Under the Affordable Care Act (ACA), taxpayers are subject to a “shared responsibility” penalty for any month that either they or their spouse or dependents do not have “minimum essential coverage.” As of last year, individuals began receiving Form 1095-B, Form 1095-C, or both depending upon the size of the employer and the employer’s group health coverage it offered.
However, based on an executive order issued on Jan. 20, 2017 that required federal agencies to exercise all authority and discretion available to them to waive, defer or grant exemption from any provision of the ACA that would impose a burden on individuals, the IRS accepted and processed tax returns during the 2017 tax filing season where taxpayers were silent on health care coverage (referred to as ‘silent returns’).
IRS changes position.
In a complete reversal from that position, the IRS has stated that for the upcoming 2018 filing season, they will not accept electronically filed tax returns where the taxpayer does not address the health coverage requirements of the ACA.
The IRS will not accept the electronic tax return until the taxpayer indicates whether they had coverage, had an exemption or will make a shared responsibility payment. In addition, returns filed on paper that do not address the health coverage requirements may be suspended pending the receipt of additional information and any refunds may be delayed.
What this means.
Applicable Large Employers subject to the ACA’s reporting requirements must provide Forms 1095-C for the 2017 calendar year to each of its full-time employees by Jan. 31, 2018. For calendar year 2017, Forms 1094-C and 1095-C are required to be filed with the IRS by Feb. 28, 2018, or April 2, 2018, if filing electronically. This means that employers will need to ensure that they are prepared to comply with all of ACA’s reporting requirements without the likelihood of the extensions that were made available in prior years.
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