IRS Asks for Voluntary Compliance with Delayed ACA Provisions

A July 2 Treasury Department blog posting by Mark J. Mazur, the assistant secretary for Tax Policy at the U.S. Department of the Treasury, announced the delay for one year of the deadline for employer reporting and shared responsibility payments under the ACA (see “Regulators Delay ACA Employer Reporting, Payment Deadlines”). The IRS then issued Notice 2013-45, which provides transition relief for 2014 from: (1) the information reporting requirements applicable to insurers, self-insuring employers, and certain other providers of minimum essential coverage under § 6055 of the Internal Revenue Code (Code) (§ 6055 Information Reporting); (2) the information reporting requirements applicable to applicable large employers under § 6056 (§ 6056 Information Reporting); and (3) the employer shared responsibility provisions under § 4980H (Employer Shared Responsibility Provisions).

However, in preparation for the application of the Employer Shared Responsibility Provisions beginning in 2015, the agency is encouraging employers and other affected entities to voluntarily comply for 2014 with the information reporting provisions (once the information reporting rules have been issued) and to maintain or expand health coverage in 2014. “Real-world testing of reporting systems and plan designs through voluntary compliance for 2014 will contribute to a smoother transition to full implementation for 2015,” the agency said in the Notice. It expects to issue proposed information reporting rules this summer.

The IRS explained that § 6056 Information Reporting is integral to the administration of the Employer Shared Responsibility Provisions. In particular, because an employer typically will not know whether a full-time employee received a premium tax credit, the employer will not have all of the information needed to determine whether it owes a payment under § 4980H. Accordingly, the employer is not required to calculate a payment with respect to § 4980H or file returns submitting such a payment.

Instead, after receiving the information returns filed by applicable large employers under § 6056 and the information about employees claiming the premium tax credit for any given calendar year, the Internal Revenue Service (IRS) will determine whether any of the employer’s full-time employees received the premium tax credit and, if so, whether an assessable payment under § 4980H may be due. If the IRS concludes that an employer may owe such an assessable payment, it will contact the employer, and the employer will have an opportunity to respond to the information the IRS provides before a payment is assessed.

The IRS said it realizes that since the reporting requirement is delayed, it is impractical to determine which employers owe shared responsibility payments for 2014 under the Employer Shared Responsibility Provisions, so no employer shared responsibility payments will be assessed for 2014.

The agency said the transition relief will provide additional time for input from employers and other reporting entities in an effort to simplify information reporting consistent with effective implementation of the law. This transition relief also is intended to provide employers, insurers, and other providers of minimum essential coverage time to adapt their health coverage and reporting systems. Both the information reporting and the Employer Shared Responsibility Provisions will be fully effective for 2015.

Individuals will continue to be eligible for the premium tax credit by enrolling in a qualified health plan through the Affordable Insurance Exchanges (also called Health Insurance Marketplaces) if their household income is within a specified range and they are not eligible for other minimum essential coverage, including an eligible employer-sponsored plan that is affordable and provides minimum value, the Notice stated.

In addition, the transitional relief has no effect on the effective date or application of other Affordable Care Act provisions, such as the premium tax credit under § 36B and the individual shared responsibility provisions under § 5000A. However, in Notice 2013-42, the agency provided relief from the ACA § 5000A shared responsibility payment for specified individuals who are eligible to enroll in certain eligible employer-sponsored health plans with a plan year other than a calendar year (non-calendar year plans) if the plan year begins in 2013 and ends in 2014 (see "IRS Provides Relief for ACA Individual Mandate").

Notice 2013-45 is here.