On October 2, 2020, the IRS issued Notice 2020-76, extending the deadline for employers to furnish ACA Forms 1095-C to applicable full-time employees from January 31, 2021, to March 2, 2021.
Will the agency issue an extension for the 2021 tax year? To further align with the agency’s goals to identify ACA Employer Mandate non-compliance, it makes sense for the agency to not issue an extension. While nothing is set in stone at this time, employers would be wise to prepare for the aforementioned deadlines as is, and here’s why.
Notably, the Treasury Inspector General for Tax Administration (TIGTA) recommended that the IRS do more to identify ACA non-compliance and assess more penalties. What better way to do that than to give employers less time to complete their filings?
In addition, the agency has made clear in its recent penalty assessments that employers must do more to contest ACA penalties, such as providing actual math computations demonstrating ACA affordability and why they shouldn’t receive a penalty.
Lastly, this is the first year where Good-Faith Transition Relief is no longer available. The fail-safe for employers struggling with ACA reporting ended in 2020 and reinforces the importance for employers to take ACA reporting seriously.
That means for the 2021 tax year, the ACA reporting deadlines are as follows:
January 31, 2022: This is the deadline to furnish 1095-C forms to applicable ACA full-time employees as well as Form 1095-B for self-funded employers.
February 28, 2022: Employers with less than 250 filings may choose to paper file their ACA forms 1094-C and 1095-C to the IRS by February 28, 2022. Employers that elect this method of ACA reporting should note that a new IRS proposed rule could impact the size requirements for this method and should proceed with caution. If the ruling passes, the size of filings could drop to 100 for the 2022 tax year.
March 31, 2022: The electronic filing deadline of ACA forms 1094-C and 1095-C for the 2021 tax year is March 31, 2022. Best practices indicate electronic filing with the IRS due to the extra time it permits, as well as the fail-safes it provides for identifying and correcting ACA reporting issues.
As a reminder, employers with 50 or more full-time employees and full-time equivalent employees are Applicable Large Employers (ALEs) under the ACA’s Employer Mandate and must:
- Offer Minimum Essential Coverage (MEC) to at least 95% of their full-time employees (and their dependents) whereby such coverage meets Minimum Value (MV); and
- Ensure that the coverage for the full-time employee is affordable based on one of the IRS-approved methods for calculating affordability.
Failing to meet these requirements could result in 4980H penalty assessments from the IRS. The agency is currently issuing these penalties for the 2018 tax year. Additional IRS penalties can be assessed if employers fail to file accurately and on time via Letter 5005-A and Letter 972CG.
We’re heading into the 7th ACA reporting year and this will be the first time in ACA history that the IRS hasn’t issued a furnishing extension.
Employers that need assistance meeting ACA reporting deadlines for the 2022 tax year should download the ACA 101 Toolkit. The ultimate resource includes important state and federal reporting deadlines, steps for reducing IRS penalty risk, and affordability percentages.
To minimize IRS penalty risk and maximize ACA compliance, download the new Employer’s Guide to Coding ACA Form 1095-C.
We’re committed to helping companies reduce risk, avoid penalties, and achieve 100% ACA compliance. For questions about the ACA contact us here.