October, 2020 | Fraser Blog

Fall in Michigan: Safely Handling Deer/Automobile Accidents

You did the right thing… you did not swerve but have hit a deer… now what?

During the next couple of months there will be thousands of deer/car accidents in both rural and suburban Michigan. In fact, statistics suggest that there will be over 50,000 deer/car accidents during the 2020 calendar year. The Michigan State Police report that 80% of these accidents will occur between dawn and dusk, but they are not limited to rural areas. Indeed, for example in the Lansing area alone, Meridian Township had 129 car/deer accidents, and Delta Township had 128 deer/car accidents in 2018. Simply stated, if you drive enough, there is an excellent chance that at some point in time you will be involved in a car/deer accident.

When that happens what should you do?

First, and foremost, if it is still drivable, get your vehicle as far off the traveled portion of the highway as possible. Activate your hazard warning flashers but stay in your vehicle! Getting out of your vehicle places you in a zone of danger that you need to avoid at all costs. The adrenaline will be flowing right after the accident but control it and think safety. Use your cell phone and call 911 which, hopefully, will dispatch a police car to the scene. Regardless, you should receive a police report number even if a police car is not dispatched to the accident. This is important so that you can provide your insurance company with evidence that the accident was a car/deer accident as opposed to a collision claim. Car/deer accidents (or other car/animal accidents) are covered under what is referred to as the comprehensive insurance coverage of your auto policy. Typically, your comprehensive coverage will have a substantially lower deductible than your collision coverage. You will need to check with your insurance agent to determine your “out-of-pocket” costs of repair.

Finally, remember that if you wish to keep the deer you may do so. You will need to advise the responding police officer that you would like a highway deer kill permit. The police officer will then give you a tag to transport the deer. If you take the deer that you have hit without a permit you could be in trouble with law enforcement or the Department of Natural Resources. Keep in mind too that even if you are not a fan of venison there are organizations that would be happy to accept the donation of your deer.

Most importantly, stay safe after your unavoidable car/deer accident.

Fraser Trebilcock Shareholder Gary C. Rogers has firsthand experience with car/deer accidents, having been involved in four himself; Gary is recognized as one of the top civil defense attorneys in the area of automobile related cases, and he has co-written Michigan No-Fault Law-The Insurers’ Perspective, a handbook for handling claims under Michigan’s No-Fault Automobile legislation. Gary can be reached at grogers@fraserlawfirm.com or (517) 377-0828.

Unemployment Compensation Benefits Extended to 26 Weeks

On October 20, 2020, Michigan Senate Bill 886 was signed into law by Governor Gretchen Whitmer. The bill extends the expansion of unemployment benefits for Michigan workers from 20 weeks to 26 weeks. Extended Benefits are now available for claims established on or before December 31, 2020, on which date the extended benefits provision expires.

The Michigan legislature passed the bipartisan legislation, which is now Public Act No. 229, following the Michigan Supreme Court’s ruling on October 2, 2020, that the governor lacked the authority, after April 30, 2020, to issue or renew COVID-19-related executive orders under the Emergency Powers of Governor Act of 1945. The new law, with certain exceptions noted below, largely reflects the now invalidated Executive Order 2020-76, which provided for temporary expansions in unemployment eligibility.

Public Act No. 229 provides that:

The maximum unemployment benefit period is extended from 20 weeks to 26 weeks;
Certain eligibility requirements for an individual to receive benefits would not apply if COVID-19 prevents the individual from meeting the requirements;
Benefits are to be charged to the employer’s “non-chargeable” account when a worker is laid off due to COVID-19, meaning that the employer’s experience rating is not affected by the cost of extended benefits;
Workers may receive benefits during time off work due to a COVID-19-related cause.

Public Act No. 229, in contrast to Executive Order 2020-76, does not waive the requirement that an unemployed worker must be “seeking work” to be eligible for benefits. Thus, except in certain circumstances, claimants will need to prove they are actively searching for a job to receive benefits. The requirement that a claimant seek work to receive benefits can be waived if either (i) the employer notifies the Unemployment Insurance Agency (“UIA”) that the layoff is temporary and that work is expected to be available in a declared number of days, not to exceed 45 days, following the last day the laid-off individual worked, or (ii) the UIA finds that suitable work is unavailable both in the locality where the individual resides and in those localities in which the individual has earned wages during or after the base period.

