should update them accordingly so they can appropriately plan their own tax preparations. If employees are looking to file their individual income tax returns and have not received their ACA information prior to filing, they may utilize other information received from their employer.
Acceptable forms of documentation that provide proof of insurance coverage:
- Insurance cards
- Statement from your insurer
- Explanation of benefits
- W-2 Form or payroll statement showing health insurance deductions
- Records of previous payments of the premium tax credit
The IRS will begin accepting these filings in January, so employers are encouraged to try to meet the original filing deadlines.