ACA Draft Instructions Released for TY2016

The IRS has released the ACA draft instructions for Form 1094-C and 1095-C to provide employers with a sneak-preview of the upcoming ACA information reporting changes.

If you would like to view the full drafts for the 2016 1094-C and 1095-C, you can find them here.

(Note: Do not use this draft to file your tax forms.)

What’s changed?

ACA Draft Instructions – Form 1094-C revisions

  • Line 22 Box B “Qualifying Offer Method Transition Relief” is designated “Reserved” and no longer applicable.
  • In Part III column (b), the header was changed to include “Section 4980H” in front of “Full Time Employee Count for the ALE Member”. This reminds filers the section 4980H definition of “full time employee” applies for the purposes of this column and no other purpose.

ACA Draft Instructions – Form 1095-C revisions

  • “Do not attach to your tax return. Keep for your records.” is inserted under the title. This will remind eligible employees that the 1095-C’s need to be kept with their tax records and not mailed with their tax return.
  • Lines 14 (Code 1I) and 16 (Code 2I) are designated “Reserved” and are no longer applicable.
  • Line 14 will include new codes 1J and 1K to address conditional offers of spousal coverage.
    • 1J – Minimum essential coverage providing minimum value offered to employee and at least minimum essential coverage conditionally offered to spouse; minimum essential coverage not offered to dependent(s).
    • 1K –  Minimum essential coverage providing minimum value offered to employee; at least minimum essential coverage offered to dependents; and at least minimum essential coverage conditionally offered to spouse.
  • Plan Start Month was optional in 2015 and will still be optional in 2016. However, the 2017 tax year will require this information.

Transition Relief Changes

The following transition reliefs are now only available for ALEs with a non-calendar year plan:

  • 2015 plan year section 4980h transition relief:
    • (50-99 transition relief)
    • (100 or more transition relief)
  • Health coverage was offered to at least 70% of full-time employees (and their dependents) in 2015. If the ALE member offered coverage under more than one health plan with different years, the relief applies through the last day of the latest of the plan years.
  • Under certain circumstances where dependent health care coverage was not previously offered, but steps are being taken to extend dependent coverage.

Penalties

The IRS will also be increasing the fines for failure to comply with the filing requirements.

penalty chart
ACA Draft Instructions – Penalties

Conclusion

Hopefully, this summary of the changes seen in the ACA draft instructions for tax year 2016 has been helpful and informative. BoomTax will continue to keep you updated with everything you need to know to be prepared for the next filing season.

Ready to file your 2016 TY 1094-C and 1095-C forms? Visit us at Boomtax, and reach out to our sales team for a quick demo to see how we make ACA reporting easy.

BoomTax, The Boom Post, and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors prior to engaging in any transaction.

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