In a recent statement from the IRS, it is clear that they have stepped up enforcement of Affordable Care Act regulations. The recent statement reverses a prior practice of accepting individual tax returns which omitted information related to health insurance coverage on line 61 of tax form 1040. For 2017 tax forms, this information will be required. The text of the statement from the IRS is below:
For the upcoming 2018 filing season, the IRS will not accept electronically filed tax returns where the taxpayer does not address the health coverage requirements of the Affordable Care Act. The IRS will not accept the electronic tax return until the taxpayer indicates whether they had coverage, had an exemption or will make a shared responsibility payment. In addition, returns filed on paper that do not address the health coverage requirements may be suspended pending the receipt of additional information and any refunds may be delayed.
To avoid refund and processing delays when filing 2017 tax returns in 2018, taxpayers should indicate whether they and everyone on their return had coverage, qualified for an exemption from the coverage requirement or are making an individual shared responsibility payment. This process reflects the requirements of the ACA and the IRS’s obligation to administer the health care law.
Taxpayers remain obligated to follow the law and pay what they may owe at the point of filing. The 2018 filing season will be the first time the IRS will not accept tax returns that omit this information. After a review of our process and discussions with the National Taxpayer Advocate, the IRS has determined identifying omissions and requiring taxpayers to provide health coverage information at the point of filing makes it easier for the taxpayer to successfully file a tax return and minimizes related refund delays.
Click here for more information about the individual shared responsibility provision.
The information necessary for individual taxpayers to prove that they were covered for 2017 comes, at times, from form 1095-C. Self-insured employers are required to complete Part III of form 1095-C. This information is used by tax preparers when completing line 61 of form 1040.
Now that the IRS is requiring employees to complete this information, it is reasonable to assume that the form 1095-C will need to be available to the employee as they are filing their individual tax returns. The current deadline for filing form 1095-C to the employee is January 31st, 2018. As a result, is very unlikely that the IRS will extend filing deadlines for form 1095-C for the upcoming filing season in contrast to the extensions employers have received in the past.
As always, we encourage employers to ensure they are ready for a compressed filing period and ensure they have all the necessary processes in place to prepare the ACA information returns in a timely manner. An automated solution like the Integrity ACA solution is a great way to make ACA compliance easy. Please check out more information here: www.integrity-data.com/aca. Also, be aware that the Integrity ACA solution allows for full fulfillment of the forms to the employee via email or through a print, stuff and mail service, which makes sending forms to employees as easy as clicking a button.