Client Alert 11.21

The IRS has just issued proposed regulations containing two items of note for employers:

• The employee distribution deadline for Forms 1095-C has always been January 31. Each year, the IRS has announced a 30 day extension for this deadline. The regulations seek to set a permanent, automatic 30 day extension for the employee distribution deadline, making it March 2nd annually (March 3rd in a leap year).

• In prior years, the IRS stated it would not impose penalties for incorrect information on forms 1095-C or 1094-C if the employer could show it used 'good faith efforts' to comply with the obligations under 6055 and 6056. The regulations propose to eliminate the 'good faith' penalty relief they have previously extended to employers. As a reminder, the incorrect or late filing penalty is currently $280 for each form (applied to employee distribution, and again applied to IRS filing, so it would be $560 between both penalties, for each form).

There is no action required on account of the proposed regulations. Employers are still encouraged to distribute the employee 1095-C forms by the January 31 deadline if possible, but they may use the automatic 30 day extension if required. There are no extensions to the IRS reporting deadlines (February 28 2022 for hard copy filing of less than 250 forms 1095-C; March 31 2022 for AIR filing of 250 or more forms 1095-C).