According to the Journal of Accountancy (Jan. 4, 2016), because the IRS is extending the due dates for these information returns, the normal provisions for requesting extended due dates for these forms will not apply. The IRS is encouraging employers who cannot meet the extended due dates to file the returns anyway. The IRS says it will take into account whether the employers made reasonable attempts to comply with the requirements and the steps taken to prepare for the 2016 reporting requirements when determining whether to abate penalties for reasonable cause.
The extended due dates for information returns required to be furnished to individual taxpayers may make it difficult for employees who may not receive the information in time to file their returns. For those taxpayers, the IRS is providing relief by eliminating any requirement that they file amended returns if they receive these statements after they have filed their returns. They should, however, keep the information returns with their tax records.
For more information regarding the due date extensions, see Notice 2016-4 at this link:
New Employer Information-Reporting Requirements of the Affordable Care Act (ACA) for 2016
Under the Patient Protection and Affordable Care Act (ACA), employers are required to file annual information returns with the IRS and furnish statements to employees on their healthcare plan coverage information beginning in 2016 (for reporting on calendar year 2015). These reporting requirements help administer the employer shared-responsibility mandate and the individual mandate added as a part of the ACA. Because this is the first year it is mandatory to file, many businesses may not be aware of their reporting obligations. This could lead to confusion for employers and subject businesses to fines that could have easily been avoided. In light of the complexity of the new information-reporting requirements, as well as the potential lack of awareness by many businesses, it may be prudent for CPA firms to help “warn and advise” their business clients of the fast approaching deadline and the new reporting requirements.
The ACA’s reporting requirements apply to all employers with 50 or more full-time or full-time equivalent employees during calendar year 2015. There is no extra year of relief from reporting for mid-size employers, as there is under the employer shared-responsibility provisions. Small employers with fewer than 50 full-time employees (including full-time equivalents) will be required to file as well if they are members of a controlled or affiliated service group that collectively has at least 50 full-time employees (including full-time equivalents).
In addition, employers of all sizes that offer employer-sponsored self-insured coverage will also need to report information to the IRS and to affected individual employees about individuals who have minimum essential coverage under the employer plan and therefore have met the individual shared-responsibility requirement for the months that they are covered under the plan.
The federal filing deadlines for this new ACA reporting are consistent with W-2 and 1099 reporting. Form 1095-B or Form 1095-C, as applicable, must be provided to employees by January 31, similar to W-2 forms. For 2015, statements must be provided no later than February 1, 2016 (since January 31, 2016 is a Sunday). Form 1094-B or Form 1094-C (transmittal forms), as applicable, and copies of each 1095-B/Form 1095-C are due to the IRS by February 29, 2016, or by March 31, 2016 if filing electronically. If a company files 250 or more Forms 1095-C, it will be required to file electronically.
The IRS forms themselves may be difficult to complete, and should only be prepared by individuals knowledgeable with the compliance and reporting aspects of the ACA requirements. There is a system of codes that an employer must use on various lines of the forms to report each employee’s employment and health coverage. The IRS will use the information submitted on the forms to determine whether employees are subject to the new shared-responsibility penalty for not having health coverage or are eligible for premium tax credits on insurance purchased through the health insurance marketplace. The information will also allow the IRS to determine if an employer is liable for a shared-responsibility penalty.
Since the impact of this new information-reporting requirement may be significant to a firm’s applicable business clients, CAMICO recommends firms consider informing these clients of the new reporting requirements as soon as possible. This awareness campaign will help minimize your risk of a client alleging that “my trusted advisor failed to warn me.” If a firm provides payroll services or prepares the payroll tax returns for clients subject to the new reporting requirements, some of those clients may “assume” that the firm will be responsible for, as well as assist them with, preparing the applicable IRS forms. CAMICO strongly encourages firms to communicate with these clients and clarify the extent of your responsibilities and the steps the client should take to determine the appropriateness of their compliance with these new information-reporting requirements. If you decide it would be appropriate for the firm to take on the responsibility of preparing the information-reporting forms for certain clients, CAMICO suggests you document this work in a separate engagement letter. CAMICO has developed a sample engagement letter, “Preparation of Information Returns under the Affordable Care Act,” which is available to CAMICO policyholders on the Members-Only Site (MOS). They can find the letter by clicking “Knowledge Tree” (Reference Library), then the “Alert Documents” folder, then “2015,” and then the “ACA Reporting” folder to find the letter and related documents.
To help policyholders with their client-awareness efforts, CAMICO developed a sample “Client Notification Letter for Employers — New Employer Information-Reporting Requirements of the Affordable Care Act (ACA) for 2016.” CAMICO policyholders will also find the sample letter on the MOS Knowledge Tree (Reference Library) under “Alert Documents,” “2015,” and “ACA Reporting.” Your firm might choose to address this issue in your client newsletters or by other methods. Adequately communicating (and documenting!) this issue to your clients that could be impacted is excellent service and risk management.
Additional information and resources are available on the Internal Revenue Service’s website at www.irs.gov/Affordable-Care-Act/Employers. We suggest that you check this website regularly for further information and updates.
See also The Tax Adviser article dated November 2015 at: www.thetaxadviser.com/issues/2015/dec/new-information-reporting-requirements-under-aca.html.
CAMICO policyholders can contact CAMICO at 800.652.1772 or email the Loss Prevention Department at firstname.lastname@example.org with questions.