IRS Commentary on Deadline Extension
On Oct. 2, the IRS announced it would extend the deadline for employers to provide employees with a copy of their 1095-C or 1095-B reporting form, as required by the Affordable Care Act (ACA), from Jan. 31, 2021, to March 2, 2021. In addition, the IRS again extended “good-faith effort” transition relief to employers for plan year 2020 reporting.
The deadlines were not extended for filing 1095 forms with the IRS, and they are still Feb. 28 for paper filing or March 31 for electronic filing.
Comments should be posted at www.regulations.gov (type IRS 2020-0037 in the search filed on the regulations home page to find the notice and submit comments. Alternatively, comments can be mailed to: Internal Revenue Service Attn: CC:PA:LPD:PR (Notice 2020-76) Room 5203 P.O. Box 7604 Ben Franklin Station Washington, D.C. 20044.
Please see DirectPath’s comments below.
Thank you for the opportunity to comment on IRS Notice 2020-0037 regarding extension of the deadline for Information Reporting by employers (and other entities) to individuals under Internal Revenue Code sections 6055 and 6056.
Our organization handles benefits compliance matters for dozens of large employers, including Fortune 500 companies. An important part of that work is preparing Forms 1094-C and 1095-C for our clients, which we have been doing since the reporting requirement took effect.
Employers typically cannot report hours worked to determine full-time equivalent employees until after the pay period ends, which for employers on a biweekly pay cycle could be as late as January 13 (as pay is generally retroactive, hours worked through Dec 31 will not be available until the end of the pay period). The calculations required to produce the 1095s require consolidating data from multiple systems (payroll, time tracking, benefit enrollment, COBRA reports, etc.) into a single formatted file before it can be used to perform the affordability, offer of coverage, and Line 14/16 code calculations.
It can take at least three and–depending on data and calculation issues, the number of forms, and printer capacity–as many as seven weeks to upload and process data, resolve data errors, generate and review the forms, make corrections and prepare them for the printer. And, as there are a limited number of printers with the capability of handling this type of project, there is the potential for printing and mailing delays. All of this makes distribution by January 31 problematic, at best. With several years of experience in performing the necessary calculations and creating the forms, and with a solid process in place, we can confirm that the January 31 mailing deadline can typically only be met when payroll data is available by January 4 and there are no data challenges. Accordingly, we fully expect employers to continue to need an extension to the mailing deadline in the future.
Further, it’s worth noting that the Agency typically doesn’t begin accepting individual tax returns until late January (January 27, in 2020), and the IRS’s own data shows that the majority of Americans file their taxes in mid-March or later. As such, postponing Information Reporting to individuals until February 17 or later should not present a substantial hardship to participants. Even those states that have imposed individual mandates merely ask residents to “check the box” that they have coverage, rather than attaching proof of coverage.
As such, we respectfully request the Agency to either (1) make the extension permanent (whether to March 2 or some other interim date no earlier than February 15, as deemed appropriate) or (2) provide an annual automatic 30-day extension of the deadline to distribute Forms 1095-B and 1095-C to employees.
We would welcome the opportunity to share our experiences with the Agency if desired.