Tax Alert: IRS issues deadline extensions for ACA information reporting

By Mark R. Baran  |  February 17, 2016  |  Download PDF

Under the Affordable Care Act (ACA), employers that are considered Applicable Large Employers (ALEs) are required to report information regarding health coverage to both the IRS and employees. ALEs are employers (or a controlled group treated as one employer) with 50 or more full-time or full-time equivalent employees. Reporting is required regardless of whether the employer offers health insurance coverage or sponsors self-insurance, and is also required even if the ALE is not liable for an employer responsibility payment due to transitional relief. The information on the IRS forms help determine eligibility for transition relief and determine employee eligibility for a premium tax credit.

In an effort to help ALEs meet their reporting obligations, the IRS has extended two important deadlines. ALEs now have an additional two months (now March 31, 2016) to provide employees Form 1095-B, “Health Coverage,” and Form 1095-C, “Employer-Provided Health Insurance Offer and Coverage.” In addition, ALEs have at least an additional three months (now May 31, 2016 or June 30 if filed electronically) to file the forms with the IRS. Reporting to the IRS involves filing Form 1094-C, “Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns,” and Form 1095-C, “Employer-Provided Health Insurance Offer and Coverage.”

Penalties for noncompliance with reporting requirements

Failure to comply with the information reporting requirements may subject affected employers to harsh penalties. Penalties for information returns and payee (employee) statements filed after December 31, 2015, are as follows:

• The penalty for failure to file an information return generally will be $250 for each return (up from $100), not to exceed a calendar-year total of $3 million (up from $1.5 million).
• The penalty for failure to provide a correct payee statement will be $250 for each statement (up from $100), with a calendar-year maximum of $3 million (up from $1.5 million).

Special rules apply to increase the per-statement and total penalties in the case of intentional disregard of the requirement to furnish a payee statement. Also, taxpayers with average annual gross receipts of no more than $5 million for the three preceding tax years are subject to lower maximum penalty amounts.

Plan – Coordinate – and File

If you have not yet filed your required ACA tax reporting forms, now is the time to begin assembling the necessary information to process Forms 1094 and 1095. The compliance obligation will likely require a joint effort by the payroll, HR and benefits departments to collect the relevant data. If you are unsure of your reporting obligations or need assistance complying with the ACA’s information-reporting requirements, please contact us. 

For more information 

If you have questions about this alert, please contact Mark Baran, Principal in the Tax Practice, by phone at  (212) 503-8991 or by email at mbaran@markspaneth.com or any of our Marks Paneth professionals.

About Mark R. Baran