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Reminder to Check Your Form 1094-C Before It’s Filed with IRS

Applicable large employers have until February 28th (March 31st if filed electronically) to submit their Forms 1094-C and 1095-C to the IRS for compliance with the ACA. The Form 1094-C is used, in part, to report to the IRS whether the employer has offered health coverage to at least 95% of its full-time employees. In our experience, most employers intend to meet this 95% threshold in order to avoid the extremely large penalty that otherwise is imposed under the ACA. However, some employers are reporting they did NOT meet this 95% threshold on their Forms 1094-C, even though they did, usually as a result of an error made by a service provider completing the form. This results in the IRS sending a notice of a proposed assessment of the employer shared responsibility penalty under the ACA. If an employer does not timely respond to the notice, the IRS will send… Continue Reading

IRS Proposes Permanent Extension to Furnish Forms 1095 and Elimination of Good Faith Transition Relief

The IRS recently issued proposed regulations providing an automatic 30-day extension of the January 31st due date for furnishing Forms 1095-B and 1095-C to individuals, as required for compliance with the Affordable Care Act. In prior years, the IRS granted similar relief for employers to provide these forms to individuals; however, the proposed regulations would make this extension permanent, beginning with reporting due for the 2021 tax year. Consistent with prior IRS guidance, the proposed regulations do not extend the due date to file Forms 1094-B, 1095-B, 1094-C, or 1095-C with the IRS, which are due by February 28th (March 31st if filed electronically). In addition, the proposed regulations eliminate the good-faith transition relief from penalties that apply for incorrect or incomplete information reported on those forms, as furnished to individuals or filed with the IRS, for the 2021 tax year and subsequent years. The proposed regulations are available here.

Ordinary Employee Benefits Issues That Can Cause Extraordinary Problems in M&A Deals

Employee benefits rarely drive corporate transactions, but if the benefits of a target company are not reviewed carefully, they can sometimes derail the transaction.  Even some of the most routine facets of benefit plan administration can result in significant potential financial exposure (e.g., additional employer contributions, taxes, penalties, and fees as well as fees associated with the preparation and filing of IRS and DOL correction program applications) that could negatively affect the overall value of the target company. By identifying issues early in the transaction, the seller can prevent costly purchase price reductions and identify issues that need correction, while the buyer can avoid overpaying for a target and ensure that representation and warranty insurance will be available to cover potential claims. Some of those routine compliance issues include, but are not limited to, the following: Failing to timely file an annual Form 5500.  The DOL can assess a penalty… Continue Reading

Last Year for Leniency on Forms 1095-C

In keeping with prior years, the IRS has extended the due date for providing the 2020 Forms 1095-B and C to individuals until March 2, 2021. These forms are required for compliance with the Affordable Care Act (?Ç£ACA?Ç¥). In Notice 2020-76, the IRS also extended the good-faith transition relief for penalties related to incomplete or incorrect Forms 1095-B and C to 2020. Notice 2020-76 also states that this is the last year for which the IRS intends to provide this type of good-faith relief. This relief was especially helpful for employers who received ACA employer penalty notices and determined that the penalty notices were related to reporting errors on their Form 1095-C. Employers should thus ensure that all software errors and glitches that resulted in incorrect coding on Forms 1095-C are resolved before the 2021 reporting is due. Notice 2020-76 is available here.

Extension of Due Date to Furnish IRS Form 1095 to Individuals and of Good Faith Transition Relief

In Notice 2019-63, the IRS extended the due date, from January 31, 2020 to March 2, 2020, for furnishing to individuals the 2019 Form 1095-B and Form 1095-C. This notice does not, however, extend the due date to file Forms 1094-B, 1095-B, 1094-C, and 1095-C with the IRS, which are due by February 28, 2020 (paper filing) or March 31, 2020 (filing electronically), although certain other extensions may be available. This notice also extends the IRS?ÇÖs good faith transition relief from penalties that could apply for incorrect or incomplete information reported on such forms furnished to individuals or filed with the IRS. This relief does not apply if the forms were not filed or furnished by the applicable due date. Notice 2019-63 is available here.

In-Depth Look at IRS Forms 1094 and 1095 for 2016 ACA Reporting

Earlier this month, we provided information regarding the IRS’s release of final Forms 1094 and 1095 and instructions for the 2016 Affordable Care Act (“ACA“) reporting year, which is available here. A more in-depth look at the changes to the ACA’s shared responsibility reporting requirements is available on our new companion blog, HB Health and Welfare. HB Health and Welfare provides more details regarding health and welfare benefits topics of interest, and also provides information about upcoming speaking engagements by Haynes and Boone’s benefits lawyers.

November 2022
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