CONTACT PERSON: Kim Phillips, Vice President; Kim.Phillips@BenefitScape.com or (508)655-3307
BenefitScape applauds the IRS Notice providing a 30 day extension of the Due Date for Furnishing Form 1095 for Tax Year 2016 and extending transition relief to those employers making “good faith” efforts to comply with the information-reporting requirements.
Notice 2016-70 https://www.irs.gov/pub/irs-drop/n-16-70.pdf specifically extends the due date for furnishing to individuals the 2016 Form 1095-B, Health Coverage, and the 2016 Form 1095-C, Employer-Provided Health Insurance Offer and Coverage, from January 31, 2017, to March 2, 2017.
Yearend 2017 was shaping up as a very busy time for employee benefit plan management; in particular conforming to the requirement to send the Form 1095 to their employees by January 31, 2017. This deadline was especially challenging since it coincided with Form 1099 and W2 processing schedules. Adding another tax form at year end could be the straw that broke the camel’s back. So a 30 day extension, while short, moves the printing and distribution to a more opportune time.
BenefitScape has always had an extremely fast and efficient process to make even the narrowest of deadlines possible for our clients. Before the Form 1095 reports can be distributed, there is quite a bit of data management, IRS code calculation and Health Plan coverage information to be developed. Our software is especially designed to make the reporting compliance effort error free and complete; while adhering to a strict deadline.
“BenefitScape will continue to hold to our original distribution schedule for those clients that wish to maintain the schedule.” Notes Mike Downey, Executive Vice President of BenefitScape. “We will do this for several reasons; we wish to maintain the momentum established and avoid the questions that come from employees who may be filing their personal tax returns and wish to refer to these forms. In all cases if a client needs the extra time we are pleased to comply with their wishes.”
Possibly even more importantly, this notice also extends good faith transition relief from section 6721 and 6722 penalties to the 2016 information reporting requirements under sections 6055 and 6056. “ACA reporting is still a very new concept for many employers and it will be the first year that many systems are producing all of the required reports and XML data to file with the IRS” says Kim Phillips, Vice President Customer Experience.
“There are a few new requirements this year and more time for testing and quality control is appreciated. The transition standard worked well last year and its extension is a welcome addition to an already overloaded benefit management schedule.”
For 2015 reporting, the IRS signaled that they recognized the complexity of the regulations and as long as employers acted in good faith and made legitimate efforts to fulfill the requirements they could potentially be absolved from certain penalty liability. Extending this relief to tax year 2016 will be will be welcomed by most employers and practitioners.
It is now expected that the Service would not impose penalties under sections 6721 and 6722 on reporting entities that can show that they made good-faith efforts to comply with the information-reporting requirements. This relief applied only to furnishing and filing incorrect or incomplete information reported on a statement or return, and not to a failure to timely furnish or file a statement or return. In addition, the section 6721 and 6722 penalties may be waived if a failure to timely furnish or file a statement or return is due to reasonable cause. This requires the reporting entity to demonstrate that it acted in a responsible manner, and that the failure was due to significant mitigating factors or events beyond the reporting entity’s control.
While Notice 2016-70 is still relatively new, and contains many provisions that need to be studied. It should come as welcome relief to anyone who was concerned about the complexity and strict deadlines imposed on ACA reporting.
In addition, filers of Forms 1094-B, 1095-B, 1094-C, and 1095-C may receive an automatic 30-day extension of time to file such forms with the Service by submitting Form 8809, Application for Extension of Time to File Information Returns, on or before the due date for filing those forms. Treas. Reg. § 1.6081-1; Temp. Treas. Reg. § 1.6081-8T. Under certain hardship conditions, filers who submit Form 8809 before the automatic 30-day extension period expires and explain in detail why the additional time is needed may also receive an additional 30-day extension of time to file Forms 1094-B, 1095-B, 1094- C, and 1095-C with the Service.
BenefitScape is a full service Affordable Care Act (ACA) compliance company providing the best choice in services and software to assist our clients by bringing knowledge, insight, and expertise to ACA reporting. We have developed IRSAIR www.IRSAIR.com to provide a solution for those HCM, HRMS and Payroll providers that have developed an ACA-specific module and have XML files to print or transmit to the IRS.
BenefitScape does ACA Compliance only. This is our only focus. The team at BenefitScape has a long and excellent track record of working in employee benefits and we use our experience to ensure 100% ACA Compliance for our clients. Visit us atwww.BenefitScape.com