As part of implementing the Affordable Care Act, IRC 6055 and 6056 were added to the Internal Revenue Code requiring certain information reporting for insurers, sponsors of self-insured plans and other entities that provide “minimum essential coverage” and additional “large employer” information reporting. In 2012, the IRS requested comments from the public regarding these reporting requirement (Notice 2012-32 and Notice 2012-33). After considering initial comments from this request, the IRS, on September 5, 2013, released two sets of proposed regulations regarding these reporting requirements. Copies of these proposed regulations may be found here and here (for IRC 6056).
Although the proposed regulations for the most part do not expand much upon the language of IRC 6055 and 6056, there are a number of points of which practitioners should be aware:
- In relation to the large employer reporting requirements under IRC 6056, taxpayers are required to apply certain aggregation rules in order to determine whether a taxpayer (or group of taxpayers) is an “applicable large employer” (generally, an employer with more than 50 full-time employees). However, the IRS confirmed in the proposed regulations that where a group of taxpayers is determined to be an “applicable large employer” under such rules, each of the taxpayers in such group who have full-time employees must meet the information reporting requirements of IRC 6056 (rather than the parent / primary taxpayer). Each such group member is termed an “applicable large employer member”. A similar statement was previously made in the proposed regulations for 4980H (regarding the “pay-or-play” rules).
- The information returns to the IRS under both provisions must be filed with the IRS no later than February 28th (or, if filed electronically, March 31st) of the calendar year following the year on which the taxpayer is reporting. In other words, following the reporting delay previously announced by the IRS (see Notice 2013-45), the first returns which need to be filed (i.e., for the 2015 calendar year) are not due until February 28, 2016 (or, if filed electronically, March 31, 2016). That said, the IRS reiterated that taxpayers could voluntarily file the IRC 6055 information reports for the 2014 calendar year if they so desired.
- Taxpayers who file at least 250 returns in a given year (including both IRC 6055 or IRC 6056 information returns and other returns filed by the taxpayer (e.g., Forms W-2)) must file their information returns under these provisions electronically. Taxpayers who file less than 250 returns in a given year have the option to file electronically or by mail.
- The IRS indicated a desire throughout the proposed regulations to streamline information reporting under these two sections. For example, the IRS stated that it was considering certain simplified methods for IRC 6056 reporting, such as using codes on Form W-2 to report whether full-time employees, spouses and their dependents had been offered coverage. Additionally, the IRS is considering whether employers sponsoring self-insured group health plans can fulfill their employee statement requirements by using a single substitute statement.
Public hearings are scheduled for the proposed regulations on November 18th and 19th and the IRS will consider additional comments submitted to it in accordance with the requirements of the preambles to the proposed regulations by November 8, 2013.