The IRS has announced an extension of the due date for filing Forms 1095-B, 1095-C, 1094-B, and 1094-C in Notice 2016-4. The Forms 1095-B and 1095-C are used to report to individuals whether they possessed minimum essential coverage (MEC) for the year and, for employees of applicable large employers, whether they had an offer of MEC that provided minimum value as well as information to determine that offered coverage was affordable.
Individuals use that information to determine if they are subject to a shared responsibility payment for failure to have MEC for some or all of the year, as well as whether the individual qualifies for a tax credit that offsets a portion of the cost of any insurance they obtained from the applicable exchange.
The Forms 1094-B and 1094-C are used to transmit the same information for the IRS, allowing the agency to determine if individuals properly reported the above information.
Under the law the notices needed to be given to employees and those with coverage by January 31, and transmitted to the IRS by February 29 if filing paper forms (with a later due date of March 31 for those filing electronically).
For the filings due in 2016, the IRS has pushed back the due dates as follows:
- Forms 1095-B and 1095-C to individuals – due by March 31, 2016
- Forms 1094-B and 1094-C to the IRS
- Paper filing – May 31, 2016
- Electronic filing – June 30, 2016
Penalties would apply to returns filed after that date. However the IRS provides in the notice:
However, employers and other coverage providers that do not meet the extended due dates are still encouraged to furnish and file, and the Service will take such furnishing and filing into consideration when determining whether to abate penalties for reasonable cause. The Service will also take into account whether an employer or other coverage provider made reasonable efforts to prepare for reporting the required information to the Service and furnishing it to employees and covered individuals, such as gathering and transmitting the necessary data to an agent to prepare the data for submission to the Service, or testing its ability to transmit information to the Service. In addition, the Service will take into account the extent to which the employer or other coverage provider is taking steps to ensure that it is able to comply with the reporting requirements for 2016.
Recognizing that individuals were supposed to refer to these forms to prepare their own individual income tax returns, the IRS also offers individuals some relief under this notice. The late issuance could affect proper computation of the credit (or amount of prepayment to be repaid), as well as whether the individual owes a shared responsibility payment.
Generally the IRS will allow individuals to use other information obtained to make a reasonable determination of the proper filing.
For purposes of the credit computation, the IRS provides the following relief:
As a result, for 2015 only, individuals who rely upon other information received from employers about their offers of coverage for purposes of determining eligibility for the premium tax credit when filing their income tax returns need not amend their returns once they receive their Forms 1095-C or any corrected Forms 1095-C. Individuals need not send this information to the Service when filing their returns but should keep it with their tax records.
A similar rule applies for computation of the shared responsibility payment:
Because, as a result of the extension, individuals may not have received this information before they file their income tax returns, for 2015 only individuals who rely upon other information received from their coverage providers about their coverage for purposes of filing their returns need not amend their returns once they receive the Form 1095-B or Form 1095-C or any corrections. Individuals need not send this information to the Service when filing their returns but should keep it with their tax records.