Right before the holidays, President Joseph Biden gifted employers some slight ACA reporting relief with the Paperwork Burden Reduction Act and the Employer Reporting Improvement Act (the “Acts”). The Acts are effective for the 2024 reporting year.
Paperwork Burden Reduction Act
Under this act, applicable large employers (ALEs) do not need to automatically provide a copy of Form 1095-C to employees. Now, ALEs only need to inform employees of their ability to request a copy of their 1095-C via a “clear and conspicuous notice.” If the employee requests the form, the ALE must provide it by the later of (i) January 31 or (ii) 30 days after the request. Employers can also provide a copy of Form 1095-C electronically (see the requirements in the Employer Reporting Improvement Act below).
Employer Reporting Improvement Act
This act provides the following relief:
- ALEs can now use an employee’s or a dependent’s birthdate in Part III of Form 1095-C if the ALE is unable to obtain the employee’s or dependent’s social security number. Previously, the IRS required an ALE to make several onerous attempts to collect the employee’s or dependent’s social security number before the ALE was allowed to substitute a birthdate on Form 1095-C.
- The act codifies previous regulations that allow an ALE to furnish Form 1095-C to employees electronically if the employee consented to receive the form electronically and the employer has provided a “clear and conspicuous notice” that employees may receive paper copies upon request.
- ALEs who receive the dreaded Letter 226J from the IRS will now have 90 instead of 30 days to respond. Letter 226J is usually the first communication from the IRS to an ALE in a situation where the IRS believes the ALE owes ACA penalties under Code Section 4980H.
- There is now a six-year statute of limitations on the IRS assessing ACA penalties against an ALE, effective for ACA forms filed after December 31, 2024. This six-year period begins running on the due date for filing ACA forms (or, if later, the date the return was filed) for the calendar year for which ACA penalties are assessed. Previously, the IRS had indicated that there was no statute of limitations on the IRS’ ability to assess and collect ACA penalties.
Next Steps
ALEs are still required to file Forms 1094-C and 1095-C with the IRS by March 31, 2025, if filing electronically. The due date is February 28, 2025, if filing by paper. If employers want to take advantage of the relief that allows the employer to only provide a copy of Form 1095-C to employees who request it, the employer will need to provide a clear statement regarding the employee’s right to request a copy. Further guidance from the IRS on what that statement should say and how employers can provide it would be welcome.