Another way in which Public Act No. 229 deviates from Executive Order 2020-76 is that it requires the UIA to review the claimant’s job history for the 18-month period preceding the claim filing date. Any disqualification identified during that period would prevent the extension of benefits. Executive Order 2020-76 had waived that requirement, requiring the UIA only to only consider a claimant’s most recent job. In a statement issued in conjunction with signing the bill into law, the governor’s office called the 18-month look-back period “a waste of resources because employers are not being directly charged for benefits paid at this time.”

If you have any questions about how this new law affects your business, please contact your Fraser Trebilcock attorney.

This alert serves as a general summary, and does not constitute legal guidance. All statements made in this article should be verified by counsel retained specifically for that purpose. Please contact us with any specific questions.

We have created a response team to the rapidly changing COVID-19 situation and the law and guidance that follows, so we will continue to post any new developments. You can view our COVID-19 Response Page and additional resources by following the link here. In the meantime, if you have any questions, please contact your Fraser Trebilcock attorney.

Fraser Trebilcock Shareholder Dave Houston has over 40 years of experience representing employers in planning, counseling, and litigating virtually all employment claims and disputes including labor relations (NLRB and MERC), wage and overtime, and employment discrimination, and negotiation of union contracts. He has authored numerous publications regarding employment issues. You can reach him at 517.377.0855 or dhouston@fraserlawfirm.com.

Client Alert: Health FSA Maximum Remains the Same for 2021

The IRS has just released its 2021 annual inflation adjustments, in which it announced that the Code section 125 dollar limitation on voluntary employee salary reductions to health flexible spending arrangements (health FSAs) is staying at $2,750.

The IRS annual inflation adjustments for more than 60 tax provisions, including health FSAs, can be found in Rev. Proc. 2020-45. This guidance reiterates that cafeteria plans can be written to allow carryovers of unused health FSA amounts up to a maximum of $550.

Although open enrollment season is about to be in full swing for most, employers should ensure that their salary reduction agreements, plan documents, and related enrollment materials are updated to reflect any changes in benefits for the upcoming plan year.

This alert serves as a general summary, and does not constitute legal guidance. Please contact us with any specific questions.

Elizabeth H. Latchana specializes in employee health and welfare benefits. Recognized for her outstanding legal work, in both 2019 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 elatchana@fraserlawfirm.com.

Brian T. Gallagher is an attorney at Fraser Trebilcock specializing in ERISA, Employee Benefits, and Deferred and Executive Compensation. He can be reached at (517) 377-0886 or bgallagher@fraserlawfirm.com.

Michigan Supreme Court Officially Incorporates Centers for Disease Control’s Order Halting Evictions

On September 4, 2020, we reported on the Centers for Disease Control and Prevention’s order halting evictions nationwide through December 31, 2020 for tenants who cannot pay rent based on COVID-19 related circumstances. An article interpreting that order and discussing how it might apply to common eviction, landlord, mortgage and land contract situations appears here. It remains accurate and timely, but does not address yesterday’s Michigan Supreme Court Order 2020-17.

Yesterday, October 22, 2020, the Michigan Supreme Court adopted the CDC order and effectively made it the law of the State of Michigan. It did so over the objection of Chief Justice Pro Tem David Viviano, who expressed a preference for ruling on the validity of the CDC order in a case brought by litigants, as opposed to adopting it administratively as the Supreme Court did. Justice Viviano also argued in dissent that the CDC order “has been challenged on a host of grounds and, I believe, rests on a shaky legal foundation.” Order 2020-17 can be found here.

A court form for landlord/plaintiffs and tenant/defendants to file (attesting that the case is not subject to the CDC order or attesting that it is) can be found here.

Please refer back to this article in the coming days for comprehensive updates and analysis. If you are a landlord confronting these issues, please contact your Fraser Trebilcock attorney.

