IRS Extends 2020 Delivery Date Deadline for Forms 1095 B & C and Announces Good Faith Compliance Relief

IRS Extends 2020 Delivery Date Deadline for Forms 1095 B & C and Announces Good Faith Compliance Relief

The Internal Revenue Service (IRS) extended the deadline for the delivery of 2019 ACA employer reporting statements to individuals from January 31, 2020, to March 2, 2020. Notice 2019-63 gives applicable large employers (ALEs) and health insurance issuers (including self-funded-health plans) one extra month to furnish Forms 1095 B & C to employees and covered individuals.  ALEs and health insurance issuers also get another year of employer reporting penalty relief, provided that they can demonstrate a good-faith effort towards compliance.

One deadline that did not change is the due date for employers and health insurance issuers to submit coverage documentation to the federal government.  Paper copies of Forms 1094 and 1095 B&C are due to the IRS by February 28, 2020, and electronic submissions must be completed by April 2, 2020.  A company of any size may submit forms to the IRS electronically.  However, companies that issue 250 or more Forms 1095 B or C are required to use the electronic submission process.  Employers should also let employees know that they do not need to wait to receive Forms 1095-B and 1095-C before filing their individual income tax returns, but when they get their 2019 forms, they should keep them with their tax records.

Notice 2019-63 also provides employers and health coverage issuers with a bit of protection in the case of accidental errors when completing 1094 and 1095 forms and transmitting the documents to the IRS.  The notice extends good-faith compliance transition relief for another year, but it does have some limitations.  The transition relief only applies to employers and health plans that accidentally furnish and file incorrect or incomplete information on a statement or return.  If a business ignores their reporting obligations, then penalties will apply.  Employers and issuers that miss the deadline to provide statements to employees and covered individuals or are late to file their returns with the IRS may have penalty liability too.

If for some reason, an employer does not meet the relevant due dates, that business should still furnish statements and file returns with the IRS as soon as possible. The IRS will consider how quickly an employer responded to correct an error when determining whether to abate penalties for reasonable cause.  In determining good faith, the IRS will also consider whether an employer or other coverage provider made reasonable efforts to prepare for reporting the required information to the IRS and furnishing it to employees and covered individuals.  Additionally, the IRS will evaluate if the employer or issuer is taking steps to ensure that it will be able to comply with the reporting requirements for 2021.

It’s important to note that the IRS’ deadline changes do not impact New Jersey and the District of Columbia’s specific employer reporting requirements. As of now, the New Jersey reporting deadline is March 31, 2020. For the tax year ending December 31, 2019, the District of Columbia’s due date will be June 30, 2020.

 

By Jessica Waltman, Special Contributor
Jessica Waltman is a health reform strategist, with more than 20 years of experience in health insurance markets and health policy. She is the former Senior Vice President, Government Affairs, for the National Association of Health Underwriters.

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