IRS Proposes Regulations Regarding ACA Reporting

On November 22, 2021, the IRS released proposed rules that will provide an automatic 30-day extension each year for Forms 1095-B or 1095-C distribution to individuals. While the rule is currently proposed and not yet final, the IRS explains that these proposed regulations can be relied on for calendar years beginning after December 31, 2020, and before the date when the IRS decides to finalize the regulations. As such, for 2021 reporting purposes, the date by which employers must distribute Forms 1095-B or 1095-C to individuals is now March 2, 2022 (instead of the January 31, 2022 deadline).

The ACA imposes two reporting requirements under Sections 6055 and 6056. Section 6055 requires entities that provide minimum essential coverage to report to the IRS and to covered individuals the months in which the individuals were covered. Section 6056 requires applicable large employers (under the employer mandate) to report to the IRS and full-time employees whether they offered minimum essential coverage that was affordable and minimum value.

Under the proposed rule, the date by which employers must distribute Forms 1095-B or 1095-C to individuals is automatically extended 30 days from the previous January 31 deadline. While the IRS has previously extended the deadline each year, this proposed rule amends the rules to permanently change the due date of the reporting. Specifically, Forms 1095-B and 1095-C furnished to individuals will be timely if provided no later than 30 days after January 31 of the calendar year following the reporting year (if the date falls on a weekend day or legal holiday, statements will be timely if provided on the next business day).

Further, the IRS has in the past recognized good faith efforts made by employers that timely file and distribute their required Forms 1094-B/C and 1095-B/C. As a result, such employers have not been subject to penalties if the information filed was incorrect or incomplete. Since the intention of this good faith relief was to be transitional relief, the IRS stated last year that it was the last year they intended to provide such relief. Accordingly, the agency also proposes that the good faith relief should no longer apply.

The proposed rules do not extend the date by which employers must file Forms 1094-B/C and 1095-B/C with the IRS. Reporting entities must still file Forms 1094-B/C and 1095-B/C with the IRS by February 28, if filing by paper, and March 31, if filing electronically. Employers may still request an automatic extension to file the Forms 1094-B/C and 1095-B/C with the IRS, as long as they submit a Form 8809 on or before the due date of those filings.

Employers should keep this guidance in mind as they prepare their ACA filings and distributions for 2021. We will monitor the status of the proposed rules and communicate any updates accordingly.

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