Automatic 30-Day Extension of Due Dates for Participant Statements and Reinstatement Good-Faith Compliance Standard Granted!
November 21, 2016
Authored by: Sarah Bhagwandin
On Friday, IRS and the Department of Treasury issued Notice 2016-70 granting an automatic 30-day extension for furnishing 2016 Forms 1095-B, Health Coverage, and 1095-C, Employer-Provided Health Insurance Offer and Coverage, to individuals for employers and other providers of minimum essential coverage (MEC). These forms must now be provided to individuals by March 2, 2017 rather than January 31, 2017. Coverage providers can seek an additional hardship extension by filing a Form 8809. Notice 2016-70 provides that individual taxpayers do not need to wait to receive the Forms 1095-B and 1095-C before filing their tax-returns.
The due date for 2016 ACA filings (Forms 1094-B, 1094-C, 1095-B, 1095-B) with the IRS remains February 28, 2017 (or March 31 if filed electronically). Employers and other coverage providers can request an automatic 30-day extension for filing these forms with the IRS by submitting a Form 8809 before February 28, 2017. Notice 2016-70 advises that employers and other coverage providers that do not meet the relevant due dates should still furnish and file the forms, even if late, as the Service will take such action into consideration when determining whether to abate penalties for reasonable cause.
Regarding penalties, Notice 2016-70 extends the good faith standard for providing correct and complete forms that applied to 2015 filings. The penalty for failure to file a correct informational return with the IRS is $260 for each return for which the failure occurs, with the total penalty for a calendar year not to exceed $3,193,000. The same level of penalty applies for failure to provide an accurate payee statement. The good-faith relief applies to missing and inaccurate taxpayer identification numbers and dates of birth, as well as other information required on the return or statement and not to failure to timely furnish or file a statement or return.
When evaluating good faith, the Service will take into account whether an employer or other coverage provider made reasonable efforts to prepare for reporting, such as gathering and transmitting the necessary data to an agent to prepare the data for submission to the Service. In addition, the Service will take into account the extent to which an employer or other coverage provider is taking steps to ensure it will be able to comply with reporting requirements for 2017. No penalty relief is provided in the case of reporting entities that do not make a good-faith effort to provide correct and accurate returns and statements or that fail to file an informational return or furnish a statement by the due dates.
Treasury and the Service do not anticipate extending this relief with respect to due-dates or good-faith compliance for future years.