IRS Extends 2020 Tax Year 1095-C for One Last Year
The IRS issued Notice 2020-76 on October 2, 2020 which provides extensions and relief on some ACA rules and regulations.
One last automatic 30-day extension for furnishing forms
The notice provides automatic extensions to the 2020 tax year due dates, giving employers extra time to furnish Form 1095-B and Form 1095-C to individuals. The last day to postmark forms is now March 2, 2021. The IRS has extended the date every year since the ACA’s employer reporting requirement went into effect because a substantial number of employers, insurers, and other providers of health coverage need more time to gather and analyze the information they need to prepare forms.
Because the IRS is extending the due dates for providing Forms 1095-B and 1095-C to individuals, the normal provisions for requesting extended due dates for providing these forms will not apply. Although it is extending the due dates, the IRS encouraged employers to furnish the information statements as soon as possible. Notably, for California residents, the due date for providing forms to employees remains January 31 unless similar relief is provided.
This extension is only for furnishing forms to employees. It does not extend the due date to file to the IRS. The IRS filing deadline continues to remain March 31, 2021.
The IRS also indicated this will be the last year of the automatic extension, unless it receives comments arguing for continued relief. Tango is preparing comments on behalf of its clients as critical data, such as COBRA information of December demographic and payroll data, is at times not available until well into January.
Final year of “Good-Faith Relief”
The notice also provides a final extension of transitional good-faith relief from section 6721 and 6722 penalties to the 2020 information reporting requirements under sections 6055 and 6056. “Good-Faith Relief” assists employers that report incomplete or incorrect information on their returns. Employers must still show they made a conscious effort to file and furnish on time. This relief is not available for employers who fail to file on time or furnish forms to employees by the deadline.
The IRS will determine whether an employer made reasonable efforts to prepare for reporting the required information to the IRS and furnishing it to employees and covered individuals, such as gathering and transmitting the necessary data, or testing its ability to transmit information to the IRS. That said, tax year 2020 will be the final year for this “Good-Faith Relief”.
Categorized in: ACA