Jared Roberts is a shareholder at Fraser Trebilcock who works in real estate litigation and transactions, among other areas of the law. Jared also “walks the walk” as a landlord and owner of residential rental properties and apartments in Downtown Lansing. He may be reached at jroberts@fraserlawfirm.com and (517) 482-0887.

SBA Clarifies Rules Regarding PPP Loans and Changes of Ownership

In a recently issued procedural notice, the Small Business Association (“SBA”) addressed a lingering question of borrowers and lenders related to the Paycheck Protection Program (“PPP”) process: What procedures are required for changes of ownership of an entity that has received PPP funds?

The notice, issued on October 2, describes when change of ownership is considered to have occurred and what impact such change has on a PPP borrower’s responsibilities under the program.

Definition of a Change of Ownership

For the purposes of the PPP, a “change of ownership” takes place when one of the following occurs:

At least 20% of the common stock or other ownership interest of a PPP borrower (including a publicly traded entity) is sold or otherwise transferred, whether in one or more transactions, including to an affiliate or an existing owner of the entity;
The PPP borrower sells or otherwise transfers at least 50% of its assets (measured by fair market value), whether in one or more transactions; or
A PPP borrower is merged with or into another entity.

A PPP borrower must aggregate all sales and other transfers occurring since the date of approval of the PPP loan in determining whether the relevant threshold has been met.

Is a Borrower Required to Obtain SBA Consent?

If a PPP borrower fails to satisfy one of the criteria below, SBA consent is required for a change in ownership to ensure the repayment of any unforgiven PPP loan amounts.

The PPP loan has been paid in full or forgiven by the SBA.
In the case of a stock sale or merger:
(a) The sale or transfer involves less than 50% of the borrower’s stock/ownership interest; or
(b) The PPP borrower completes a forgiveness application reflecting its use of all of the PPP loan proceeds and submits it, together with any required supporting documentation, to the PPP Lender, and an interest-bearing escrow account controlled by the PPP Lender is established with funds equal to the outstanding balance of the PPP loan. After the forgiveness process (including any appeal of SBA’s decision) is completed, the escrow funds must be disbursed first to repay any remaining PPP loan balance plus interest.
In the case of an asset sale of 50% or more of the borrower’s assets, if the PPP borrower completes a forgiveness application reflecting its use of all of the PPP loan proceeds and submits it, together with any required supporting documentation, to the PPP Lender, and an interest-bearing escrow account controlled by the PPP Lender is established with funds equal to the outstanding balance of the PPP loan.

If SBA consent is required, the PPP lender is required to submit certain documents to the SBA, including documents relating to the transaction and information about the buyer and its ownership. The SBA will review and provide a decision within 60 days of receipt of a complete request.

Borrower’s Responsibilities in the Event of a Change in Ownership

The PPP borrower remains responsible for all obligations under its PPP loan in the event of change of ownership, including performance obligations under the PPP loan, certifications it made in connection with its loan application, retention of records and providing records in connection with a request from the PPP lender or the SBA, as well as other applicable PPP requirements.

In addition, before undergoing a change of ownership, a PPP borrower must notify its PPP lender in writing and provide the lender with copies of relevant documentation related to the transaction prior to closing.

Regardless of whether SBA approval is required and/or obtained, if change in ownership involves a sale of equity interest or a merger, the new owner is responsible for all obligations under the PPP loan. If the new owners use PPP funds for unauthorized purposes, the SBA will have recourse against them. If the new owner also had a PPP loan, the PPP loan funds must be segregated and properly allocated among the two borrowers.

Unanswered Questions

While the notice clarifies a great deal about change in ownership issues related to PPP loans, there remain unanswered questions. Among those questions are:

What are the consequences of failing to obtain SBA consent for a change in ownership transaction?
What rules apply for changes in ownership that occurred prior to the issuance of the notice?
What should PPP borrowers do if their PPP lenders have not yet opened application portals for seeking loan forgiveness?

We will continue to monitor and keep you abreast of new developments related to PPP forgiveness. In the meantime, if you have questions or require assistance, please contact your Fraser Trebilcock attorney.

