On November 22, 2021, the Department of Treasury and the IRS issued proposed regulations generally intended to provide Form 1095-B and 1095-C reporting relief. Under the statutory language of the ACA, reporting entities are supposed to issue the Forms 1095-B and 1095-C, which provide information about the offers of and enrollment in health coverage during the prior year, to individuals by no later than January 31. The challenges related to preparing and distributing these forms on such a short timeframe soon became apparent, so through a series of Notices issued every year since these reporting rules first went into effect, the IRS has extended the deadline to furnish the Forms to individuals and provided good faith relief from reporting penalties. The proposed regulations would make this relief permanent, along with limited relief from the furnishing requirement that the IRS has provided for the last two years. However, the IRS is also proposing eliminating the good faith relief from reporting penalties it has offered since the inception of the reporting requirements. The proposed regulations would apply for calendar years beginning after December 31, 2021, and taxpayers may rely on the proposed regulations for calendar years beginning after December 31, 2020.
In order to give reporting entities time to come into compliance with the ACA reporting rules when they were implemented, the IRS stated it would not impose penalties for the reporting of incorrect or incomplete information if the reporting entity could show it made good faith efforts to comply with the information reporting requirements. This transitional relief was extended through tax year 2020. In the proposed rule, the IRS takes the position that the “good faith” relief should no longer apply now that the reporting requirements have been in effect for six years.