IRS is Extending ACA Filing Deadline and Good Faith Compliance Standard

Charles Maniace
November 21, 2016

This blog was last updated on June 26, 2021

The Internal Revenue Service (IRS) made two important announcements regarding the information reporting requirements imposed under the Affordable Care Act (ACA) in Notice 2016-70, released on November 18, 2016. Specifically, the IRS announced:

  1. That it was extending the due date for furnishing statements to recipients (Forms 1095-B and 1095-C)
  2. That it was extending good faith transition relief into Tax Year 2016.

Extension of Due Date for Furnishing to Individuals

The IRS has extended the timeline for furnishing statements to the recipient. Prior to this announcement, Forms 1095-B and 1095-C were slated to be due to individuals on January 31, 2017. However, pursuant to this extension, the forms are now due to individuals on March 2, 2017. The IRS noted that this extension was the result of consultations with multiple stakeholders. Specifically, insurance companies, applicable large employers, and other providers of minimum essential coverage indicated that they needed additional time to gather and analyze the information necessary to properly prepare Forms 1095-B and 1095-C. It is critical to note that the due dates for filing forms with the IRS remain unchanged. These filings are due on February 28, 2017 when filing via paper and March 31, 2017 when filing electronically.

Extension of Good Faith Transition Relief for Tax Year 2016

The standard against which taxpayers are evaluated with regard to whether or not they have met their reporting obligations under Sections 6055 and 6056 was designated as a “good faith” requirement for Tax Year 2015. The same is now true for Tax Year 2016. In explaining the rationale for extending this good faith standard, the IRS specified that these reporting requirements are still new and that, historically, providing relaxed standards and relief in such situations has been common practice. Specifically, the IRS acknowledged that it recognizes “the challenges involved in developing new procedures and systems to accurately collect and report information in compliance with new reporting requirements.” However, as was the case last year, the extension of the Good Faith standard does NOT mean that no reporting requirements exist. Organizations that make no attempt to comply or make inadequate attempts may still be penalized. Good faith means that penalty relief may be extended to incorrect or incomplete returns. It does not apply to late or missing returns and it does not mean that corrected returns are optional. Specifically, a penalty under Section 6721 and 6722 can be abated only if the filer can show that they used good faith in attempting to file and meet the requirements. Examples of activities which may constitute good faith include, but are not limited to:

  • Whether filers made reasonable efforts to prepare for reporting the required information to the IRS as well as to employees and covered individuals
  • Whether filers gathered and transmitted the necessary data to an agent to prepare the data for submission to the IRS
  • Whether filers tested their abilities to transmit information to the Service
  • Whether filers are taking affirmative steps to ensure that they will be able to comply with the reporting requirements for Tax Year 2017
  • Whether or not filers attempted to address discrepancies by filing corrections if there were errors in the initial filing

Next Steps

The IRS explicitly provided that the extension of time to furnish information statements under 6055 and 6056 and transition relief extend only to Tax Year 2016. They have no impact on the filing requirements as they may exist for Tax Year 2017. In fact, the IRS has specifically stated they do not expect either of these extensions to apply to reporting in Tax Year 2017. For more information please see the full IRS Notice 2016-70. https://www.irs.gov/pub/irs-drop/n-16-70.pdf

Sign up for Email Updates

Stay up to date with the latest tax and compliance updates that may impact your business.

Author

Charles Maniace

Chuck is Vice President –Regulatory Analysis & Design at Sovos, a global provider of software that safeguards businesses from the burden and risk of modern tax. An attorney by trade, he leads a team of attorneys and tax professionals that provide the tax and regulatory content that keeps Sovos customers continually compliant. Over his 20-year career in tax and regulatory automation, he has provided analysis to the Wall Street Journal, NBC, Bloomberg and more. Chuck has also been named to the Accounting Today list of Top 100 Most Influential People four times.
Share this post

Hungary Supplemental Insurance Premium Tax
EMEA IPT
July 11, 2022
Extra Profit Tax: An Introduction to Supplemental IPT in Hungary

This blog was last updated on October 28, 2024 Update 7 October 2024 by Edit Buliczka Hungarian Tax Office Updates IPT Declaration Form for 2023 The procedure necessary to correct an underdeclared premium figure in Hungary can be complicated. The complexity of a correction for return form 2320 has become even more challenging. Following a […]

2025 bond project
North America Tax Information Reporting
November 4, 2024
The Insurer’s Guide to the 2025 Bond Project

This blog was last updated on November 4, 2024 The regulatory landscape for insurance companies is undergoing significant changes with the Principles-Based Bond Project which is set to take effect on January 1, 2025. These changes, driven by the National Association of Insurance Commissioners (NAIC), will impact how insurance companies classify and value bond investments, […]

E-Invoicing Compliance EMEA VAT & Fiscal Reporting
November 1, 2024
New ViDA Proposal Set for ECOFIN Approval

This blog was last updated on November 1, 2024 The Council of the European Union has released a new proposal regarding the VAT in the Digital Age (ViDA) reform. The proposal aims to modernise and streamline VAT systems across the EU, notably e-invoicing and Continuous Transaction Controls (CTC). Members States will review it on 5 […]

what is peppol
E-Invoicing Compliance North America
October 29, 2024
What it is PEPPOL?

This blog was last updated on October 29, 2024 Peppol E-invoicing explained: What it is and how it works The global adoption of electronic invoicing is accelerating. Governments worldwide are pushing to adopt e-invoicing to digitally transform their national systems and, often, to close the VAT gap. While many countries have introduced their own e-invoicing […]

remote sellers sales tax
North America Sales & Use Tax
October 28, 2024
Will Congress Act to Simplify Remote Seller Sales Tax Collection

This blog was last updated on October 29, 2024 When the United States Supreme Court ruled in 2018, that South Dakota’s law imposing sales tax collection requirements on sellers without in-state physical presence was constitutional, it did not grant states free reign. States are still responsible for ensuring that their sales tax requirements are manageable, […]

dtc shipping laws for craft spirits
North America ShipCompliant
October 23, 2024
Why It’s Time to Reform DtC Shipping Laws for Craft Spirits

This blog was last updated on October 23, 2024 While wine lovers have enjoyed the convenience of direct-to-consumer (DtC) shipping for nearly two decades, the craft spirits market is still not afforded the same access. Outdated and restrictive spirits shipping laws have kept the spirits industry from fully leveraging the benefits of DtC shipping, leaving […]