IRS Extends Due Dates for Providing Forms 1095-B and C for 2016, But Not for Filing Returns with IRS

The IRS has announced an extension of the due date for providing Forms 1095-B and 1095-C to individuals in Notice 2016-70.  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.

Under the law the notices needed to be given to employees and those with coverage by January 31, and transmitted to the IRS (with Forms 1094-B and 1094-C) by February 29 if filing paper forms (with a later due date of March 31 for those filing electronically).

For the filings that were due in 2016, the IRS had pushed back the 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

The IRS for returns due in 2016 has pushed back only the time period for providing Forms 1095-B and 1095-C to individuals.  Those forms will now need to be provided to individuals by March 2, 2017 (30 days after the date provided for in the law).  The IRS will not, however, grant any 30 day extensions beyond that date—so, effectively, the agency has simply granted all entities providing those form with the extension that they could have asked for.

However the IRS provided that no extension would be given for the time to provide the forms to the IRS this year.  The Forms 1094-B and 1094-C must be filed with the IRS by February 28, 2017 for those not filing electronically, or March 31, 2017 if filing the returns electronically.

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.

The IRS provides the following for individuals:

Because of the extension granted under this notice, some individual taxpayers may not receive a Form 1095-B or Form 1095-C by the time they are ready to file their 2016 tax return. Taxpayers may rely on other information received from their employer or other coverage provider for purposes of filing their returns, including determining eligibility for the premium tax credit under section 36B and confirming that they had minimum essential coverage for purposes of sections 36B and 5000A. Taxpayers do not need to wait to receive Forms 1095-B and 1095-C before filing their returns. Individuals need not send the information relied upon to the Service when filing their returns but should keep it with their tax records.

The IRS is also extending penalty relief for filers of Form 1094-B and 1094-C who make a good faith effort to comply but end up with erroneous or incomplete reporting.  The Notice provides:

…[T]his notice extends transition relief from penalties under sections 6721 and 6722 to reporting entities that can show that they have made good-faith efforts to comply with the information-reporting requirements under sections 6055 and 6056 for 2016 (both for furnishing to individuals and for filing with the Service) for incorrect or incomplete information reported on the return or statement. This relief applies to missing and inaccurate taxpayer identification numbers and dates of birth, as well as other information required on the return or statement. No relief is provided in the case of reporting entities that do not make a good-faith effort to comply with the regulations or that fail to file an information return or furnish a statement by the due dates (as extended under the rules described above). In determining good faith, the Service will 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 will be able to comply with the reporting requirements for 2017.