United States

IRS provides Affordable Care Act information reporting relief

Relief applies to both due dates and penalties

TAX ALERT  | 

The IRS has released Notice 2016-70 granting insurers, self-insuring employers and other providers of health plan coverage an extension of time to furnish to employees and other insureds their annual statement of health plan coverage. In addition, the notice describes when the IRS will grant good faith relief for failure to file or furnish correct statements.

The IRS has extended the due date for insurers, self-insuring employers and certain others to file the 2016 Form 1095-B, Health Coverage, and the 2016 Form 1095-C, Employer-Provided Health Insurance Offer and Coverage, from Jan. 31, 2017, to March 2, 2017. That means that the insurers and employers have an extra month to furnish these forms to their employees.

The purpose of the 1095 series of forms is to allow individuals to indicate on their individual income tax returns that they have minimum essential health coverage, and therefore, are exempt from the shared responsibility penalty applicable to certain individuals who fail to have health coverage. In the notice, the IRS stated that taxpayers do not need to wait until they receive their statement to file their tax returns, but that taxpayers should retain these statements (once received) for their records.

In addition, the notice provides transitional good-faith relief with respect to the penalty for failing to file correct information returns with the IRS and the separate penalty for failing to furnish correct information returns to employees and other intended recipients. However, the penalty relief does not apply to any failure to file or furnish the statements by the new extended due date. Presumably, the indication that the relief is transitional means that the IRS does not anticipate providing such relief in 2018 (for filing and furnishing 2017 statements). Although the notice provides welcome relief this year, taxpayers should use this year to get a good process in place for timely filing these returns in future years in the event such relief is not provided again.

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