IRS Extends Deadlines for 2017 Individual Statements Under ACA Information Reporting Rules

Practical Law Legal Update w-012-3959 (Approx. 6 pages)

IRS Extends Deadlines for 2017 Individual Statements Under ACA Information Reporting Rules

by Practical Law Employee Benefits & Executive Compensation

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.

(26 U.S.C. § 6721.)

Code Section 6722 imposes a penalty for either:

Failing to timely furnish an information statement.
Providing an incorrect or incomplete information statement.

(26 U.S.C. § 6722.)

These penalty provisions apply to information returns and statements required under Code Sections 6055 and 6056.

Extended Deadlines for 2015 and 2016 Reporting Years

To varying extents, the IRS extended the deadlines for ACA information reporting for the 2015 and 2016 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, the extended deadlines (under Notice 2016-70) applied only to statements furnished to individuals (see Legal Updates, IRS Extends Due Dates for ACA Information Reporting and IRS Extends Deadlines for Individual Statements Under ACA Information Reporting Rules).

Extended Deadlines for Providing 2017 Individual Statements

Notice 2018-06 extends the deadline for furnishing individuals their 2017 Forms 1095-C and 1095-B, as applicable, from January 31, 2018 to March 2, 2018. The extended due dates apply:

Automatically and do not require submission of a request or other documentation to the IRS.
Only to 2017 ACA individual statements (under Code Sections 6055 and 6056) furnished in 2018.

Because the 30-day extension under Notice 2018-06 is as generous as a permissive 30-day extension for providing 2017 information statements available under implementing regulations (on a showing of good cause), which some entities had already requested regarding 2017 statements, the IRS will not formally respond to those requests. Despite the 30-day extension, the IRS encouraged employers and other entities to provide 2017 individual statements as soon as they can do so.

Notice 2018-06 Does Not Extend Deadlines for Filing 2017 Information Returns

However, Notice 2018-06 does not extend the deadline for submitting to the IRS Forms 1094-B, 1095-B, 1094-C, and 1095-C for 2017. The deadlines for these forms remains:

February 28, 2018 for paper filers.
April 2, 2018 for electronic filers.

Notice 2018-06 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 2018-06 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.

As a result of the Notice 2018-06 extension, some individuals may not receive a Form 1095-B or Form 1095-C by when they are ready to file their 2017 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 2018-06 also provides transition relief for Code Section 6721 and 6722 penalties involving incorrect or incomplete information (see Legal Update, IRS Extends Deadlines for Individual Statements Under ACA Information Reporting Rules). The relief applies to reporting entities that can show they made good-faith efforts to comply with the information reporting requirements for 2017 (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 2018-06.

For purposes of the transition relief, good faith is based on:

Whether an entity made reasonable efforts to prepare for filing information with the IRS and furnishing statements to individuals.
The extent to which an entity has taken steps to ensure that it will be able to comply with the reporting requirements in 2018.

The deadline extension under Notice 2018-06 has no effect on either:

ACA information reporting requirements for other years.
The effective date or application of other ACA provisions.

Practical Impact

Although employers and other entities will no doubt welcome this 30-day extension for individual statements, the IRS indicated that they should not become accustomed to such extensions in future years. The IRS does not expect the due date extensions and transition relief under Notice 2018-06 to apply for the 2018 reporting year. (Interestingly, though, the IRS made a similar prediction in announcing the extension for 2016-year individual statements.)

IRS Extends Deadlines for 2017 Individual Statements Under ACA Information Reporting Rules | Practical Law