Notice 2016-4, 2016-3 IRB
In a Notice, IRS had extended the due dates for the 2015 information reporting requirements under the Affordable Care Act (ACA)—both furnishing to individuals and filing with IRS—for insurers, self-insuring employers, and certain other providers of minimum essential coverage under Code Sec. 6055, and the information reporting requirements for applicable large employers (ALEs) under Code Sec. 6056. Guidance is also provided to individuals who, as a result of these extensions, might not receive a Form 1095-B or Form 1095-C by the time they file their 2015 tax returns.
Background. Code Sec. 6055(a) generally requires every health insurance issuer, sponsor of a self-insured health plan, government agency that administers government-sponsored health insurance programs, and other entity that provides “minimum essential coverage” (defined in Code Sec. 5000A(f)) to file annual returns reporting information for each individual for whom such coverage is provided. An entity filing an information return reporting minimum essential coverage must also furnish a written statement to each individual listed on the return that shows the information that must be reported to IRS for that individual. (Code Sec. 6055(c)(1)) The purpose of this reporting is to allow taxpayers to establish, and IRS to verify, that the taxpayers were covered by minimum essential coverage and their months of enrollment during a calendar year.
Reporting entities subject to Code Sec. 6055’s requirements use Form 1094-B, Transmittal of Health Coverage Information Returns, and Form 1095-B, Health Coverage, or another form that IRS designates, to report minimum essential coverage.
Code Sec. 6056 requires annual information reporting by ALEs relating to the health insurance that the employer offers (or does not offer) to its full-time employees. In general, an ALE, as defined in Code Sec. 4980H, is an employer that employed an average of at least 50 “full-time employees” during the preceding calendar year. Code Sec. 6056 also requires those employers to furnish related statements to their employees. The information that the employers report allows IRS to administer the Code Sec. 4980H employer shared responsibility provisions and allows their employees to determine whether, for each month of the calendar year, they may claim on their individual tax returns a Code Sec. 36B premium tax credit. Under Code Sec. 36B(c)(2)(C), an employee is not eligible for the premium tax credit for any month for which the employee is eligible for coverage under an eligible employer-sponsored plan that provides minimum value and is affordable (or for any month for which the employee enrolls in an eligible employer-sponsored plan, regardless of whether the plan is affordable or provides minimum value). The information reported also is used by individuals to confirm that they had minimum essential coverage for purposes of the individual mandate under Code Sec. 5000A.
Employers meet the Code Sec. 6056 requirements by filing Form 1094-C, Transmittal of Employer Provided Health Insurance Offer and Coverage Information Returns, and a Form 1095-C, Employer Provided Health Insurance Offer and Coverage, or other form(s) designated by IRS, or a substitute form. Each Form 1095-C and the transmittal Form 1094-C together constitute a Code Sec. 6056 information return required to be filed with IRS. (Reg. § 301.6056-1(c)(1)) Form 1095-C generally includes information on the coverage (if any) offered by the ALE to the full-time employee.
The penalties under Code Sec. 6721 for failing to timely file an information return or filing an incorrect or incomplete information return, and under Code Sec. 6722 for failing to timely furnish an information statement or furnishing an incorrect or incomplete information statement, apply to the information returns and statements required by Code Sec. 6055 and Code Sec. 6056.
Extensions. Notice 2016-4 extends the due date:
- For furnishing to individuals the 2015 Form 1095-B and the 2015 Form 1095-C: from Feb. 1, 2016, to Mar. 31, 2016, and
- For filing with IRS the 2015 Form 1094-B, the 2015 Form 1095-B, the 2015 Form 1094-C, and the 2015 Form 1095-C: from Feb. 29, 2016, to May 31, 2016, if not filing electronically; and from Mar. 31, 2016, to June 30, 2016, if filing electronically.
Employers or other coverage providers that do not comply with these extended due dates are subject to penalties under Code Sec. 6722 or Code Sec. 6721 for failure to timely furnish and file.
In view of these extensions, the automatic and permissive extensions of time for filing information returns and permissive extensions of time for furnishing statements will not apply to the extended due dates. Because these extensions apply automatically to all filers and are more generous than extensions of time to file or furnish 2015 returns and information statements under Code Sec. 6055 and Code Sec. 6056 that have already been requested by some filers in submissions to IRS, such requests will not be formally granted.
Notwithstanding the extensions provided in Notice 2016-4, employers and other coverage providers are encouraged to furnish statements and file the information returns as soon as they are ready. IRS also encouraged employers and other coverage providers that do not meet the extended due dates to furnish and file. IRS will take such furnishing and filing into consideration when determining whether to abate penalties for reasonable cause. IRS will also take into account whether an employer or other coverage provider made reasonable efforts to prepare for reporting the required information to IRS and furnishing it to employees and covered individuals, such as gathering and transmitting the necessary data to an agent to prepare the data for submission to IRS, or testing its ability to transmit information to IRS. In addition, IRS will take into account the extent to which the employer or other coverage provider is taking steps to ensure that it is able to comply with the reporting requirements for 2016.
Guidance to individuals. Notice 2016-4 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.
IRS notes that most individuals offered employer-provided coverage will not be affected by the extension. This is partly because Code Sec. 1.36B-2(c)(3)(v)(A)(3) provides that an offer of employer-sponsored coverage is generally treated as unaffordable for Code Sec. 36B purposes if the individual enrolls in coverage through the Marketplace and receives the benefit of advance payments of the premium tax credit based on a determination from the Marketplace that the offer of employer-sponsored coverage is unaffordable. Specifically, the extension will not affect: employees who enrolled in the employer-sponsored coverage or in other coverage that was not offered through the Marketplace; employees who for any other reason would not qualify for a premium tax credit (for example, an employee who qualifies for Medicare or has household income in excess of the limits); employees who enrolled in coverage through the Marketplace and received the benefit of advance payments of the premium tax credit based on a determination by the Marketplace that the employee’s offer of employer-sponsored coverage was unaffordable; or employees who did not enroll in any coverage.
However, some employees (and related individuals) who enrolled in coverage through the Marketplace but did not receive a determination from the Marketplace that the offer of employer-sponsored coverage was not affordable could be affected by the extension if they do not receive their Forms 1095-C before they file their income tax returns. For 2015 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 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. Because, as a result of the extension, individuals may not have received this information before they file their income tax returns, for 2015 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.
IRS emphasizes that the extensions of due dates provided by Notice 2016-4 apply only to Code Sec. 6055 and Code Sec. 6056 information returns and statements for calendar year 2015 filed and furnished in 2016 and do not require the submission of any request or other documentation to IRS.