Employee Benefit Advisors recommends companies inform employees of the following. – The original announcement came out in October 2017, however EBA thought it would be a good reminder to post at this time.
Reminder: The new tax law does not actually repeal the individual mandate. It eliminates the penalty (penalty is zero) starting in 2019, not 2017 or 2018. However, the penalty can be reinstated with an update to the tax law. The requirement for companies with 50+ FTEs to offer health insurance remains.
The IRS has stated that it will not accept Forms 1040 for the 2017 tax year if the taxpayer does not report on the ACA’s health coverage reporting requirements. This is the first year that the IRS has put in place system changes to its Form 1040 review process that would reject tax returns during processing in instances where the taxpayer does not provide this information.
Background. The ACA’s individual mandate requires most individuals to obtain minimum essential health insurance coverage for themselves and any dependents or pay a penalty. Form 1040 instructs taxpayers to report whether they (and every dependent listed on their return) had health insurance coverage, were eligible for an exemption from the ACA’s coverage requirement, or will make an individual shared responsibility payment.
For prior tax seasons, the IRS had delayed processing of tax returns that did not answer the health care coverage questions, but it did not prevent the return from ultimately being processed.
Guidance. For 2017 tax returns, the IRS has stated it will not accept the electronic tax return until the taxpayer indicates whether they (and all of their dependents) met the ACA requirements or are paying the penalty. In addition, returns filed on paper that do not address the ACA reporting requirements may be suspended pending the receipt of additional information, and refunds may be delayed.
In response to the IRS’s revised review process for Forms 1040, to avoid refund and processing delays when filing 2017 tax returns, taxpayers should indicate whether they (and everyone listed as dependents on their tax return) had health insurance coverage, qualified for an exemption or made a shared responsibility payment.
The IRS guidance is available at: https://www.irs.gov/tax-professionals/aca-information-center-for-tax-professionals
Content is provided for information purposes by The Wagner Law Group and may not be relied upon as specific legal advice.