Deadline to Furnish 2019 ACA Forms to Recipients Extended and Penalty Relief Offered

The IRS has announced that it is extending the deadline for furnishing 2019 Affordable Care Act (ACA) information statements to recipients. The IRS is also providing the same penalty relief that it provided with respect to 2018 returns and extending penalty relief for failure to furnish information statements to recipients. However, the deadline for filing the forms with the IRS is not being extended [Notice 2019-63, 2019-51 IRB].

Background. Code Sec. 6055 requires health insurance issuers, certain employers, and others that provide “minimum essential coverage” to individuals to provide information statements to covered individuals. Entities who are only subject to the Code Sec. 6055 information reporting requirements must provide the individuals with Form 1095-B (Health Coverage).

Code Sec. 6056 requires applicable large employers (generally, employers with at least 50 full-time employees, including full-time equivalent employees in the previous year) to provide the individuals with Form 1095-C (Employer Provided Health Insurance Offer and Coverage).

Extension of deadline for furnishing ACA information statements to recipients. The IRS is extending the due date for furnishing Forms 1095-B and 1095-C to recipients from Jan. 31, 2020 to March 2, 2020. The extension is automatic. No documentation needs to be submitted to receive the extension from the IRS. In view of this automatic extension, the provisions in federal regulations that allow the IRS to grant further extensions of time of up to 30 days to furnish Forms 1095-B and 1095-C will not be allowed.

No extension of deadline for filing ACA information returns with the IRS.  The IRS has determined that there is no similar need for additional time for employers, insurers, and other providers of minimum essential coverage to file 2019 Forms 1094-B (Transmittal of Health Coverage Information Returns), 1095-B, 1094-C (Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns), and 1095-C with the IRS. The filing deadline for these returns remains Feb. 28, 2020, if not filing electronically, or Mar. 31, 2020, if filing electronically. However, Notice 2019-63, 2019-51 IRB, does not affect the provisions regarding automatic and additional extensions of time for filing information returns, which remain available under the normal rules by submitting Form 8809 (Application for Extension of Time To File Information Returns).

Penalty relief for failing to furnish Form 1095-B and some Form 1095-C. Due to the elimination of the individual shared responsibility payment beginning after Dec. 31, 2018 (reduced to zero), Form 1095-B is no longer required for a taxpayer to compute federal tax liability or file an income tax return while the requirement to furnish Form 1095-B remains. The IRS will not assess a penalty under Code Sec. 6722 for failing to furnish a Form 1095-B if: (1) the reporting entity posts a notice on its website stating that individuals may request a 2019 Form 1095-B and that the individual must provide an email and physical address to mail the statement and a phone number where they can be contacted; and (2) the reporting entity furnishes the statement within 30 days of the request. This penalty relief does not apply to furnishing Form 1095-C to full-time employees, generally required of ALE members that offer self-insured health plans due to combined reporting requirements under Code Sec. 6056 and Code Sec. 6055. Penalty relief will cover any penalties related to furnishing Form 1095-C to any employee who is not a full-time employee for any month in 2019.

Penalty relief for failure to timely furnish or file information returns.  Notice 2019-63, 2019-51 IRB, also extends to the 2019 tax year the good-faith penalty relief from Code Sec. 6721 and Code Sec. 6722 penalties for failure to timely furnish and file the information returns. In determining good faith, the IRS 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. Examples of good faith include gathering and transmitting the necessary data to an agent to prepare the data for submission to the IRS, or testing the ability to transmit information to the Service.

Penalty relief for reporting incorrect or incomplete information. Notice 2019-63, 2019-51 IRB, also extends to the 2019 tax year the good-faith penalty relief from Code Sec. 6721 and Code Sec. 6722 penalties for reporting incorrect or incomplete information on the return or statement. In determining good faith, the IRS 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. Examples of good faith include gathering and transmitting the necessary data to an agent to prepare the data for submission to the IRS, or testing the ability to transmit information to the IRS.

Public comment.  The IRS is seeking public comment regarding whether extension for furnishing statements and penalty relief is necessary for future years and why. Comments may be submitted via the Federal eRulemaking Portal. Type “IRS2019-63” in the search field. Comments may also be mailed to: Internal Revenue Service, Attn: CC:PA:LPD:PR (Notice 2019-63) Room 5203, P.O. Box 7604, Ben Franklin Station, Washington, D.C. 20044.

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