Furnishing Deadline Delayed for 2018 ACA Reporting
The Internal Revenue Service (IRS) has again determined that some employers, insurers and other providers of minimum essential coverage (MEC) need additional time to gather and analyze the information and prepare 2018 Forms 1095-B and 1095-C to be furnished to individuals.
As a result, on Nov. 29, 2018, the IRS issued Notice 2018-94 which:
- Extends the due date for furnishing forms to employees/covered individuals under Sections 6055 and 6056 for 2018 from Jan. 31, 2019, to March 4, 2019; and
- Extends good-faith transition relief from penalties related to 2018 information reporting under Sections 6055 and 6056.
The IRS has determined that there is no need for additional time for employers, insurers and other providers of MEC to file 2018 forms with the IRS. Therefore, the notice does not extend the due date for filing forms with the IRS for 2018. The due date for filing with the IRS under Sections 6055 and 6056 remains Feb. 28, 2019 (April 1, 2019, if filing electronically, since March 31, 2019, is a Sunday).
Despite the delay, employers and other coverage providers are encouraged to furnish 2018 statements to individuals as soon as they are able. No request or other documentation is required to take advantage of the extended deadline. Additionally, because this extended furnishing deadline applies automatically to all reporting entities, the IRS will not grant additional extensions of time to furnish Forms 1095-B and 1095-C.
Texas Court Rejects City of Austin's Paid Sick Leave Law
On Feb. 16, 2018, the Austin City Council passed an ordinance that would have required private employers in Austin to provide paid sick leave to their employees. Under the sick time ordinance, employees would have been eligible to take up to eight paid sick days per year. Employers that violated the ordinance would have faced possible penalties.
Although the paid sick leave ordinance was scheduled to take effect on Oct. 1, 2018, a Texas appeals court temporarily blocked the ordinance from becoming effective while various businesses challenged its validity. On Nov. 16, 2018, the Texas appeals court rejected Austin’s sick leave ordinance as unconstitutional.
The court ruled that because Austin’s paid sick leave law establishes a wage, it is preempted by Texas’s minimum wage law. Texas’s minimum wage law supersedes local laws that regulate the wages of employers. It's possible that the City of Austin will challenge this ruling. However, for now, the paid sick leave law has been ruled invalid, which means that Austin employers do not need to comply with it. This ruling may also invalidate a similar law passed by the City of San Antonio. We'll keep you updated on both ordinances as information becomes available.
IRS Begins Pay or Play Enforcement for 2016
The Affordable Care Act (ACA) requires applicable large employers (ALEs) to offer affordable, minimum value health coverage to their full-time employees or pay a penalty. This employer mandate provision is also known as the “employer shared responsibility” or “pay or play” rules. An ALE is only liable for a pay or play penalty if one or more of its full-time employees receives a subsidy for coverage under an Exchange.
The employer shared responsibility final regulations did not provide substantial guidance on how these rules would be enforced and, prior to 2017, no penalties had been assessed under these rules. However, the IRS began issuing Letter 226-J informing employers of their potential liability for an employer shared responsibility penalty (ESRP) for the 2015 calendar year, if any, in late 2017. The IRS began the enforcement process for the 2016 calendar year in late 2018.
The general procedures the IRS uses to propose and assess the ESRP are described in Letter 226-J. The IRS will issue Letter 226-J to an ALE if it determines that, for at least one month in the year, one or more of the ALE’s full-time employees was enrolled in a qualified health plan for which a premium tax credit was allowed (and the ALE did not qualify for an affordability safe harbor or other relief for the employee).
Responding to a proposed ESRP is a relatively straightforward process. ALEs must respond to Letter 226-J by either agreeing with the proposed ESRP or disagreeing with part or all of the proposed amount before any employer shared responsibility liability is assessed and a Notice and Demand for payment is made. Letter 226-J provides instructions for how the ALEs should respond in writing. If an ALE does not respond or request an extension by the response date on the first page of Letter 226-J, the IRS will send a Notice and Demand for the penalty that was proposed and assessed.
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