The U.S. Internal Revenue Service requires U.S. employers and U.S. Health Insurance Marketplace to issue health insurance coverage information forms to the insurance holder (employee) and send a copy of the form to the IRS as well. The deadline for sending these forms to the IRS is 28th February, if paper-filed and 31st March, if e-filed, while the insurance owner should have their copy by the 31st of January.
This is done to ensure that every taxpayer required to have minimum health coverage under the Affordable Care Act (ACA/Obamacare) is compliant.
On the 18th of November, the IRS announced that it has temporarily extended the deadline for providing the 2016 health coverage information forms to individuals to the 2nd of March, 2017. The due date to file with the IRS remains the same.
This deadline of 2nd March applies to the following health insurance tax-related forms:
- 1095-B that is provided to responsible individuals by self-insured employers, and health insurance marketplace
- 1095-C provided to full-time employees by self-insured applicable large employers
Self-insured employers, and health insurance marketplace providers should keep in mind that this is only a temporary extension applicable for only the 2016 tax forms.
Additionally, self-insured applicable large employers providing insurance to non-employees and issuing Form 1095-B or Form 1095-C to report this coverage should, however, be informed that this temporary deadline extension does not apply in the case of non-employees.
NOTE: Employers filing more than 250 Forms 1095-B or Forms 1095-C, should note that they must electronically file these information forms with the IRS.
Transition Penalty Relief for Qualifying Healthcare Providers & Employers
Under the Affordable Care Act (ACA) Regulation, the employer or marketplace coverage provider will be subject to penalties if they fail to report this information to the IRS or insurance owner.
The applicable penalties are:
- $50 per report (maximum $500,000) if the forms are filed within 30 days after deadline
- $100 per report (maximum $1,500,000) if the form is filed after the deadline but by the 1st of August, and
- $250 per report (maximum $3,000,000) if the form is filed after August 1 or not at all.
However, along with the temporary deadline extension, the IRS is also providing transition relief from these penalties to providers and employers who are able to prove that they have made good-faith efforts to comply with the information-reporting requirements for 2016, and the incorrect or incomplete information reported on the return or statement was not done deliberately.
Effect on Taxpayers
As the 2017 tax filing season begins from 23rd January onward, individuals may not receive their Forms 1095-B or 1095-C by the time they file their returns, due to this extension.
The IRS stated that although these forms ease the reporting of the health insurance coverage, they are not required to be filed along with the individual income tax return. Therefore, taxpayers may continue to prepare and file their returns using other information about their health insurance and do not have to wait until the Forms 1095-B or 1095-C is received.
For 2017 and beyond, the IRS has updated the deadline for various other tax-related forms under the Path Act, you may refer to the following articles for details:
- Current & Updated Deadlines for IRS Forms
- Changes to IRS Form W-2 for Tax Year 2017 & Beyond
- Updated IRS Form 1099 Deadline and Penalties
AG TAX LLP CAN HELP
If you have any tax-related queries, need assistance with tax planning or filing your tax returns please contact us. Our team comprises of highly experienced tax professionals with extensive knowledge of US and Canadian tax laws as well as cross-border compliance.
Furthermore, as a full service accounting firm, AG Tax assures complete assistance with even your most complex tax needs.
We can assist with:
- Canadian Personal and corporate tax returns
- Cross Border Taxation and Business Planning
- US Personal and Corporate Taxation
- Disclosure of Foreign Assets and other information filings
- Retirement planning
- Estate Planning, Inheritance tax advice
To obtain a quote or to arrange for a consultation to discuss your tax related queries, please contact us at:
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Disclaimer: The information in this publication is accurate as of the time of its publication. AG Tax assumes no responsibility for changes to tax legislation subsequent to the publication of this document. The information provided is for general information purposes only and should not be acted upon without seeking professional advice. If you would like to engage our services, please contact our staff and obtain authorization to send our firm confidential information. A client relationship is not created by the transmission of information. A client relationship is only formed with our firm when a scope and engagement letter signed by the firm and the potential client detailing the terms of engagement is present.
