The Internal Revenue Service ("IRS") has extended the deadlines for employers to furnish the 2020 Forms 1095-B and 1095-C to employees from January 31, 2021 to March 2, 2021. The IRS has also waived penalties associated with failures to furnish a Form 1095-B to responsible individuals under specified conditions, and provided the final extension of good-faith relief from penalties for incorrect or missing information on the Forms 1094 and 1095. The relief will be welcomed by many employers who require additional time to gather and analyze reporting data.

Background

Sections 6055 and 6056 of the Internal Revenue Code ("Code") impose requirements for filing and furnishing informational returns under the ACA. Section 6055 requires health insurers, self-insuring employers, governmental entities, and other providers of minimum essential coverage to file and furnish annual information returns regarding the coverage provided to employees. Section 6056 requires applicable large employers to file and furnish annual returns relating to the health insurance offered to full-time employees. Forms 1094-B and 1095-B and Forms 1094-C and 1095-C, respectively, are used to satisfy these reporting and furnishing requirements. The deadline for filing the four forms with the IRS is generally the February 28 (or March 31 if filed electronically) following the calendar year to which the information relates. The deadline for furnishing the forms to employees is January 31 of the same year. Section 6721 imposes a penalty for failure to timely file an informational return. Section 6722 imposes a penalty for failure to timely furnish a correct and complete informational return.

On October 2, 2019, the IRS issued Notice 2020-76, providing the following relief.

Extended Deadline for Furnishing Forms 1095-B and 1095-C

Notice 2020-76 extends the deadline for furnishing the 2020 Forms 1095-B and 1095-C to individuals from January 31, 2021 to March 2, 2021. This will provide employers, insurers, and other providers of minimum essential coverage additional time to gather and analyze the information for reporting.

This automatic extension means that the IRS will not respond to requests for permissive 30-day extensions of the due date to furnish these information statements to individuals. The extension does not extend the due date for filing with the IRS the 2020 Forms 1094-B, 1094-C, 1095-B, or 1095-C. However, both automatic extensions and additional extensions for filing these returns with the IRS remain available under normal rules.

Waiver of Penalties for Failure to Furnish Forms 1095-B

Now that individual shared responsibility payments have been reduced to zero for 2020, individuals no longer need the information on Form 1095-B to compute their federal tax liabilities. Accordingly, the IRS will not assess a penalty against reporting entities for failing to furnish a Form 1095-B to responsible individuals if both of the following conditions are met:

  1. The reporting entity must post a notice prominently on its website stating that responsible individuals may receive a copy of their 2020 Form 1095-B on request. The notice must be accompanied by an email address and a physical address to which the request may be sent, along with a telephone number individuals may use for questions.
  2. The reporting entity must furnish a 2020 Form 1095-B to any responsible individual within 30 days of receiving a request. The reporting entity may furnish the Form electronically in accordance with applicable guidance.

This relief does not extend to the requirement to furnish Forms 1095-C to full-time employees. As a result, applicable large employers must still furnish Form 1095-C to full-time employees and complete all sections of the Form. It also does not affect the assessment of penalties related to the requirement to file with the IRS the 2020 Forms 1094-B, 1094-C, 1095-B, or 1095-C.

The relief does extend to the requirement to furnish Form 1095-C to non-full-time employees enrolled in an applicable large employer's self-insured plan for any month in 2020.

Good-Faith Relief for Reporting and Furnishing Forms 1094-B, 1094-C, 1095-B, and 1095-C

As in years past, the IRS is extending relief from penalties for reporting incorrect or incomplete information on Forms 1094-B, 1094-C, 1095-B, or 1095-C. This will be the final extension of such relief, subject to comments received.

Reporting entities qualify for the relief when they can show they made good-faith efforts to comply with the applicable reporting requirements both for furnishing to individuals and filing with the IRS. The relief encompasses missing and inaccurate social security numbers and birthdates, among other information.

In determining whether efforts were made in good faith, the IRS will consider a variety of factors including whether there were reasonable efforts to prepare for reporting and furnishing (e.g., gathering and transmitting the information to an agent or testing ability to transmit). Entities who fail to file or furnish returns by the extended due dates are not eligible for the relief.

Comments Requested

The Treasury Department and IRS have requested comments related to furnishing requirements under Code Sections 6055 and 6056. Comments are due by February 1, 2021.

In absence of comments, the IRS is likely to discontinue the extensions of due dates for furnishing Forms 1094-C and 1095-C to individuals.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.