The Current Climate
The IRS has made it very clear that they will not accept individual tax returns without Line 61 of Form 1040 completed. This means that the individual’s Form 1040 will need to indicate whether they had health coverage, had an exemption from the individual mandate, or will report a shared responsibility payment under the individual mandate.
As an Applicable Large Employer, the IRS requires you to distribute Form 1095-B/C to your Full Time employees by the recently extended deadline of March 2nd, 2018. Prior to the extension, the original deadline set by the IRS for Form distribution was January 31st, 2018. The BenefitScape team recommends delivering the Forms to employees as close to the original deadline for the following reasons:
- Employee Expectations The deadline for Tax Year 2017 employee tax forms (W-2, 1099, 1095-B/C) was the same date for all three, January 31st, 2018. The extension for Form 1095-B/C takes them out of sync. When your employees begin to file their Form 1040 Individual Income Tax Return for 2017, most will believe that they need both W-2 and 1095-B/C prior to filing. Should they go to a third-party tax specialist, the tax professional will likely ask for Form 1095-B/C as proof of health coverage. In brief, employees expect to get a package (W-2 and 1095-B/C).
- Avoid Unnecessary Penalties The IRS can issue a penalty of $260 per Form distributed after the March 2nd, 2018 deadline, capped at $3,218,500. This is not a negligible amount; for example, just 100 late Form 1095-Cs equal $26,000 of potential penalties.
- Don’t Cut eFiling Too Close ACA Compliance and Reporting is not a small project. Compiling all necessary data, configuring it to meet IRS requirements, and ensuring your data is accurate and completed in a timely fashion is a difficult and daunting project, especially on top of working during the busy holiday season. The IRS Affordable Care Act Information Returns (IRSAIR) Program is challenging and resource-heavy. Testing your 1095-C and 1094-C data against the difficult ACA Rules will leave you with little time for last-minute data corrections prior to the April 2nd, 2018 IRSAIR eFiling deadline.
BenefitScape recommends starting early and distributing your Form 1095-B/C to your employees on or before January 31st, 2017. We can jump in at any point to help you through this process: as ACA experts and compliance nerds, we would be thrilled to support your organization!
Give us a call at (508) 655-3307 or email Kim at firstname.lastname@example.org to discuss your Tax Year 2017 ACA Compliance and Reporting.