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Proposed Regs Permanently Extend Form 1095 Deadline, Eliminate Transitional Relief.

(Parker Tax Publishing December 2021)

The IRS issued proposed regulations which (1) provide an automatic extension of time for providers of minimum essential coverage to furnish individual statements regarding such coverage, (2) provide an alternative method for furnishing statements, and (3) eliminate the transitional relief previously provided for good faith failures to comply with the Code Sec. 6055 reporting requirements. The proposed regulations also provide that "minimum essential coverage" does not include Medicaid coverage that is limited to COVID-19 testing and diagnostic services. REG-109128-21.


Under the Patient Protection and Affordable Care Act (ACA) enacted in 2010, eligible individuals who purchase coverage under a qualified health plan through a health insurance exchange may claim a premium tax credit under Code Sec. 36B. The ACA also added Code Sec. 5000A, which requires that individuals have minimum essential coverage for each month in the tax year, qualify for an exemption from the minimum essential coverage requirement, or make an individual shared responsibility payment upon filing a federal income tax return.

The term "minimum essential coverage" is defined to include various types of health plans and programs including, for example, Medicare, Medicaid, and coverage under certain employer-sponsored plans. The individual shared responsibility payment amount was reduced to zero, beginning in 2018, by the Tax Cuts and Jobs Act of 2017.

Certain information reporting requirements apply to providers of minimum essential coverage. Under Code Sec. 6055, a provider of minimum essential coverage must file Form 1094-B, Transmittal of Health Coverage, to report certain information to the IRS that identifies covered individuals and the period of coverage, and furnish a Form 1095-B, Health Coverage, to the covered individuals containing the same information. Under Code Sec. 6056, every applicable large employer (ALE) is required to file Form 1094-C, Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns, and furnish written statements on Form 1095-C, Employer-Provided Health Insurance Offer and Coverage, in relation to the health insurance, if any, that the employer offers to its full-time employees. Forms 1094-B and 1094-C are due on or before February 28 (March 31 if filed electronically) of the year following the calendar year to which they relate. Forms 1095-B and 1095-C are currently required to be furnished on or before January 31 of the year following the calendar year to which they relate.

The current regulations under Code Secs. 6055 and 6056 allow the IRS to grant an extension of time of up to 30 days to furnish Forms 1095-B and 1095-C for good cause shown. Additionally, filers generally may receive an automatic 30-day extension of time to file the forms with the IRS by submitting Form 8809, Application for Extension of Time to File Information Returns, on or before the due date for filing the forms. In Notice 2020-76, the IRS provided an automatic extension of time for reporting entities to furnish 2020 Forms 1095-B and 1095-C to individuals from January 31, 2021, to March 2, 2021. Similar extensions were provided for years 2015-2019 in earlier notices.

Code Sec. 6721 imposes a penalty for failing to timely file an information return or for filing an incorrect or incomplete information return. Code Sec. 6722 imposes a penalty for failing to timely furnish an information statement or furnishing an incorrect or incomplete information statement. These penalties are imposed with regard to information returns and statements listed in Code Sec. 6724(d), which include those required by Code Sec. 6055 and Code Sec. 6056. Under Code Sec. 6724, no penalty will be imposed under Code Sec. 6721 or Code Sec. 6722 with respect to any failure if it is shown that the failure is due to reasonable cause and not to willful neglect. In the preambles to the regulations under Code Sec. 6055 (T.D. 9660) and Code Sec. 6056 (T.D. 9661), the IRS stated it would not impose penalties on reporting entities for the reporting of 2015 health coverage and offers of coverage if those entities could show that they made good faith efforts to comply with the information reporting requirements (transitional good faith relief). In subsequent notices, the IRS extended that transitional relief for years 2015-2019. However, in Notice 2020-76, the IRS stated that 2020 was the last year that transitional good faith relief would be provided.

Proposed Regulations Permanently Extend Deadline for Furnishing Forms 1095-B and 1095-C

In REG-109128-21, the IRS published proposed regulations under Code Secs. 5000A, 6055, and 6056 that (1) provide a permanent extension of the deadline for furnishing Forms 1095-B and 1095-C, (2) provide an alternative manner of furnishing Forms 1095-B, and (3) eliminate the transitional good faith relief provided in the preambles to the regulations under Code Secs. 6055 and 6056.

Under the proposed regulations, Forms 1095-B will be timely furnished if furnished no later than 30 days after January 31 of the calendar year following the calendar year in which minimum essential coverage is provided. The proposed regulations also provide applicable large employers (generally, employers with 50 or more full-time or full-time equivalent employees) with an automatic extension of time, not to exceed 30 days, in which to furnish Forms 1095-C to full-time employees. Such statements will be considered timely furnished if furnished no later than 30 days after January 31 of the calendar year in accordance with applicable IRS procedures and instructions.

Under the alternative manner of furnishing Forms 1095-B provided in the proposed regulations, a reporting entity may post a clear and conspicuous notice on the entity's website stating that responsible individuals may receive a copy of their statement upon request. The notice must include an email address, a physical address to which a request may be sent, and a telephone number that responsible individuals may use to contact a reporting entity with any questions. The notice must be written in plain, non-technical terms and must be retained on the website until October 15 of the year following the calendar year to which the statement relates. An example of a clear and conspicuous notice is provided in Prop. Reg. Sec. 1.6055-1(g).

IRS Ends Transitional Relief for Earlier Years

With regard to the transitional good faith relief provided for years 2015-2019, the IRS stated that the ACA reporting requirements have now been in place for six years and transitional relief is no longer appropriate. The IRS noted that the reasonable cause exception under Code Sec. 6724 already provides adequate relief from penalties under Code Sec. 6721 and Code Sec. 6722 for filers who have reasonable cause for failing to timely or accurately complete their reporting requirements. Therefore, the IRS is discontinuing the transitional good faith relief after tax year 2020.

The proposed regulations also make permanent the guidance the IRS provided in Notice 2020-66, which states that Medicaid coverage that is limited to COVID-19 testing and diagnostic services under Section 6004(a)(3) of the Families First Coronavirus Response Act (Pub. L. 116-127) does not qualify as minimum essential coverage under a government-sponsored program. As a consequence, an individual's eligibility for such coverage for one or more months does not prevent those months from qualifying as coverage months for purposes of determining eligibility for the premium tax credit under Code Sec. 36B.

For a discussion of information reporting of minimum essential coverage, see Parker Tax ¶190,060. For a discussion of the information reporting requirements for applicable large employers, see Parker Tax ¶191,160.

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