Extension of Due Date for Furnishing Statements to Participants of Forms 1095 and Related Relief

Especially at this time of year, it is important to be grateful for the many gifts and blessings in our lives. As we reflect on that thought, there is one additional item to be thankful for this year:  Internal Revenue Service (IRS) Notice 2016-70, https://www.irs.gov/pub/irs-drop/n-16-70.pdf.  For employers subject to 2016 information reporting on Forms 1095-B and 1095-C under the Affordable Care Act, the IRS has granted taxpayers an automatic extension from January 31, 2017 to March 2, 2017, to furnish the forms to employees, without the need to file an application with the IRS. This is welcome relief.

It is important to note this guidance does not extend the deadline for filing the information with the IRS. The Treasury and the IRS have determined there is no similar need for granting additional time to file the 2016 forms with the IRS. Those due dates remain the same. If you file on paper, those forms are required to be filed by February 28, 2017, or if filing electronically, by March 31, 2017. However, you may still apply for an automatic 30-day extension to file these forms with the IRS on Form 8809 prior to the due dates noted above. Employers that do not comply with the due dates for furnishing forms to employees or filing the forms with the IRS are subject to penalties for failure to furnish or file in a timely manner.  

Because of the extension granted under this notice, some individual taxpayers will not have their Form 1095-B and/or Form 1095-C at the time they wish to file their 2016 personal income tax return. Taxpayers do not need to wait to receive these forms before filing their returns and do not need to send to the IRS any information they relied on in preparing the returns, but they should retain the forms with their tax records. 

Further, the IRS recognizes the challenges involved in preparing the forms and is also extending to the 2016 filing the transition relief from penalties that applied in 2015. The transition relief grants penalty relief to taxpayers who demonstrated a good-faith effort to furnish accurate and complete information to both the participants and the IRS. The IRS has made it clear that it does not expect to issue transition relief in future years, assuming no further changes to the law.