Notice 2016-70: Unexpected (but limited) ACA reporting relief

On November 18, 2016, the IRS released Notice 2016-70, addressing insurer and employer reporting requirements under Sections 6055 and 6056 of the Internal Revenue Code (the Code). The primary impact of the notice is to extend the due date for providing employees with copies of Affordable Care Act (ACA) information returns. Furthermore, the notice provides relief to insurers and employers from certain penalties that would otherwise apply for returns containing incorrect or incomplete information. 

Background

Sections 6055 and 6056 of the Code were enacted as part of the ACA. They require insurance providers, self-insured employers and Applicable Large Employers (generally defined as employers that averaged 50 or more employees during the previous year) to report information to the IRS concerning minimum essential coverage offered to employees. In addition to the information returns filed with the IRS, entities subject to these provisions are also required to provide copies to employees, as well as certain non-employees enrolled in coverage. 

Due dates

Despite previous guidance from the IRS suggesting that no further relief would be granted, Notice 2016-70 extends the due date for providing information returns to individuals. The regulations state that individuals must be provided a copy of the 2016 information returns by January 31, 2017. Notice 2016-70, however, extends this due date to March 2, 2017. 

Importantly, Notice 2016-70 does not alter the due date for filing returns with the IRS. If filing by paper, entities subject to reporting under Sections 6055 and 6056 are still required to file returns with the IRS by February 28, 2017. If filing electronically, such returns are due by March 31, 2017. 

Extension of transition relief

Notice 2016-70 also extends transition relief from certain penalties provided to insurers and employers in 2015. Ordinarily, entities are subject to penalties for filing incorrect or incomplete information returns. Likewise, a penalty also applies if an incorrect or incomplete information return is provided to individuals. Notice 2016-70 extends the IRS’s policy of granting relief from these penalties where an entity with a reporting obligation has made a good faith attempt at compliance. The notice specifically mentions missing or inaccurate taxpayer identification numbers and dates of birth as covered by the transition relief. 

Future years

The notice applies only to 2016, thus reporting obligations under Sections 6055 and 6056 remain unchanged for all future years. Furthermore, the IRS states that it does not anticipate extending the relief provided under Notice 2016-70 beyond the current year.