When we flip our calendars to the new year, many of us take time to review our priorities and reset our to-do lists. This year, many employers will have a new challenge to add to their lists: ACA reporting.
The Affordable Care Act (ACA) added new reporting rules to the federal tax code that will affect many employers in early 2016—Sections 6055 and 6056. Section 6055 applies to employers that sponsor self-insured plans, regardless of their size. Section 6056 impacts applicable large employers (those with 50 or more full-time and full-time equivalent employees), regardless of whether they offer coverage or not. These employers will need to report information to the IRS and individuals using the appropriate 1094 and 1095 forms. Employers that fail to comply could be subject to significant penalties under the tax code.
The IRS gave us all a late holiday gift and extended the reporting deadlines for the first year, but employers still have limited time to comply and need to act now in order to prepare.
Key ACA reporting dates
Here are the key dates in 2016 that employers need to prepare for:
- March 31, 2016: The deadline for furnishing statements to individuals
- May 31, 2016: The deadline for submitting returns to the IRS (if paper filing)
- June 30, 2016: The deadline for submitting electronic returns to the IRS (required for entities filing 250 or more of either type of return)
These are the extended deadlines that the IRS provided in Notice 2016-4. They are automatic and apply to all reporting entities. The previous provisions regarding extensions of time to file returns and furnish statements do not apply to these extended due dates.
Be aware of employer concerns —and possible penalties
One reason that these deadlines are so concerning (even with the extra time) is that the ACA reporting is a brand new requirement that many employers are not prepared for. They’re not sure what the rules are, how they apply to their companies, which forms they have to use or when they have to do the reporting.
Even the employers that have been keeping up with the reporting rules may find it challenging to get the reporting done. Because these rules are new, employers have to implement brand new workflows when it comes to identifying the information they need, collecting that information and documenting it.
Many employers mistakenly believe that there are no penalties if they don’t do the reporting. While the IRS is providing some penalty relief for the first year, in most cases, it’s only available for employers that actually file and furnish the required forms on time and make a good faith effort to get the information right. Any reporting entities that do not meet the deadlines are encouraged to furnish and file the required information. The IRS will take the furnishing and filing into consideration, along with any efforts made to prepare for reporting, when determining whether to decrease penalties for reasonable cause.
Employers need their brokers
Since employers are looking to their brokers for help on compliance, brokers are in a unique position to let these groups know that they need to get moving on reporting. Brokers can also provide the tools to help employers comply. Our 6055 and 6056 Reporting Workbooks provide a starting point to collect the information that needs to be reported on the applicable Forms 1094 and 1095. The workbooks provide step-by-step instructions along with information to help educate employers on the rules that apply. With the addition of our ACA reporting tool, employers using the workbooks can translate the information they’ve collected into forms that can be filed with the IRS and furnished to individuals.
For more information on the ACA reporting requirements, including the extended deadlines, Broker Briefcase® users can review the following documents:
- ACA Reporting Deadlines Delayed
- Employer Reporting of Health Coverage—Code Sections 6055 & 6056
- Q&As on Employer Reporting of Health Coverage (Section 6056)
- Q&As on Reporting by Health Coverage Providers (Section 6055)