What happens if an employer cannot meet the filing deadline due to unforeseen circumstances?
Erich Ruth
If an employer cannot meet the filing deadline for ACA forms (Forms 1095-C and 1094-C) due to unforeseen circumstances, they may request an extension or take other steps to mitigate potential penalties. Here’s how to handle the situation:
1. Automatic 30-Day Extension for Filing with the IRS
- Employers can request an automatic 30-day extension to file ACA forms with the IRS by submitting Form 8809 (Application for Extension of Time to File Information Returns).
- Deadline for Form 8809: It must be filed by the original filing deadline (e.g., March 31 for electronic filing).
- How to File: Form 8809 can be filed online or on paper. No explanation is needed for the first extension.
2. Additional 30-Day Extension (If Needed)
- If the employer cannot meet the extended deadline, they may request an additional 30-day extension by submitting a written explanation with Form 8809.
- The explanation must detail the extenuating circumstances (e.g., natural disasters, serious illness).
- Approval is not guaranteed and is subject to IRS discretion.
3. Extensions for Employee Copies
- There is no formal process to extend the deadline for distributing copies of Form 1095-C to employees (typically due by January 31). However:
- The IRS may grant relief from penalties if the employer can show a reasonable cause for the delay.
- Employers should notify employees as soon as possible about the delay and provide the forms promptly when ready.
4. Relief for Incomplete or Incorrect Forms
- If the employer files incomplete or incorrect forms by the deadline, the IRS may waive penalties under the Good-Faith Effort Provision (if it applies for that tax year).
- Employers must show they made a genuine effort to comply and correct errors promptly after discovery.
5. Penalty Relief for Reasonable Cause
- Employers who miss filing deadlines may avoid penalties by demonstrating reasonable cause under IRS rules:
- The failure was due to unforeseen circumstances (e.g., a natural disaster, technical issues).
- The employer took corrective action as soon as possible.
- Supporting documentation (e.g., evidence of hardship or communications with vendors) may be required.
Potential Penalties for Non-Compliance
If no extension is requested or reasonable cause is not shown, the following penalties may apply:
- Failure to File with IRS: $310 per form, up to a maximum of $3,783,000 per year.
- Failure to Provide Employee Copy: $310 per form, subject to the same annual maximum.
- Penalties are halved for small businesses with gross receipts of $5 million or less.
Recommendations
- File Form 8809 immediately if you anticipate a delay.
- Communicate proactively with employees about delays in their copies of Form 1095-C.
- Keep thorough records of circumstances causing the delay and your corrective actions.
Let me know if you’d like further assistance with this process!