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IRS Announces Limited Relief for Information Reporting on 2020 Forms 1094/1095

EBIA  

EBIA  

IRS Notice 2020-76 (Oct. 2, 2020)

Available at https://www.irs.gov/pub/irs-drop/n-20-76.pdf

The IRS has announced limited relief for Form 1094/1095 information returns for the 2020 tax year, largely following prior years’ guidance (see our Checkpoint article):

  • Deadline for Furnishing Statements to Individuals. The deadline for furnishing Forms 1095-B and 1095-C to individuals is extended from January 31 to March 2, 2021. Due to this automatic extension, the permissive 30-day extension is not available, and no further extensions may be obtained. The IRS will not formally respond to any previously submitted deadline extension requests.
  • No Extension for Filing Returns With the IRS. The relief does not apply to filings with the IRS. The deadlines will be March 1, 2021, for paper filings (because February 28 falls on a Sunday) and March 31, 2021, for electronic filings. Filers may extend these deadlines by application to the IRS.
  • Good Faith Error Penalty Relief. No penalties will be imposed on entities that report incorrect or incomplete information—either on statements furnished to individuals or returns filed with the IRS—if they made good faith efforts to comply with the reporting requirements. Penalty relief is not available to entities that fail to furnish statements or file returns; miss an applicable deadline; or are otherwise not making good faith efforts to comply. Evidence of good faith efforts may include gathering necessary data and transmitting it to a third party to prepare the required reports, or testing the ability to transmit data to the IRS. According to the notice, 2020 is the last year that the IRS intends to provide good faith relief from penalties for incorrect or incomplete information returns.
  • Penalty Relief From Furnishing Statements Under Code § 6055. As a reminder, Code § 6055 requires coverage providers to report enrollment information to the IRS and furnish that information to covered individuals. Enrollment information generally is reported on Form 1095-B, but applicable large employers (ALEs) report enrollment information for employees enrolled in their self-insured health plans on Part III of Form 1095-C. For 2020, the IRS will not assess penalties against reporting entities that fail to automatically furnish Forms 1095-B to individuals so long as (1) a Form 1095-B is furnished within 30 days after an individual’s request is received; and (2) a notice with information about requesting Form 1095-B is prominently posted on the reporting entity’s website. Similar relief applies to ALEs that fail to automatically furnish Forms 1095-C to employees who were not full-time for any month in 2020, so long as the form is furnished on request and the website notice is provided. But the IRS emphasizes that the Section 6055 relief does not apply to an ALE’s full-time employees or to the requirement for coverage providers to file enrollment information with the IRS.

EBIA Comment: The IRS previously requested comments on the relief for furnishing statements to individuals and received very little input. It has requested comments again and suggests that the relief will not be granted in future years unless commenters explain why it continues to be necessary. Meanwhile, preparations for 2020 filings should proceed apace. So far, the IRS has released draft 2020 Forms 1094 and 1095 (see our Checkpoint article) and ancillary reporting resources, such as Publication 5164 and business rules, crosswalks, and schemas, but not the draft instructions. ALEs, especially those that offered individual coverage HRAs in 2020, will want to keep a sharp eye out for essential guidance. For more information, watch for the 2020 update to EBIA’s Form 1094/1095 Workbook, including Sections IX (“Furnishing Employee Statements”) and X (“Filing With the IRS”). See also EBIA’s Health Care Reform manual at Sections XXVIII (“Shared Responsibility for Employers (Play or Pay Penalty Tax)”), XXXVI.C (“Information Reporting of Minimum Essential Coverage (Insurers and Employers That Self-Insure)”), and XXXVI.D (“Information Reporting of Employer-Sponsored Coverage (Applicable Large Employers)”). And watch for registration information for our December webinar, “Form 1094/1095 Reporting for 2020.”

Contributing Editors: EBIA Staff.

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