2 minute read:
To kick off the holiday season, the IRS has issued Notice 2019-63, which extends the deadline for distributing Form 1095-C for the 2019 tax year to full-time employees as required by the Affordable Care Act (ACA). The new deadline also applies for distributing Form 1095-B, used by employers with self-funded insurance programs, to employees.
The new deadline for furnishing forms 1095-C and 1095-B for employers who administer self-funded insurance programs is March 2, 2020. It was previously January 31, 2020.
The notice, issued on December 2, 2019 affects Applicable Large Employers (ALEs) and their reporting obligations under the ACA’s Employer Mandate. Under the ACA’s Employer Mandate, ALEs, organizations with 50 or more full-time employees and full-time equivalent employees, are required to offer Minimum Essential Coverage (MEC) to at least 95% of their full-time workforce (and their dependents) whereby such coverage meets Minimum Value (MV) and is affordable for the employee or be subject to Internal Revenue Code (IRC) Section 4980H penalties.
In addition to the furnishing extension, the IRS has granted good-faith transition relief through the 2019 tax year from sections 6721 and 6722 penalties to the 2019 information-reporting requirements under sections 6055 and 6056. Section 6721 imposes a penalty for failing to timely file an information return or for filing an incorrect or incomplete information return. Section 6722 imposes a penalty for failing to timely furnish an information statement or for furnishing an incorrect or incomplete information statement.
It is important to note that good-faith transition relief can only be applied when it is demonstrated that reasonable efforts have been made to comply with ACA regulations and IRS deadlines in a responsible manner.
The notice states the following in determining good-faith, “[i]n determining good faith, the Service will take into account whether an employer or other coverage provider made reasonable efforts to prepare for reporting the required information to the Service 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 the Service or testing its ability to transmit information to the Service.”
Employers should note that while the IRS has issued an extension for furnishing, no extension has been issued regarding the filing deadlines. If your organization is not equipped to meet these deadlines, some third-party experts can handle these requirements in addition to managing your ACA compliance process.
These deadlines are especially important to remember as the IRS is currently issuing penalties under sections 6721/ 6722 in Letter 972CG. The penalty amounts for the 2019 tax year are higher than before.
We’re committed to helping companies reduce risk, avoid penalties, and achieve 100% ACA compliance. For questions about the ACA contact us here.