On December 12th, the IRS issued final regulations around ACA’s Employer Mandate filing of 1095 and 1094 forms. Below are details of the new IRS final regulations and the impact on employers.
- Final regulations confirm end of good-faith transition relief
The final regulations make clear that the current good-faith transition relief is no longer available for Applicable Large Employers (ALEs). Good-faith relief was initially meant as a transitional grace period for employers that report incomplete or incorrect information on their ACA filings or for failing to file or furnish them to employees on time if they could reasonably explain why. The final regulations eliminated good-faith relief and confirmed that relief will not apply for any tax year following 2020. This means employers could be subject to penalties for failing to file and furnish accurate ACA filings for the 2022 tax year. Penalties for failing to timely file are up to $570 for every late or inaccurate form.
- Automatic 30-day furnishing extension
Also included in the final regulations is a permanent, automatic 30-day furnishing extension. This essentially moves the annual furnishing deadline from January 31st to March 2nd, or thereabouts, each year. For 2022 and beyond, ALEs will now have additional time to meet the annual requirement to furnish 1095-C or B forms to their employees. Although the filing deadline technically remains January 31st, employers would be able to take advantage of a 30-day extension automatically without having to apply. The extension allows ALEs to furnish forms 1095-C or B to employees no later than 30 days after January 31st of each year (unless the 30 days falls on a Saturday, Sunday, or federal holiday – then they’re due on the next business day following 30 days). In the past, forms were due by January 31st unless an employer filed for and received an extension. The extension is now automatic. It’s important to remember that the automatic extension only applies to furnishing obligations and does not impact ALE’s responsibility to report ACA information to the IRS by February 28th (if paper filing) and March 31st (if filing electronically).
Employers that are required to file 250 or more 1095-C Forms must file electronically. However, the IRS encourages employers to file electronically even if they are filing fewer than 250 returns. The IRS has proposed regulations that would reduce the required electronic filing threshold to employers filing just 10 or more returns. That reduced 10-return electronic filing threshold has not been finalized and, therefore, is not currently being enforced.