IRS Extends 2016 ACA Reporting Deadline for Employers to Furnish 1095 Forms to Employees

While we were not expecting it, we certainly are not complaining. On November 18, 2016, the IRS issued Notice 2016-70, granting Applicable Large Employers (ALEs) under the Affordable Care Act (ACA) an additional month to furnish individual employee 1095-C and 1095-B Returns.

The IRS cited the reason for the extension being that the Treasury Department had determined a significant number of ALEs and insurance providers would need the additional time to analyze 2016 reporting data and complete their reports on time.

Here are a couple of key points to keep in mind regarding Notice 2016-70:

• The extension applies to 2016 reporting only—it is not an amendment to future reporting timelines.

• The extension does not change the filing deadlines for 1094 and 1095 forms with the IRS. Paper filers must still do so by February 28, 2017, and electronic filers must transmit by March 31. Keep in mind, all ALEs with more than 250 1095-C returns must file electronically.

• Employers are automatically entitled to the extension—they do not have to submit a request for an extension.

• The IRS extended “good faith transition relief” for yet another year. Again, this “good faith” transition relief assures that employers that have made the effort to comply, but may have submitted forms with incorrect filing information, will not be fined with administrative filing penalties. Like last year, this penalty protection does not extend to those who file late. That being said, not all late filers will be penalized the same. Those that have made adequate efforts to file on time will be fined differently than those who miss the deadline out of negligence or procrastination.

• Good faith effort also covers those employers that have “missing or inaccurate employee identification numbers or dates of birth.”

• Employees, like in 2016, will not be required in 2017 to attach a copy of their individual 1095-C return to their income taxes. However, the employee may be required to furnish the form should they be selected for a future audit.

There is a lot of discussion on the future of the ACA and President-Elect Trump’s plans to repeal the regulation. Until that time, the ACA is still the law of the land, and we advise employers to adhere accordingly.