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Final Regs Permanently Extend Deadline for Furnishing Forms 1095-B and 1095-C

(Parker Tax Publishing January 2023)

The IRS finalized regulations that provide an automatic extension of time for providers of minimum essential coverage (including health insurance issuers, self-insured employers, and government agencies) to furnish statements regarding such coverage and that also provide an alternative method for furnishing individual statements when the individual shared responsibility payment amount is zero. However, the IRS rejected practitioners' suggestions that the IRS reconsider its termination of the transitional good faith relief at least for calendar years 2022, 2023, and 2024. T.D. 9970.


Under the Patient Protection and Affordable Care Act (ACA) enacted in 2010, eligible individuals who purchase coverage under a qualified health plan through a health insurance exchange may claim a premium tax credit under Code Sec. 36B. The ACA also added Code Sec. 5000A, which requires that individuals (1) have minimum essential coverage for each month in the tax year, (2) qualify for an exemption from the minimum essential coverage requirement, or (3) make an individual shared responsibility payment upon filing a federal income tax return.

Certain information reporting requirements apply to providers of minimum essential coverage. Under Code Sec. 6055, a provider of minimum essential coverage must (1) file Form 1094-B, Transmittal of Health Coverage, to report certain information to the IRS that identifies covered individuals and the period of coverage, and (2) furnish a Form 1095-B, Health Coverage, to the covered individuals containing the same information. Under Code Sec. 6056, every applicable large employer (ALE) is required to (1) file Form 1094-C, Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns, and (2) furnish written statements on Form 1095-C, Employer-Provided Health Insurance Offer and Coverage, in relation to the health insurance, if any, that the employer offers to its full-time employees. Forms 1094-B and 1094-C are due on or before February 28 (March 31 if filed electronically) of the year following the calendar year to which they relate. Forms 1095-B and 1095-C are required to be furnished on or before January 31 of the year following the calendar year to which they relate.

The term "minimum essential coverage" is defined to include various types of health plans and programs including, for example, Medicare, Medicaid, and coverage under certain employer-sponsored plans. The individual shared responsibility payment amount was reduced to zero, beginning in 2018, by the Tax Cuts and Jobs Act of 2017 (TCJA). However, the TCJA did not amend any of the reporting or filing requirements under Code Sec. 6055.

The current regulations under Code Sec. 6055 and Code Sec. 6056 (i.e., Reg. Sec. 1.6055-1(g)(4)(i)(B)(1) and Reg. Sec. 301.6056-1(g)(1)(ii)(A)) allow the IRS to grant an extension of time of up to 30 days to furnish statements to individuals for good cause shown. Additionally, the regulations provide that the IRS may prescribe guidance or procedures for automatic extensions of time for furnishing statements to individuals. Through a series of notices, the IRS extended the due date for furnishing statements to individuals under Code Sec. 6055 and Code Sec. 6056 for calendar years 2015 through 2020.

Code Sec. 6721 imposes a penalty for failing to timely file an information return or for filing an incorrect or incomplete information return. Code Sec. 6722 imposes a penalty for failing to timely furnish an information statement or furnishing an incorrect or incomplete information statement. The Code Sec. 6721 and Code Sec. 6722 penalties are imposed on information returns and statements listed in Code Sec. 6724(d), which include those required by Code Sec. 6055 and Code Sec. 6056. Code Sec. 6724 provides that no penalty is imposed under Code Sec. 6721 or Code Sec. 6722 with respect to any failure if it is shown that the failure is due to reasonable cause and not to willful neglect.

Proposed Regulations

In 2021, to reduce the administrative burdens for reporting entities and for the IRS, the IRS issued proposed regulations (REG-109128-21), which provided reporting entities, including ALEs (generally employers with 50 or more full-time or full-time equivalent employees) with an automatic extension of time, not to exceed 30 days after January 31, in which to furnish the required written statements under Code Sec. 6055 and Code Sec. 6056. Further, because this extension would be automatic, the 2021 proposed regulations eliminated the requirement for a reporting entity to make a written application to the IRS requesting an extension of time to furnish the required statements. The proposed regulations provided amendments to Code Sec. 6055 to provide an automatic extension of time for furnishing statements to "responsible individuals" and also provided for an alternative manner for timely furnishing statements.

Observation: A "responsible individual" for purposes of the regulations includes a primary insured, employee, former employee, uniformed services sponsor, parent, or other related person named on an application who enrolls one or more individuals, including him or herself, in minimum essential coverage.

