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IRS Extends Deadlines for 2018 Individual Statements Under ACA Information Reporting Rules
Practical Law Legal Update w-017-8498 (Approx. 6 pages)
IRS Extends Deadlines for 2018 Individual Statements Under ACA Information Reporting Rules
by Practical Law Employee Benefits & Executive Compensation
| Published on 03 Dec 2018 • USA (National/Federal) |
In Notice 2018-94 (Nov. 29, 2018), the Internal Revenue Service (IRS) announced an extension of the deadlines for furnishing individual statements for 2018 (IRS Forms 1095-C and 1095-B), from January 31, 2019 to March 4, 2019. The guidance also extended transition relief for penalties under Internal Revenue Code Sections 6721 and 6722.
In IRS Notice 2018-94, (Nov. 29, 2018), the IRS announced extensions of the deadlines for certain 2018 information reporting requirements under the Affordable Care Act (ACA) applicable to:
- Insurers, employers with self-insured health plans, and certain other providers of minimum essential coverage (MEC) under Section 6055 of the Internal Revenue Code (Code) (26 U.S.C. § 6055).
- Large employers under Code Section 6056 (26 U.S.C. § 6056).
Specifically, Notice 2018-94 extends:
- The deadlines for providing individuals 2018 Forms 1095-C (Employer-Provided Health Insurance Offer and Coverage) and Forms 1095-B (Health Coverage), as applicable, from January 31, 2019 to March 4, 2019. (The IRS extended the deadlines to March 4, rather than March 2 as it had done in previous years, because March 2, 2019 is a Saturday.)
- Good-faith transition relief from penalties under Code Sections 6721 and 6722, so that the relief applies to 2018 information reporting requirements under Code Sections 6055 and 6056.
The IRS made available similar extensions for 2017 information reporting (see Legal Update, IRS Extends Deadlines for 2017 Individual Statements under ACA Information Reporting Rules).
For analysis of the ACA information reporting requirements, see Practice Notes:
IRS Forms 1095-B and 1095-C
As background, Code Section 6055 requires health insurers, employers with self-insured health plans, government agencies, and other providers of MEC to file and furnish annual information returns and statements regarding coverage provided. Information provided under Code Section 6055 is used to enforce the ACA's individual mandate (26 U.S.C. § 5000A; see Practice Note, Affordable Care Act (ACA) Overview: Individual Mandate).
Code Section 6056 requires large employers (in general, those with 50 or more full-time employees in the previous year) to file and furnish annual information returns and statements regarding the health insurance, if any, offered to their full-time employees.
In addition, Code Section 6721 imposes a penalty for either:
- Failing to timely file an information return.
- Filing an incorrect or incomplete information return.
Code Section 6722 imposes a penalty for either:
- Failing to timely furnish an information statement.
- Providing an incorrect or incomplete information statement.
These penalty provisions apply to ACA information returns and statements required under Code Sections 6055 and 6056.
Extended Deadlines for 2015, 2016, and 2017 Reporting Years
The IRS extended the deadlines for ACA information reporting for the 2015, 2016, and 2017 reporting years. The extensions for 2015 reporting (under Notice 2016-4) applied both to information returns filed with the IRS and statements furnished to individuals. For 2016 and 2017, the extended deadlines (under Notice 2016-70 and Notice 2018-06, respectively) applied only to statements furnished to individuals (see Legal Updates, IRS Extends Due Dates for ACA Information Reporting, IRS Extends Deadlines for Individual Statements Under ACA Information Reporting Rules, and IRS Extends Deadlines for 2017 Individual Statements Under ACA Information Reporting Rules).
Extended Deadlines for Providing 2018 Individual Statements
Notice 2018-94 extends the deadline for furnishing individuals their 2018 Forms 1095-C and 1095-B, as applicable, from January 31, 2019 to March 4, 2019. The extended due dates apply:
- Automatically and do not require submission of a request or other documentation to the IRS.
- Only to 2018 ACA individual statements furnished in 2019.
Because the Notice 2018-94 extensions are as generous as a permissive 30-day extension for providing 2018 information statements available under implementing regulations (on a showing of good cause), which some entities had already requested regarding 2018 statements, the IRS will not formally respond to those requests. Despite the extensions, the IRS encouraged employers and other entities to provide 2018 individual statements as soon as they can do so.
Notice 2018-94 Does Not Extend Deadlines for Filing 2018 Information Returns
Notice 2018-94 does not extend the deadline for submitting to the IRS Forms 1094-B, 1095-B, 1094-C, and 1095-C for 2018. The deadlines for these forms remain:
- February 28, 2019 for paper filers.
- April 1, 2019 for electronic filers.
Notice 2018-94 also does not affect the extensions available for submitting information returns to the IRS (including automatic 30-day extensions that are available by submitting Form 8809).
Penalties Involving ACA Information Reporting
Employers and other entities that do not timely meet the deadlines for providing individual statements and filing information returns with the IRS under the ACA information reporting rules are subject to penalties under Code Sections 6721 or 6722. However, Notice 2018-94 instructs entities to furnish and file even if they do not meet the relevant due dates. The IRS will take belated compliance into consideration when determining whether to abate penalties.
Because of the Notice 2018-94 extensions, some individuals may not receive a Form 1095-B or Form 1095-C by when they are ready to file their 2018 tax returns. Individuals should rely on other information received from their coverage provider when filing their tax returns.
Extension of Transition Relief from Penalties for Incorrect or Incomplete Information
Notice 2018-94 also provides transition relief for Code Section 6721 and 6722 penalties involving incorrect or incomplete information. The relief applies to reporting entities that can show they made good-faith efforts to comply with the information reporting requirements for 2018 (that is, furnishing individual statements and filing information returns with the IRS) under Code Sections 6055 and 6056 relating to incorrect or incomplete information reported on the statement or return.
This transition relief applies to missing and inaccurate taxpayer identification numbers, dates of birth, and other information required on the individual statement or information return.
The transition relief is not available to entities that:
- Do not make a good-faith effort to comply.
- Fail to furnish a statement or file a return by the due dates, as extended by Notice 2018-94.
For transition relief purposes, good faith is based on whether an entity made reasonable efforts to prepare for filing information with the IRS and furnishing statements to individuals, for example, by:
- Gathering and transmitting necessary data to an agent to prepare the data for submission to the IRS.
- Testing the entity's ability to transmit the data to the IRS.
The deadline extension under Notice 2018-94 has no effect on either:
- ACA information reporting requirements for other years.
- The effective date or application of other ACA provisions.
Practical Impact: The TCJA, Individual Mandate, and ACA Information Reporting
Effective beginning in 2019, the Tax Cuts and Jobs Act (TCJA) reduced to zero the penalty for violating the ACA's individual mandate (Pub. L. No. 115-97 (2017); see Tax Cuts and Jobs Act (TCJA) Compliance for Fringe Benefits and Health Plans Toolkit). The IRS indicated in Notice 2018-94 that it is evaluating whether and how the Section 6055 information reporting requirements should change (if it all) going forward in light of this change. As a result, we may receive additional guidance from the IRS in the future addressing ACA information reporting.