The new year is almost here and that means there are many IRS tax obligations on the horizon for businesses across the country. One of the most daunting of these obligations is Affordable Care Act reporting. As many businesses have learned from years of experience- we know, we helped them file- the sooner you get started, the better!
The IRS continues to distribute penalty notices for past tax years to businesses that have failed to report successfully and will continue to raise the penalty rates. Therefore, accurate ACA reporting is becoming more and more crucial.
Now is the time to begin the process of reporting. Here is what you need to keep in mind to stay on track with your organization’s reporting requirements.
What Business Organizations are Required to Report?
There are two sections of the IRS Code that lay out who is required to report health insurance coverage information to the IRS.
Under Section 6055, any individual or organization that provides minimum essential health insurance coverage to individuals must report this information to the IRS and distribute this information to the recipients of said coverage.
Examples of these organizations include government-sponsored plans and individual market plans, even employer self-funded plans apply. These entities are generally required to file this information on Form 1095-B with the corresponding cover page, Form 1094-B.
Under Section 6056, any employer with 50 or more full-time/full-time equivalent employees is required to provide minimum essential coverage health insurance and report this coverage both to the IRS and the respective employees. These applicable large employers are generally required to file this information on Form 1095-C with the corresponding cover page Form 1094-C.
When are the Deadlines for ACA Reporting?
There are three key deadlines that are associated with ACA reporting, for 2023, employers should be aware of the following:
Paper Filing Deadline
The deadline to file paper copies of ACA forms with the IRS is February 28, 2023. It is important to note that employers filing 250 or more returns are required to file electronically. Failing to file using the correct method can result in IRS penalties.
The deadline to file electronically with the IRS is March 31, 2023. Employers should be aware that e-filing is the IRS-preferred method and is much more efficient. When e-filing, there will be updates from the IRS on the status of the forms, whereas, with paper forms, this information is not available.
Deadline for Furnishing Recipient Copies
Employers must distribute the form copies to the corresponding employees. The deadline has differed for this over the years. Usually, it is extended automatically from January 31st to March 2nd. This is the case for the 2022 tax year as well.
So, the deadline to distribute form copies to recipients for the 2022 tax year is March 2, 2023.