The Internal Revenue Service (IRS) has released final forms and instructions for reporting under the Affordable Care Act (ACA) for calendar year 2017, which will be due in 2018. In general, the forms and instructions have no major changes.
Most of the changes have to do with transition rules that no longer apply. The new instructions reflect IRS Notice 2017-09, which provides guidance to implement changes made by the Protecting Americans from Tax Hikes Act of 2015 (PATH Act). The notice is about the de minimis error safe harbor from information reporting penalties and the payee election to have the safe harbor not apply.
The notice describes provisions that apply for returns required to be filed and payee statements required to be furnished after December 31, 2016. Generally, penalties apply when a person includes incorrect information on a return or statement. Under the new safe harbor, an error is not required to be corrected and no penalty is imposed if the error relates to an incorrect dollar amount of no more than $100 ($25 in the case of an error with respect to an amount of tax withheld).
Payees can elect to have the safe harbor not apply, which means that employers should give employees a notice of the error and their right to have it not apply. Employers can require any reasonable manner for making election, as long as employees are notified of the way to elect. Electronic election cannot be the only method.
The safe harbor does not apply to intentional errors or failure to apply.
The Notice does not specify whether the $100 is per amount or per calendar year. For example, if an employer misreports employee contributions as $100 per month, when they should be $200, does the safe harbor apply? In that case, any employees who received a subsidy should elect not to have the safe harbor apply.
The IRS still has not created a code employers can use to indicate that an employee waived coverage.
Under the ACA, every applicable large employer (50 or more employees, including full-time equivalent employees) needs to give every employee who was a full-time employee at any time during the calendar year a Form 1095-C. Self-funded plans must also provide the form to any individual enrolled for minimum essential coverage, even if they were not full-time. Copies of all 1095-Cs must be sent to the IRS with a Form 1094-C transmittal form.
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