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2016 Tax Season: IRS Releases Draft Reporting Forms and Increased Penalty Amounts


In 2016 employers who provide minimum essential coverage to employees will be required to begin mandatory reporting of employee health coverage. In addition applicable large employers (ALEs) will be required to report compliance with the employer shared responsibility provisions (e.g. “pay or play”). To help organizations prepare for new reporting mandates, the IRS is disseminating information around reporting guidelines and penalties.

To give employers an opportunity for a “practice run” the IRS has issued draft versions of the 2015 Forms 1094-Band 1095-B (for reporting employee coverage) and 2015 Forms 1094-C and 1095-C (for reporting compliance). Form 1095-C has one notable change from the 2014 version (which was used on a voluntarily basis only); on the last page, there is a field titled “Plan Start Month.” While reporting this information is optional for 2015 taxes, it will be required from 2016 onward.  These forms will help employers figure out sticking points and be compliance-ready in 2016 so there are no surprises when it comes to reporting.

Which is important because...the IRS also recently released the updated reporting penalties for those failing to comply in 2016 (for the 2015 tax year). Under the Internal Revenue Code (IRC) sections 6721 (failure to file correct information returns) and 6722 (failure to furnish correct payee statements), the increased penalties are:

·      $250 for each return that is not filed (up to a maximum of $3,000,000)

·      $250 for each payee statement that is not filed (up to a maximum of $3,000,000)

While exceptions to the penalties may apply for those organizations that can show they attempted to comply in good faith, there are also special rules that can increase these penalty amounts if intentional disregard for the requirements is shown.

For any questions around compliance and reporting requirements, please contact us.

The information and materials herein are provided for general information purposes only and are not intended to constitute legal or other advice or opinions on any specific matters and are not intended to replace the advice of a qualified attorney, plan provider or other professional advisor. This information has been taken from sources believed to be reliable, but there is no guarantee as to its accuracy. This communication does not constitute a legal opinion and should not be relied upon for any purpose other than its intended educational purpose.

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