IRS Publishes Draft Guidance on Substitute Forms under IRC Sections 6055 & 6056
On Aug. 11, 2015, the IRS published a draft version of Publication 5223, General Rules and Specifications for Affordable Care Act Substitute Forms 1095-A, 1094-B, 1095-B, 1094-C and 1095-C.
As background, larger employers (those subject to the employer mandate) and employers that sponsor self-insured plans are subject to certain informational reporting requirements under IRC Sections 6055 and 6056. Under those Sections, those employers must file certain forms (1095-B and 1095-C) with the IRS and distribute to employees/covered individuals either a copy of the forms or a substitute form.
The reporting requirements first apply in January 2016 (reporting on the 2015 calendar year), and will continue annually going forward. Publication 5223 provides draft guidance for employers that want to use a substitute form to satisfy that distribution requirement.
According to the publication, the substitute form must contain all information provided on the actual form. In addition, the information must be printed in a font large enough to be easily read by the form recipient. Also, aside from the employer’s name and primary trademark or slogan, the substitute form may not include logos, slogans and advertisements since those items may detract from the importance of the tax information being reported.
The publication also states that employers may electronically distribute substitute forms to employees and covered individuals, so long as those employees/individuals provide consent to receive those particular forms via electronic delivery (and the consent itself is made via electronic means). In addition, prior to distributing the substitute form electronically, the employer must provide the form recipient with a statement that the employee/individual may request to receive a paper version of the form and that electronic consent can be withdrawn at any time (and the procedures to do so).
While the publication is in draft form and cannot yet be relied upon as official guidance, employers should review the publication to get an idea of how the IRS views the requirements relating to distribution of substitute forms under IRC Sections 6055 and 6056.