ACA Reporting – Better Late Than Never
As it did last year, the IRS extended the deadline for distributing Form 1095-C to employees. Large and/or self-funded employers had until March 2, 2017 to distribute a Form 1095-C to all of their full-time employees and employees enrolled in a self-funded health plan, which was not as long of an extension as the IRS gave the prior year. The normal deadline is January 31. However, the deadlines for submitting Form 1094-C to the IRS, along with copies of the Forms 1095-C, was not extended. The deadline for submitting paper forms, which you may only do if you are required 250 or fewer Forms 1095-C, was February 28, 2017. For electronic filers, the deadline for filing with the IRS is March 31, 2017. Although the ACA reporting deadlines for 2016 have already expired or are soon to expire, the potential penalties should be evaluated before you decide to completely blow off the furnishing and reporting requirements.
Late filers should carefully consider their options and the potential penalties as published by the IRS. For example, correcting a reporting failure within 30 days of the due date reduces the penalty to $50 per return, with a cap of $532,000. For employers that correct reporting failures after 30 days, but on or before August 1, the penalty is $100 per return, and the cap is $1,596,500. Filing late may cost you, but you may find it better to be late than never. Because, the standard per return penalty of $260 (max $3,193,000 per calendar year) drastically increases for violations due to “intentional disregard” to a per return penalty of $530, with no cap on the total penalty.
Also, the IRS stated that it will continue to provide “transitional good-faith relief” from penalties if an employer has made a good-faith effort to comply with the ACA requirements. This is great news for employers that are taking the proper steps to address issues with returns that were filed with errors. However, good faith relief is not available to employers who fail to file or filed late.