Despite recent changes by the IRS in the requirements for reporting health care on tax returns, employers should continue to comply with ACA reporting. On Feb. 15 the IRS announced that they wouldn’t reject tax returns that are missing health care status, however, this announcement is meant only for individual tax payers.
In response to the President’s Executive Order to, “waive, defer, grant exemptions from, or delay the implementation of any provision or requirement of the Act…” the IRS will make declaring individual coverage optional.
Before the executive order, the IRS planned to penalize tax returns that didn’t fill out line 61. They would be labeled as “silent returns” and rejected.
While the IRS won’t reject tax returns, they will enforce ACA compliance. The IRS reserves the right to follow up on a future date with tax payers who don’t report their coverage. What exactly will prompt a follow up is not clear yet.
For employers, ACA reporting will continue in the same way as before. Scott Behrens, a senior ERISA attorney says, “The ACA is still the law of the land. Prudent employers will want to continue to comply with the ACA, including the play-or-pay mandate and reporting requirements until formal guidance relieves them of those compliance obligations."
Some have questioned the legality of the IRS announcement. Ryan Ellis, a Senior Fellow at the Conservative Reform Network said, “The mandate can only be weakened by Congress. This is a change to how the IRS is choosing to enforce it. They will count on voluntary disclosure of non-coverage rather than asking themselves."
Despite these objections, the IRS’s new policy is set in place. The deadline for reporting forms to be given to employees has been extended from Jan. 31 to March 2. The forms are the 2016 Form 1095-C and Form 1095-B. However, the deadline for filing with the IRS is still the same. Employers sending in Form 1094-B, 1094-C, and 1095-C by mail will need to do so by Feb. 28 and electronically by March 31.
Amidst all the talk of ACA replacement, organizations should continue to follow the same ACA compliance procedures as before. Individual taxpayers should also be aware that while the IRS won’t reject tax returns they are not necessarily safe from penalties for non-compliance.
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Andrew is the Marketing Communications Specialist for Zuman, the one solution for HR, payroll, and benefits administration that supports growing small to midsize businesses.More Content by Andrew Larsen