Wednesday, September 13, 2017

Draft Forms and Instructions For 2017 ACA Reporting Released

The Internal Revenue Service (IRS) recently released the draft instructions for  2017 Forms 1094-C and 1095-C used by applicable large employers (ALEs) to report under Internal Revenue Code (Code) Sections 6055 and 6056. The newly released instructions  incorporate  minor changes that were reflected in the 2017 draft forms, released on July 27, 2017.   
2017 forms are due to employees/covered individuals by Jan. 31, 2018, and must be filed with the IRS by Feb. 28, 2018 (or April 2, 2018, if filing electronically since March 31 is a Saturday). As a reminder, it appears ALEs will not have the extension to file they had for their 2016 forms.
Draft instructions provide employers with a few clarifications, including the following:
  • Transition Relief: Certain limited transition relief was available to ALEs for 2015 & 2016. Since no transition relief is available in calendar year 2017,  any reference to that relief has been removed.  Both boxes "B" and "C" on line 22  of form 1094 C are now labeled "Reserved". These boxes will never apply in 2017 as the transition relief for boxes "B" and "C"are no longer applicable. The second change is column (e) in Part III of the Form 1094-C is also labeled "Reserved". Column (e) in Part III of the Form 1094-C was tied to box "C".
  • Plan Start Month: Optional again in 2017 on form 1095C, Part II.
  • Penalty Information: The penalty remains at $260 per violation, but maximum was indexed to an annual maximum of $3,218,500 (up from a maximum of $3,193,000, for 2016).
  • Formatting Returns: Clarifies formatting must be in landscape.
  • Line 15: The instructions  added  for Forms 1095-C filed with incorrect dollar amounts on line 15, Employee Required Contribution, may fall under a safe harbor for certain de minimis errors. The safe harbor generally applies if no single amount in error differs from the correct amount by more than $100. ( see page 6)
  • Line 16: A note has been added in the instructions for Code 2 series " There is no specific code to enter on line 16 to indicate that a full-time employee offered coverage either did not enroll in the coverage or waived the coverage."   This question has been raised often and  employers can either enter appropriate affordability codes of 2F,2H or2G or leave blank to indicate unaffordable.
  • IRS HotlineInformation on an IRS website and IRS hotline phone number  (1-800-919-0452)  have been added to the recipient form back page instructions
For a more detailed discussion of both the finalized forms and their accompanying instructions, please see our legislative alert below.