Under the alternative manner of furnishing Forms 1095-B provided in the proposed regulations, a reporting entity could post a clear and conspicuous notice on the entity's website stating that responsible individuals may receive a copy of their statement upon request. The proposed regulations required that the notice be written in plain, non-technical terms and retained on the website until October 15 of the year following the calendar year to which the statement relates.

The proposed regulations also provided that Medicaid coverage limited to COVID-19 testing and diagnostic services under Section 6004(a)(3) of the Families First Coronavirus Response Act (Pub. L. 116-127) is not considered minimum essential coverage and thus does not have a reporting requirement.

The preamble to the proposed regulations described the genesis of the transitional good faith relief from penalties under Code Sec. 6721 and Code Sec. 6722, which the IRS initially provided to reporting entities in the preambles to the regulations under Code Sec. 6055 and Code Sec. 6056 for calendar year 2015 and in IRS notices for calendar years 2016-2020. Under the transitional good faith relief, the IRS did not impose penalties under Code Sec. 6721 and Code Sec. 6722 on reporting entities if the entities could show that they made good faith efforts to comply with the information reporting requirements. In Notice 2020-76, the IRS stated that 2020 was the last year that transitional good faith relief would be provided. The preamble to the 2021 proposed regulations reiterated that the transitional good faith relief would be discontinued after 2020.

Final Regs and Practitioner Concerns on the Elimination of Transitional Good Faith Relief

The IRS finalized the regulations under Code Sec. 6721 and Code Sec. 6722 on December 15 with clarifying modifications. The final regulations include the automatic extensions of time discussed in the proposed regulations for filing Form 1095-B and Form 1095-C, as well as the provision that adds Medicaid coverage for COVID-19 testing and diagnostic services to the types of health coverages that do not qualify as minimum essential coverage. While the 2021 proposed regulations provided that reporting entities would be granted an automatic extension of time not exceeding 30 days in which to furnish required statements, the IRS revised that provision to be clearer. The final regulations expressly provide a 30-day, automatic extension of time.

The final regulations also modified Prop. Reg. Sec. 1.6055-1(g)(4)(ii)(B)(2) to provide that a reporting entity using the alternative manner of furnishing statements must post a notice on its website on or before January 31 of the year following the calendar year in which the minimum essential coverage is provided. Reporting entities are granted an automatic, 30-day extension of time in which to furnish these statements.

In the preamble to the final regulations, the IRS addressed practitioners' appeals that the IRS reconsider its termination of the transitional good faith relief, with practitioners suggesting that the relief be retained at least for calendar years 2022, 2023, and 2024. One practitioner argued that continuation of the relief was necessary because health coverage information reporting, especially for ALEs, is complicated, and many employers continue to make unintentional mistakes. Another practitioner asked that the transitional good faith relief be retained because, although the individual shared responsibility payment amount is zero, several states have imposed individual mandates regarding health insurance that require reporting; instructions for IRS forms respecting reporting are modified annually; and plans have faced compliance problems caused by the COVID-19 pandemic.

The IRS responded that the good faith relief offered at the beginning of calendar year 2015 was intended to be transitional to accommodate public concerns with implementing the new reporting requirements under the ACA. These reporting requirements, the IRS noted, have now been in place for seven years, and transitional relief is no longer appropriate. The IRS did not feel that additional good faith relief was necessary to address the practitioners' concerns and commented that the reasonable cause exception under Code Sec. 6724 already provides adequate relief from penalties under Code Sec. 6721 and Code Sec. 6722 for filers who have reasonable cause for failing to timely or accurately complete their reporting requirements.

For a discussion of information reporting of minimum essential coverage, see Parker Tax ¶190,060. For a discussion of the information reporting requirements for applicable large employers, see Parker Tax ¶191,160.

Disclaimer: This publication does not, and is not intended to, provide legal, tax or accounting advice, and readers should consult their tax advisors concerning the application of tax laws to their particular situations. This analysis is not tax advice and is not intended or written to be used, and cannot be used, for purposes of avoiding tax penalties that may be imposed on any taxpayer. The information contained herein is general in nature and based on authorities that are subject to change. Parker Tax Publishing guarantees neither the accuracy nor completeness of any information and is not responsible for any errors or omissions, or for results obtained by others as a result of reliance upon such information. Parker Tax Publishing assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect information contained herein.

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