IRS Releases Draft 2021 1094 and 1095 Forms Instructions
October 12, 2021
The IRS recently released the drafts of general instructions for Forms 1094-B/C and 1095-B/C. Earlier this year, the IRS released the 2021 draft Forms 1094-B/C and 1095-B/C, as we reported in an article in the June 8, 2021, edition of Compliance Corner.
Forms 1094-C and 1095-C are filed by ALEs to provide information that the IRS needs to administer the employer mandate penalties and eligibility for premium tax credits, as required by the ACA under Section 6056. Forms 1094-B and 1095-B are filed by minimum essential coverage providers (e.g., insurers and self-insuring employers) to report coverage information in accordance with Section 6055.
Overall, the majority of the formats and rules remain the same as those in the previous year, with minor additions. The draft Form 1095-C and its instructions added two new codes (1T and 1U) to report individual coverage HRAs (ICHRA). Code 1T applies to ICHRAs offered to the employee and spouse but not dependents, with affordability determined using the employee’s primary residence location zip code. Code 1U applies to ICHRAs using the employee’s primary employment-site ZIP code affordability safe harbor.
For the 2021 reporting deadlines for applicable large employers (ALEs), an ALE must furnish a Form 1095-C to each full-time employee by January 31, 2022; and must file the Forms 1094-C and 1095-C with the IRS by February 28, 2022, or March 31, 2022, if filing electronically.
Importantly, the instructions do not mention an automatic extension to furnish statements to employees and other covered individuals. Instead, they explain how to request a discretionary 30-day extension. Moreover, the draft instructions do not discuss the good faith error penalty relief that was also provided in the prior years for reporting incomplete or incorrect information on the forms when reporting entities can show they made good-faith efforts to comply with the reporting requirements. Therefore, reporting entities should assume that the stated deadlines apply when preparing the required forms.
The draft instructions retain the same electronic filing threshold at 250 forms even though the IRS released the proposal recently to significantly reduce the filing thresholds so that more ALEs would be required to file electronically.
Keep in mind that the instructions and forms are still at the draft stage. Additional changes are possible in the final forms and instructions. We will keep you updated when the finalized 2021 forms and instructions are released in the future.
Draft Instructions for Forms 1094-C and 1095-C »
Draft Instructions for Forms 1094-B and 1095-B »
Draft Form 1094-B »
Draft Form 1095-B »
Draft Form 1094-C »
Draft Form 1095-C »