Edward J. Castellani is an attorney and CPA who represents clients involved with alcohol beverages as a manufacturer, wholesaler, or retailer. He may be contacted at ecast@fraserlawfirm.com or 517-377-0845.

[Client Alert]: 2021 Adjustments for ACA’s OOP Limits, Penalty Amounts, and Affordability

HHS Announces OOP Limitations for 2021

With the passage of the Affordable Care Act (ACA), group health plans became required to apply an out-of-pocket limitation to certain in-network benefits… meaning that once an individual or family out-of-pocket (OOP) limit was met, the plan could not charge additional OOP costs for essential health benefits. These OOP limits include both the plan’s deductible as well as cost-sharing amounts for essential health benefits (EHB) in-network as set forth under the ACA.

Although self-insured plans and large-group insured plans are not required to cover all EHBs (while small-group insured plans are), to the extent they do, in-network OOP expenses for EHBs cannot exceed the maximum OOP limit. Additionally, group health plans may not impose annual or lifetime dollar limitations on EHBs whether offered in-network or out-of-network.

The Department of Health and Human Services (HHS) has released the 2021 plan year inflation-adjusted OOP limits applicable to non-grandfathered plans.

Self-only coverage: $8,550 (was $8,150 for 2020)
Family coverage: $17,100 (was $16,300 for 2020)

See PPACA; HHS Notice of Benefit and Payment Parameters for 2021.

Employers with non-grandfathered group health plans must update their maximum annual OOP limits.

These rules do not apply to ACA grandfathered plans. [Please note that these cost-sharing limits are different than the maximum out-of-pocket limits for purposes of being HSA-qualifying high deductible health plans.]

HHS Announces ACA Employer Mandate (Pay or Play) Penalty Amounts for 2021

Under the ACA, applicable large employers must offer certain group health plan coverage to their full-time employees; otherwise they will risk significant penalties.

Applicable large employers are those who employ 50 or more full-time or full-time equivalent employees in the preceding calendar year. Employees of related employers (within a controlled group or affiliated service group) are counted in this determination.

Part A requires employers to offer minimum essential coverage to 95% of their full-time employees. See Section 4980H(a).
Part B requires the offered coverage be affordable and meet the minimum value standards. See Section 4980H(b).

Specifically, the Part A Penalty is imposed on an employer who fails to offer minimum essential coverage (MEC) to at least 95% of the employer’s full-time employees (FTEs) and dependents as defined under the ACA, and if one of its FTEs receives subsidized coverage through the Marketplace or public health insurance exchange. The penalty amount is multiplied by the number of FTEs, minus 30. Special rules exist for applicable large employer members which are part of a controlled group.

The Part B Penalty amount is imposed on an employer who fails to offer coverage that meets the minimum value (MV) requirements or fails to be affordable, again as defined under the ACA, with respect to each one of its FTEs who receives subsidized coverage through the Marketplace or public health insurance exchange.

The Internal Revenue Service (IRS) has released the 2021 inflation-adjusted penalty amounts under the Affordable Care Act’s Employer Shared Responsibility Mandate (Pay or Play):

Part A Penalty: $2,700 (was $2,570 for 2020)
Part B Penalty: $4,060 (was $3,860 for 2020)

See Q&A 55 on Employer Shared Responsibility Provisions under the ACA.

Specifically, HHS finalized the premium adjustment percentage as 1.3542376277 for the 2021 benefit year, which is then multiplied by the original 2015 penalty amounts (Part A was $2,000 and Part B was $3,000) and rounded down to the nearest multiple of ten.

By way of example, an employer with 200 FTEs who fails to offer MEC to 95% of those employees (and if at least one of those FTEs receives subsidized coverage through the Marketplace or an exchange), the penalty assessed for the year will be $459,000 (200-30 = 170 x $2,700). The larger the employer, the larger the penalty. If the same employer offers coverage to 95% of its FTEs but that coverage is not affordable or doesn’t provide minimum value, the penalty assessed will be based on the number of employees who receive subsidized coverage through the Marketplace or an exchange. If 20 FTEs receive subsidized coverage for each month of the year, the 2021 penalty would be $81,200 ($4,060 x 20).

