Relief in 2020: IRS Extends Transitional Relief for 2020 ACA Reporting
On October 2, 2020, the Internal Revenue Service (“IRS”) issued Notice 2020-76 (the “Notice”) that extends the due date for certain 2020 information-reporting requirements under Sections 6055 and 6056 of the Internal Revenue Code (“Code”). The Notice also provides relief from penalties under Sections 6721 and 6722 for certain aspects of the 2020 information-reporting requirements.
Sections 6055 and 6056 were added to the Code in 2010 as part of the Patient Protection and Affordable Care Act (“ACA”). Section 6055 requires health insurance issuers, self-insuring employers, government agencies, and other providers of minimum essential coverage to file and furnish annual information returns and statements regarding coverage provided. Section 6056 requires applicable large employers (“ALEs”) to file and furnish annual information returns and statements relating to the health insurance that the employer offers to its full-time employees.
Section 6721 imposes a penalty for failing to timely file or for filing an incorrect or incomplete information return, while Section 6722 imposes a penalty for failing to timely furnish or for furnishing an incorrect or incomplete information statement. Information returns must be filed with the IRS on or before February 28th (if filing by paper) or March 31st (if filing electronically) following the end of the tax year.
Extension of Due Date for Furnishing Information Statements Under Sections 6055 and 6056
The Treasury Department and the IRS have determined that a substantial number of employers, insurers, and other providers of minimum essential coverage need additional time beyond the January 31, 2021 due date to gather and analyze the information in order to prepare the 2020 Forms 1095-B and 1095-C.
|Notice 2020-76 extends the due date for furnishing the 2020 Forms 1095-B and 1095-C from January 31, 2021 to March 2, 2021.|
With that being said, employers should still try to furnish the information statements to individuals as soon as administratively possible.
The Notice does not extend the due date for filing the 2020 Forms 1094-B, 1095-B, 1094-C, or 1095-C with the IRS. However, the provisions regarding an automatic extension of time for filing information returns remains available to employers and other providers who submit Form 8809 on or before the original filing deadline.
Relief from the Furnishing Requirement Under Section 6055
Individuals do not need the information on Form 1095-B to compute his or her federal tax liability or file an income tax return with the IRS due to the individual shared responsibility payment being reduced to zero as of the beginning of 2020.
Employers and providers are still required to furnish Form 1095-B to individuals. However, if the following two conditions are met, the IRS will not assess a penalty under Section 6722 for failure to furnish a Form 1095-B to all responsible individuals:
- The employer or provider must post a notice prominently on its website stating that responsible individuals may receive a copy of his or her 2020 Form 1095-B upon request. An email and physical address to which a request may be sent as well as a phone number that responsible individuals can use to contact the employer or provider with questions MUST be provided.
- The employer or provider must furnish a 2020 Form 1095-B to any responsible individual upon request within 30 days of the date the request is received. The statement may be furnished electronically if it meets the requirements provided in §1.6055-2.
The relief extended to those furnishing Form 1095-B is extended to part-time employees of ALEs enrolled in self-insured health plans.
|This relief, however, does NOT extend to full-time employees of ALEs enrolled in self-insured health plans. Form 1095-C still needs to be furnished and penalties will continue to be assessed consistent with prior enforcement policies for failure to do so.|
The Future of Good Faith Relief
The year 2020 will be the final year for the extension of good faith relief from penalties under Sections 6721 and 6722 for employers and providers. Employers and providers must make a good faith effort to comply with the regulations under Sections 6055 and 6056 to be eligible for this relief. The IRS will take into account whether an employer or provider made reasonable efforts to prepare for reporting the required information to the IRS and furnishing it to employees and covered individuals.
The IRS and Treasury Department are renewing the request for comments related to furnishing requirements under Sections 6055 and 6056, seeking comments as to why this relief continues to be necessary. If no comments are received, then NO relief related to the furnishing requirements under Section 6055 and 6056 will be granted in future years. Comments must be submitted by February 1, 2021.
|Comments can be submitted electronically via the Federal eRulemaking Portal at www.regulations.gov.|
The content herein is provided for educational and informational purposes only and does not contain legal advice. Please contact our office if you have any questions about compliance requirements applicable to your employee benefit plans or other HR compliance matters.
Dated: October 29, 2020