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IRS continues to accept 2015 electronically filed ACA returns after June 30 deadline

IRS has issued updated information regarding 2015 Affordable Care Act (ACA) information returns that are electronically filed through the “Affordable Care Act Information Return” (AIR) system, including that the system will continue to accept returns that are filed after the June 30, 2016 filing deadline.

Background—ACA information returns. Code Sec. 6055(a) generally requires every health insurance issuer, sponsor of a self-insured health plan, government agency that administers government-sponsored health insurance programs, and other entity that provides “minimum essential coverage” to file annual returns reporting information for each individual for whom such coverage is provided. An entity filing an information return reporting minimum essential coverage must also furnish a written statement to each individual listed on the return that shows the information that must be reported to IRS for that individual. (Code Sec. 6055(c)(1))

Reporting entities subject to Code Sec. 6055’s requirements use Form 1094-B, Transmittal of Health Coverage Information Returns, and Form 1095-B, Health Coverage, or another form that IRS designates, to report minimum essential coverage.

Code Sec. 6056 requires annual information reporting by applicable large employers (ALEs) relating to the health insurance that the employer offers (or does not offer) to its full-time employees. Code Sec. 6056 also requires those employers to furnish related statements to their employees.

Employers meet the Code Sec. 6056 requirements by filing Form 1094-C, Transmittal of Employer Provided Health Insurance Offer and Coverage Information Returns, and a Form 1095-C, Employer Provided Health Insurance Offer and Coverage, or other form(s) designated by IRS, or a substitute form.

Background—Notice 2016-4. Notice 2016-4, 2016-3 IRB, extended the due date:

1. for furnishing to individuals the 2015 Form 1095-B and the 2015 Form 1095-C: from Feb. 1, 2016, to Mar. 31, 2016, and
2. for filing with IRS the 2015 Form 1094-B, the 2015 Form 1095-B, the 2015 Form 1094-C, and the 2015 Form 1095-C: from Feb. 29, 2016, to May 31, 2016, if not filing electronically; and from Mar. 31, 2016, to June 30, 2016, if filing electronically.

In Notice 2016-4, IRS also encouraged employers and other coverage providers that do not meet the extended due dates to nonetheless furnish and file. IRS said that it will take such furnishing and filing into consideration when determining whether to abate the penalties for reasonable cause. IRS said it would also take into account whether an employer or other coverage provider made reasonable efforts to prepare for reporting the required information to IRS, such as gathering and transmitting the necessary data to an agent to prepare the data for submission to IRS, or testing its ability to transmit information to IRS. In addition, IRS stated that it would take into account the extent to which the employer or other coverage provider is taking steps to ensure that it is able to comply with the reporting requirements for 2016.

New guidance. IRS has now posted the following new guidance with respect to the AIR system:

System will continue to accept returns. IRS says that the AIR system will continue to accept ACA returns after June 30. Required system testing may also be completed on AIR after June 30.

File rejections and error messages. IRS also noted that electronic ACA filers have 60 days from the date of rejection of a file to submit and have the rejected submission treated as timely filed. Filers who submitted, and who then received from IRS “Accepted with Errors” messages, may also continue to submit corrections after June 30, 2016.

Penalties. IRS again mentioned that filers of Forms 1094-B, 1095-B, 1094-C, and 1095-C that missed the June 30, 2016 deadline will not generally be assessed late filing penalties under Code Sec. 6721 if the reporting entity has made legitimate efforts to register with the AIR system and to file its information returns, and it continues to make such efforts and completes the process as soon as possible. In addition, consistent with existing information reporting rules, filers that are assessed penalties may still meet the criteria for a reasonable cause waiver from the penalties.

Paper filers. IRS also encouraged paper filers who missed the May 31, 2016 filing deadline to file their returns as soon as possible.

References: For return requirements for providers of minimum essential coverage, see FTC 2d/FIN ¶  S-3321  et seq.; United States Tax Reporter ¶  60,554; TaxDesk ¶  812,314  et seq.; TG ¶  60245. For return requirements for applicable large employers, see FTC 2d/FIN ¶  S-3331  ; United States Tax Reporter ¶  60,564.01; TaxDesk ¶  816,301; TG ¶  60246.

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