Affordability Rates for 2021

As discussed above with respect to ACA penalties, an applicable large employer who does not offer affordable employer-sponsored group health plan coverage could face steep penalties.

For 2021, the ACA affordability requirement applies to the lowest-cost self-only coverage option that offers minimum value and must not exceed 9.83 percent of an employee’s household income. Please see Rev. Proc. 2020-36. This is a increase from 2020 (which was 9.78%).

As it is difficult to determine an employee’s household income, three safe-harbors are available for employers to use to determine affordability:

Form W-2, based on an employee’s W-2 wages as reported in Box 1;
Rate of Pay, based on the employee’s hourly wage rate, multiplied by 130 hours per month; and
Federal Poverty Line, based on the individual federal poverty level as of six months prior to the beginning of the plan year, divided by 12…

Employers must be sure to carefully consider the safe harbors available and calculation of the lowest-cost employee coverage that should be charged.

This alert serves as a general summary, and does not constitute legal guidance. Please contact us with any specific questions.

Michigan Supreme Court finds Statutory Basis of Executive Orders Unconstitutional: Next Steps Uncertain

UPDATE (10/13): On Monday, October 12, 2020, the Michigan Supreme Court issued an Order in Michigan House of Representative and Senate v Governor, reversing the lower Court of Appeal decision in that case which upheld the Governor’s source of emergency authority. The Supreme Court took this action on Monday in light of. and consistent with, its recent decision on the same questions on October 2nd involving certified questions for the US District Court. The Supreme Court’s October 12 Order has been given immediate effect, putting to rest any question regarding the timing of its ruling and or binding effect. You can read that Order here.

Late on Friday, October 2, 2020, the Michigan Supreme Court ruled that the Governor’s use of the Emergency Powers of the Governor Act and the Emergency Management Act as two sources of authority to issue a host of executive orders regulating capacity limits in public-facing businesses, public mask use, school re-openings, the size of public and private gatherings, among others was unconstitutional. In the wake of the Court’s ruling, uncertainty abounds regarding the legal effect and enforceability of the Governor’s numerous executive orders issued to date. Although the Attorney General announced Sunday that she will not enforce the Governor’s COVID-19 executive orders, this does not mean all COVID-19 related rules and regulations are invalid or not without practical merit. Further, both state and local health agencies have quickly moved to fill the regulatory void left as a result of the Court’s ruling.

This controversy started towards the end of April, when the state legislature moved forward with a bill aimed at preventing the Governor from renewing her original state of emergency declaration. The Governor, relying on the 1945 emergency powers law, issued an executive order to keep a stay-at-home order in place through June 1 without consent of the Legislature. This law has been the legal basis for continued rolling orders that have kept some public-facing businesses such as bowling alleys and movie theaters shuttered until Oct. 9. There have been a number of lower state court cases challenging the Governor’s action, all of which have sided in her favor.

One particular lawsuit was brought in federal district court by three medical groups in West Michigan. The three medical groups sued the Governor, challenging her spring executive order that prohibited doctors and medical facilities from performing “elective” procedures in an effort to preserve personal protection equipment when it was in short supply during the early days of the pandemic.

The Michigan Supreme Court is the ultimate authority on interpreting state law, and the federal district court judge noted that state law questions regarding the limit of the Governor’s authority were crucial to the case before it. The law permits federal courts to ask for guidance – called a certified question — on state law questions from a state’s highest court. State supreme courts are not required to accept certified questions from a federal court but they usually do.

Here the Federal court certified two questions to the Michigan Supreme Court:

Whether, under the Emergency Powers of the Governor Act, MCL § 10.31, et seq. [(the “1945 law”)], or the Emergency Management Act, MCL § 30.401, et seq. [(the “1976 law”)], [the] Governor has the authority after April 30, 2020 to issue or renew any executive orders related to the COVID-19 pandemic; and
Whether the [1945 law] and/or the [1976 law] violates the Separation of Powers and/or the Non-Delegation Clauses of the Michigan Constitution.

