Reason to Celebrate: IRS Extends ACA Reporting Deadlines

On December 28, 2015, the IRS gave Applicable Large Employers (“ALEs”) a last-minute extension of their 2015 ACA reporting deadlines via Notice 2016-4.  The original and new, extended deadlines, which apply only to reporting for 2015, are as follows:

The same extensions apply to providers of minimum essential coverage such as insurance carriers and government-sponsored programs (Medicare, Medicaid), who are required to file Form 1094-B and furnish statements to covered individuals on Form 1095-B.  Employers generally are not required to perform minimum essential coverage reporting although, as discussed in this prior post, there are circumstances under which it is required.

The extended deadlines are hard deadlines to which the IRS will not apply automatic and permissive extensions of time that would otherwise be available. Notice 2016-4 also functions as the Service’s response to any pending extension requests, which will not be formally granted.  Reporting penalties will apply for failure to timely file returns or furnish statements but the IRS may abate penalties on a demonstration of “reasonable cause”; in this regard the employer’s “reasonable efforts” to prepare for timely reporting will be taken into account as will efforts to comply for 2016.  Although not exactly clear from the Notice it would appear that the IRS is still offering penalty relief for timely filed and/or furnished but incomplete or incorrect returns and/or statements, where the filer can show that it made good faith efforts to provide complete and correct information.    Further clarification on that point would be helpful.

As has often been the case with ACA relief, this extension is offered so close to the original compliance deadlines that some ALEs may not need or even be operationally able to take full advantage of it, and the Notice makes clear that the IRS will be prepared to accept ACA returns beginning in January 2016. However even those ALEs that had already invested substantial time and money in fulfilling the original reporting and statement deadlines were struggling with the complexity of the forms and reporting codes, and the extension will allow for a less frenzied and hopefully more accurate reporting process. The extension will be even more welcome to the many employers who qualified for pay or play relief applicable to ALEs with 50 to 99 full-time employees, including full-time equivalents, and who may only now be learning of their 2015 reporting duties.