IRS Provides Penalty Relief for Incorrect or Delayed Forms 1095-A
The IRS issued Notice 2015-30, which provides penalty relief for taxpayers who received an incorrect or delayed Form 1095-A. Form 1095-A is provided to all individuals who enrolled in health insurance coverage through the Health Insurance Marketplace and provides information that such individuals must have in order to file an accurate tax return. On February 20, 2015, the Centers for Medicare and Medicaid Services (CMS) announced that approximately 800,000 taxpayers received Forms 1095-A that contained errors. On March 20, 2015, CMS announced additional issues with the Forms 1095-A. Some state-based Marketplaces also reported issues with generating the forms. Notice 2015-30 provides some relief for individuals who otherwise would have been subject to penalties for late payment or underpayment of estimated taxes so long as those individuals timely file their tax returns (including extensions). Interest on the balance due from the original deadline to pay will still be owed even if an individual qualifies for penalty relief under the notice.
As we discussed in a prior alert, employers and plan sponsors have reporting obligations under the Affordable Care Act’s employer mandate rules (codified in Sections 6055 and 6056 of the Internal Revenue Code). Although the Form 1095-A errors were not made by employers or plan sponsors, in light of the issues discussed above, employers and plan sponsors should start planning early for their own reporting obligations. The first required reporting period under Internal Revenue Code Sections 6055 and 6056 will be for the 2015 calendar year and will be due in early 2016.