In answering these questions, the Michigan Supreme Court stated:

“[w]e conclude that the Governor lacked the authority to declare a ‘state of emergency’ or a ‘state of disaster’ under the EMA after April 30, 2020, on the basis of the COVID-19 pandemic. Furthermore, we conclude that the EPGA is in violation of the Constitution of our state because it purports to delegate to the executive branch the legislative powers of state government— including its plenary police powers— and to allow the exercise of such powers indefinitely.”

Friday’s ruling throws into doubt the Governor’s many executive orders addressing a variety of issues in response to the COVID-19 pandemic in Michigan. For example, orders that expand unemployment eligibility during a pandemic, that allow local governments to hold their meetings virtually to avoid in-person meetings that could allow the virus to spread, that place moratoriums on foreclosures and evictions, and those that permit remote witnessing and notarization of legal documents, are all somewhat in question.

Additional uncertainly surrounds the effective date of the Court’s order and if it is even entitled to binding effect, as it was issued in response to a certified question from the Federal District Court and therefore merely “advisory” in nature. For the most part, these questions have answered (1) the order was effective on October 2^nd, and (2) there is a clear likelihood that the Court’s decision will be followed in any subsequent state or federal court decisions.

State regulators are nevertheless holding fast. The Michigan Occupational Safety and Health Administration (MIOSHA) has issued thousands of dollars in citations to Michigan businesses for failing to implement COVID-19 precautions under the agency’s “general duty clause,” which requires employers to provide workspaces free of hazards causing death or “serious harm.” Since the Supreme Court decision Friday, many have questioned the validity of the citations, arguing that violations of the general duty clause were based on non-compliance with the Governor’s executive orders on mask usage, social distancing, or employee training. State regulators have said that they will not rescind any fines and penalties for workplace COVID-19 non-compliance, even in light of a Michigan Supreme Court decision upending the Governor’s executive orders back to April 30.

Further, the Director of the Michigan Department of Health and Human Services, citing authority under the Michigan Public Health Code, quickly issued an emergency order reinstating requirements that masks should be worn at most indoor and outdoor gatherings and events, limiting attendance at indoor and outdoor gatherings, limiting organized sports and other limitations on certain food service establishments, including bars. The order specifies that violations are a misdemeanor punishable by imprisonment for not more than 6 months, or a fine of not more than $200, or both.

Local health departments are issuing similar orders. The Oakland County Health Department on Saturday ordered residents of Michigan’s second-most populous county to wear masks or facial coverings when leaving their homes. More orders will follow to outline capacity limits for bars and restaurants and instill public health screenings, the department said. Ingham County followed suit Sunday by issuing emergency orders similar to Oakland’s, with rules requiring face masks, limiting restaurant capacity to 50%, mandating employee health screenings and putting restrictions on indoor and outdoor gatherings. Other local action is anticipated in Kent, Ottawa, St. Clair, and Wayne.

It will take a while for the Legislature and Governor to sort out these issues legislatively as there are only 3 session days left before the November 3 election and only 14 session days after the election. In the meantime, the Administration will pursue reissuing some of these orders through administrative rules and regulatory action.

Fraser Trebilcock attorney Paul V. McCord has more than 20 years of tax litigation experience, including serving as a clerk on the U.S. Tax Court and as a judge of the Michigan Tax Tribunal. Paul has represented clients before the IRS, Michigan Department of Treasury, other state revenue departments and local units of government. He can be contacted at 517.377.0861 or pmccord@fraserlawfirm.com.

IRS Announces 2021 Increases for HSAs

The IRS has released its 2021 annual inflation adjustments for Health Savings Accounts (HSAs) as determined under Section 223 of the Internal Revenue Code. Specifically, IRS Revenue Procedure 2020-32 provides the adjusted limits for contributions to a Health Savings Account (“HSA”), as well as the high deductible health plan (“HDHP”) minimums and maximums for calendar year 2021.

The 2021 limits are as follows:

Annual Contribution Limit
- Single Coverage: $3,600
- Family Coverage: $7,200
HDHP-Minimum Deductible
- Single Coverage: $1,400
- Family Coverage: $2,800
HDHP-Maximum Annual Out-of-Pocket Expenses (including deductibles, co-payments and other amounts, but not including premiums)
- Single Coverage: $7,000
- Family Coverage: $14,000
The catch-up contribution for eligible individuals age 55 or older by year end remains at $1,000.

