In a rather surprising turn of events, the IRS released proposed regulations that add an automatic extension to the furnishing deadline of the ACA’s 1095-C and 1095-B forms.
Under the proposed IRS regulations, employers will have up to 30 days extra from the annual deadline of January 31. While the proposed changes do not move the deadline, they effectively give employers a buffer period to assist with the annual furnishing requirements of the ACA’s Employer Mandate.
Under the ACA’s Employer Mandate, employers with 50 or more full-time employees and full-time equivalent employees are Applicable Large Employers (ALEs) 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.
ALEs that do not meet the aforementioned requirements could be subject to IRS penalties under IRC Section 4980H.
The IRS proposed regulations are likely to pass and will apply to the upcoming 2021 ACA filing season.
That means that once the new regulations go into effect, the furnishing deadline will move from January 31, 2022, to March 2, 2022. This automatic extension effectively applies to all years thereafter as well.
Employers should note that the automatic extension will supplement the previous methods for applying for an extension. You will no longer be required to submit a completed paper Form 8809 with an explanation of good cause, requesting an extension, nor will the IRS commissioner be able to grant one.
Since employers were first required to comply with the ACA’s Employer Mandate in 2015, the IRS has issued a furnishing deadline extension every year. We recently commented that the agency was unlikely to do so for the 2021 tax year, and in a way, it hasn’t – it instead changed the rules.
Organizations preparing for the 2021 ACA filing season should find comfort in the automatic extension as this alleviates the timeliness aspect of furnishing forms by a rigid deadline this year.
Employers should note that while the IRS has issued an extension for furnishing, no extension has been issued regarding the filing deadlines. If you’re not equipped to meet these deadlines, contact us to learn about our suite of ACA solutions. We can handle these requirements in addition to managing the ACA compliance process for you.
These deadlines are especially important to remember as the IRS is currently issuing penalties under sections 6721/ 6722 in Letter 972CG and Letter 5005-A. If you’ve received a penalty letter, contact us to learn about our penalty reduction services. We’ve helped prevent over $1 billion in ACA penalties for our clients.
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