For many people, the end of the year tends to sneak up on us in a whirlwind of winter weather activity, family gatherings, and holiday festivities. However, even as 2018 draws to a close, it’s not too late to think about your year-end taxes, and engage in estate & income tax planning opportunities. At Fraser Trebilcock, our tax attorneys have made sure you don’t have to start your preparations from scratch, with a two-part checklist of year-end tax considerations you should make before 2019.
Delay of Deadline to Furnish Forms 1095-B and 1095-C to Individuals
The Internal Revenue Service (“IRS”) has extended the deadline for 2018 Information Reporting by employers (and other entities) to individuals under Internal Revenue Code sections 6055 and 6056 by just over a month. However, the deadline for these entities to file with the Internal Revenue Service (IRS) remains the same.
IRS Notice 2018-94 extends the due dates for the following 2018 information reporting Forms from January 31, 2019 to March 4, 2019:
- 2018 Form 1095-C, Employer-Provided Health Insurance Offer and Coverage
- 2018 Form 1095-B, Health Coverage
Please note that no further extension beyond the March 4, 2019 deadline is allowed. Therefore, this deadline for furnishing the Forms to individuals must be met.
However, the due dates for filing these Forms and their Transmittals with the IRS remains unchanged. Specifically, the due date for filing the following documents with the IRS is February 28, 2019 for paper filings; however, if filing electronically, the due date is April 1, 2019 (employers who are required to file 250 or more Forms must file electronically):
- 2018 Form 1094-B, Transmittal of Health Coverage Information Returns, and the 2018 Form 1095-B, Health Coverage
- 2018 Form 1094-C, Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns, and the 2018 Form 1095-C, Employer-Provided Health Insurance Offer and Coverage
Additional extensions may still be available for filing these Forms with the IRS.
As a result of these extensions, individuals might not receive a Form 1095-B or Form 1095-C by the time they file their 2018 tax returns. In such case, IRS Notice 2018-94 explains that individual taxpayers may instead rely on other information received from their employers or other coverage providers for purposes of filing their tax returns and do not need to wait to receive Forms 1095-B and 1095-C before filing. Once they do receive their forms, the individuals should keep it with their tax records. You can find the full Notice here: https://www.irs.gov/pub/irs-drop/n-18-94.pdf.
IRS Notice 2018-94 also extends the good-faith transition relief from Code section 6721 and 6722 (which are the Code sections imposing penalties for failing to timely file an information return, filing incorrect or incomplete information, failing to timely furnish an information return, or furnishing an incorrect or incomplete information statement). Specifically, entities showing that they have made good faith efforts to comply may avoid penalties for incorrect or incomplete information reporting. However, relief is not available to entities who fail to file returns or furnish the statements, miss a deadline, or otherwise had not made good faith efforts to comply. The Notice states that in determining good faith, the IRS “will take into account whether an employer or other coverage provider made reasonable efforts to prepare for reporting the required information to the Service and furnishing it to employees and covered individuals, such as gathering and transmitting the necessary data to an agent to prepare the data for submission to the Service or testing its ability to transmit information to the Service.”
Last, the Notice addresses that as the individual shared responsibility payment is being reduced to zero for months beginning after December 31, 2018, the IRS and Department of Treasury are analyzing if and how the section 6055 reporting requirements should change in the future.
The links to the Final Forms and Instructions are below:
2018 Forms for Applicable Large Employers (Code Section 6056):
- 2018 Instructions for Forms 1094-C and 1095-C: www.irs.gov/pub/irs-prior/i109495c–2018.pdf
- 2018 Form 1094-C: www.irs.gov/pub/irs-pdf/f1094c.pdf
- 2018 Form 1095-C: www.irs.gov/pub/irs-pdf/f1095c.pdf
2018 Forms for Employers who Self-Fund (Code Section 6055):
- 2018 Instructions for 1094-B and 1095-B: www.irs.gov/pub/irs-prior/i109495b–2018.pdf
- 2018 Form 1094-B: www.irs.gov/pub/irs-pdf/f1094b.pdf
- 2018 Form 1095-B: www.irs.gov/pub/irs-pdf/f1095b.pdf
These instructions and forms reflect only minor changes, such as a few formatting modifications and the reflection of indexed penalty amounts for reporting failures. The increased penalties are now as follows for 2018 tax year returns (and may be waived in certain circumstances):
- The penalty for failure to file a correct information return is $270 for each return for which the failure occurs, with the total penalty for a calendar year not to exceed $3,275,500.
- The penalty for failure to provide a correct payee statement is $270 for each statement for which the failure occurs, with the total penalty for a calendar year not to exceed $3,275,500.
- Special rules apply that increase the per-return and per-statement and total penalties with no maximum limitations if there is intentional disregard of the requirement to file the returns and furnish recipient statements.
Additionally, the instructions for Forms 1094-B and 1095-B also now state that health insurance issuers and carriers are encouraged (but not required) to report coverage in catastrophic health plans enrolled in through the Marketplace for months in 2018.
The remainder of the provisions remain intact, including the mandatory electronic filing for Forms reaching the 250-return threshold.
If you should have questions regarding employer reporting requirements or other ACA mandates, the Employee Benefits Department at Fraser Trebilcock can assist.
Elizabeth H. Latchana specializes in employee health and welfare benefits. Recognized for her outstanding legal work, in both 2018 and 2015, Beth was selected as “Lawyer of the Year” in Lansing for Employee Benefits (ERISA) Law by Best Lawyers, and in 2017 as one of the Top 30 “Women in the Law” by Michigan Lawyers Weekly. Contact her for more information on this reminder or other matters at 517.377.0826 or firstname.lastname@example.org.