Plans and related documentation, including employee communications, should be updated to reflect these new limits for 2021.

As always, please keep in mind that participation in a health FSA (or any other non-HDHP) will result in HSA ineligibility, unless the health FSA is limited to: (1) limited-scope dental or vision excepted benefits; and/or (2) post-deductible expenses.

This alert serves as a general summary of lengthy and comprehensive new provisions of the Internal Revenue Code. It does not constitute legal guidance. Please contact us with any specific questions.

Client Alert: Delay of Deadline to Furnish Forms 1095-B and 1095-C to Individuals & Related Relief

Statements to Individuals

The Internal Revenue Service (“IRS”) has extended the deadline for 2020 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 2020-76 extends the due dates for the following 2020 information reporting Forms from January 31, 2021 to March 2, 2021:

2020 Form 1095-C, Employer-Provided Health Insurance Offer and Coverage
2020 Form 1095-B, Health Coverage

Please note that no further extension beyond the March 2, 2020 deadline is allowed. Therefore, this deadline for furnishing the Forms to individuals must be met.

Reporting to IRS

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 for paper filings; however, if filing electronically, the due date is March 31 (employers who are required to file 250 or more Forms must file electronically):

2020 Form 1094-B, Transmittal of Health Coverage Information Returns, and the 2020 Form 1095-B, Health Coverage
2020 Form 1094-C, Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns, and the
2020 Form 1095-C, Employer-Provided Health Insurance Offer and Coverage

Additional extensions may still be available for filing these Forms with the IRS.

Penalty Relief for Form 1095-B Statement to Responsible Individuals

The Notice addresses that as the individual shared responsibility payment was reduced to zero for months beginning after December 31, 2018, and because an individual will not need the information on Form 1095-B to compute his or her federal tax liability or to file an income tax return with the IRS, the Treasury Department and the IRS have determined that relief from penalties associated with furnishing a statement under section 6055 is appropriate. Therefore, the IRS will not assess a penalty under section 6722 against reporting entities who fail to furnish a Form 1095-B to responsible individuals if two conditions are met:

First, the reporting entity posts a notice prominently on its website stating that responsible individuals may receive a copy of their 2020 Form 1095-B upon request, accompanied by an email address and a physical address to which a request may be sent, as well as a telephone number that responsible individuals can use to contact the reporting entity with any questions.
Second, the reporting entity furnishes a 2020 Form 1095-B to any responsible individual upon request within 30 days of the date the request is received.

This relief does not extend to the requirement that applicable large employers (ALEs) must furnish Forms 1095-C to full-time employees. Those statements must continue to be provided. However, the penalty relief will apply to employees enrolled in an ALE’s self-insured health plan who are not full-time employees for any month of 2020.

Last Year for Good-Faith Transition Relief

IRS Notice 2020-76 also extends the good-faith transition relief from Code section 6721 and 6722, which are the Code sections imposing penalties for filing incorrect or incomplete information on the return or 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 IRS or testing its ability to transmit information to the IRS.” However, this is the last year the IRS and Treasury Department intend on providing this transition relief.

Indications this may be the Last Year for Statement Relief

Last, the IRS indicates that unless it receives comments explaining why the relief afforded in this notice continues to be necessary, no relief relating to the furnishing requirements under sections 6055 and 6056 will be granted in future years.

Taxpayers and reporting entities are strongly encouraged to submit comments electronically via the Federal eRulemaking Portal at www.regulations.gov (type “IRS- 2020-0037” in the search field on the regulations.gov homepage to find this notice and submit comments).
Alternatively, taxpayers and reporting entities may mail comments 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
Comments must be submitted by February 1, 2021.

You can find the full Notice here: https://www.irs.gov/pub/irs-drop/n-20-76.pdf.

If you should have questions regarding employer reporting requirements or other ACA mandates, the Employee Benefits Department at Fraser Trebilcock can assist.