Employee Benefits Compliance Alert – March 21, 2016
2015 Form 1095-C delivery and filing: Last minute
suggestions
Summary

Applicable large employers must generally
furnish 2015 Forms 1095-C to full-time
employees by March 31, 2016
IRS has announced relief from penalty
assessments for incorrect or incomplete
Forms 1095-C required under IRC sections
6055 and 6056 if the employer or other
coverage provider can demonstrate good
faith efforts to comply with the reporting
requirements
Good faith relief does not apply to the failure
to timely furnish or file Forms 1095-C
Nevertheless, failures to timely furnish or file
a Form 1095-C may still qualify for penalty
relief if the IRS determines the applicable
large employer satisfies standards for
“reasonable cause”
The filing instructions for Forms 1094-C and
1095-C provide methods for correcting
furnished forms in two scenarios—correcting
prior to filing the original Forms 1095-C with
the IRS




The Patient Protection and Affordable Care Act
(ACA) requires certain employers to furnish Forms
1095-C to all full-time employees for the 2015
calendar year and thereafter. Most employers
should know whether they are an applicable large
employer (ALE) member for 2015, and therefore
subject to this reporting requirement, as well as the
following special extended deadlines for the 2015
forms:
 March 31, 2016: Furnish 2015 Forms 1095C to employees

June 30, 2016: File the 2015 Forms 1095-C,
and the accompanying 2015 Form 1094-C,
with the Internal Revenue Service (IRS), if
filing electronically (required if filing 250 or
more Forms 1095-C)
o May 31, 2016, if filing manually
(optional if filing fewer than 250
Forms 1095-C)
The vast majority of the reporting work involves
preparing the Forms 1095-C. If ALE members are
able to timely meet the March 31, 2016 deadline for
furnishing the forms to employees, there should be
little trouble meeting the deadline two to three
months later with respect to filing with the IRS.
Some ALE members are executing these ACA
reporting requirements on their own, while many
have hired their payroll vendors or other thirdparty service providers to assist. In either case,
they have faced some difficulties, including
properly identifying all employees who should
receive a form, challenges in collecting and
processing accurate data, and difficulties in
interpreting and applying IRS instructions and
other guidance.
In general, the failure to furnish and file accurate
and timely Forms 1095-C can result in penalties of
up to $500 per employee. ALEs who are getting
down to the wire with the March 31st deadline, or
who have already furnished Forms 1095-C, perhaps
with some trepidation, may benefit from an
understanding of the IRS good faith transition
guidance on the accuracy of timely distributed and
filed 2015 Forms 1095-C, possible penalty
abatements due to reasonable cause for untimely
furnished and filed 2015 Forms 1095-C, and
guidance on correcting identified errors in the
forms after distribution to employees either before
or after filing with the IRS.
Accurate forms – good faith
As noted in our January 2016 Employee Benefits
Compliance Update, the IRS announced transition
penalty relief with respect to ACA reporting filings
for 2015 that are due in early 2016. Under this
relief, penalties for incorrect or incomplete 2015
Forms 1095-C will not be assessed if an ALE
member can demonstrate good faith efforts to
comply with the reporting requirements. However,
good faith transition relief will not apply to the
failure to timely furnish or file a required
statement or return. Thus, the general advice has
been for ALE members to ensure they have
provided Forms 1095-C to full-time employees by
the March 31, 2016 deadline, even if not 100% sure
that all of the returns are correct and complete.
Unfortunately, the IRS has not provided any
specific guidance as to what constitutes “good faith”
in this context and it is speculative to guess what
factors may be relevant. However, the IRS is aware
of the complexity of the law and the challenges that
employers and third-party service providers are
having in developing and implementing
appropriate policies and procedures for this first
year. In fact, this prompted the IRS to provide the
special extended deadlines for this filing season.
Hopefully, the IRS will apply good faith transition
relief generously to employers who timely
distribute and file their 2015 ACA information
returns.
Untimely forms – reasonable cause
The “good faith” standard will not apply to ALE
members who fail to timely furnish Forms 1095-C
or to those that miss the deadlines for filing with
the IRS. However, the IRS has provided guidance
regarding possible abatement of penalties for
“reasonable cause,” which is generally a moredifficult standard to meet compared to the “good
faith” standard. In Notice 2016-4, as discussed in
our December 30, 2015 Compliance Alert, the IRS
indicated the following guidance for ALE members
who miss the deadline:
 ALE members are still encouraged to
furnish and file, and the IRS would take
such furnishing and filing into
consideration when determining
“reasonable cause”
 The IRS would take into account whether
an ALE member made reasonable efforts to
prepare for furnishing the required
information to employees and filing with
the IRS, such as gathering and transmitting
the necessary data to a third party service
provider to prepare the data for IRS filing

The IRS would take into account the extent
to which the ALE member is taking steps to
ensure it will comply with the reporting
requirements for 2016
It should be noted that it is fairly clear how the IRS
might identify a failure to timely file Forms 1095-C
and 1094-C with the IRS, but less clear how the IRS
might identify a failure to timely furnish Forms
1095-C to employees absent an IRS audit.
Correcting mistakes
As noted above, much of the reporting work
involves preparing the Forms 1095-C, which must
be provided to full-time employees by March 31,
2016, but need not be filed with the IRS for two to
three months thereafter. After furnishing Forms
1095-C to employees, many ALE members may
discover errors on the previously furnished forms.
The 2015 Instructions for Forms 1094-C and 1095C (Instructions) set forth the rules for handling
corrections both before and after filing Forms 1095C with the IRS.
For corrections prior to filing with the IRS, the
Instructions appear to give ALEs two choices for
correcting Forms 1095-C prior to filing with the
IRS:
1. Furnish corrected version and only file
corrected version. Here, the ALE member
should generate corrected Forms 1095-C,
write “CORRECTED” on the new Form
1095-C (and not enter “X” in the
“CORRECTED” box), and furnish the new
forms to affected employees. Then, only the
correct Forms 1095-C get filed with the IRS
with the original Form 1094-C. This would
likely be a better option for ALE members
that have relatively few errors and can make
all corrections prior to the Form 1094-C
filing deadline.
2. File incorrect version, then furnish
corrected version and then file corrected
version
Here, the ALE member may wish to proceed with
getting all original Forms 1095-C timely filed with
the IRS. Then, the ALE member should generate
the corrected Forms 1095-C, enter “X” in the
“CORRECTED” box on the form and furnish to
affected employees. The ALE member should then
file the corrected Forms 1095-C with the IRS, along
with a Form 1094-C transmittal. The ALE member
should not mark the “CORRECTED” box on the
Form 1094-C transmittal (assuming that form
requires no corrections).
Correction after filing with IRS
Here, the ALE member must follow rules similar to
the second option described above. The ALE
member should generate the corrected Forms 1095C, enter “X” in the “CORRECTED” box on the form
and furnish to affected employees. This would be
followed by filing the corrected Forms 1095-C with
the IRS, along with a Form 1094-C transmittal (but
not marking the “CORRECTED” box on that form,
assuming that form requires no corrections).
How can we help?
Please contact your Wells Fargo Insurance Service
representative for additional information on
furnishing, filing, and correcting 2015 Forms
1095-C.
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