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IRS Extends 1095-C Deadline, Works on Withholding Guidance

The week leading up to the December holiday break was a busy time in Washington, DC. Drawing the most attention was the president, Congress and Senate as they worked to finalize recent tax reform legislation and sign it into law Dec. 22. Meanwhile, the Internal Revenue Service (IRS) was working to prepare for the many changes ahead, and keep some things status quo.

Two big questions remain:

  1. Does the new tax law affect 1095-C reporting for the 2017 benefits year?
  2. When will new tax law be reflected in employee paychecks?

To answer the first question, 1095-C reporting is still mandatory for the 2017 benefit year. The reporting requirement is likely to continue through the 2018 benefits year. The newly passed tax bill removes the individual mandate starting in 2019.1 However, don't let the excitement of the recent tax legislation distract you from your responsibility this year. More details will become clear as we approach the official end of the Individual mandate in 2019.

The IRS has confirmed the reporting requirement by issuing a 30-day extension Dec. 22 for 1095-C reporting. The new deadline (previously Jan. 31) to provide Form 1095-C to employees is March 2. Note that the deadline for filing 2017 information returns with the IRS was not extended.

For 2018, the due dates for filing with the IRS are:

  • Feb. 28 for paper filers
  • April 2 for electronic filers

Full details are available on the IRS website.

Regarding the second question, the timing of the recent tax legislation put pressure on the IRS's already tight timeline for publishing annual guidelines for employee withholding taxes. Typically, the IRS publishes its updates to employee withholding tables in early December for the following year. The IRS is currently working to develop withholding guidance for the tax reform bill. In the meantime, employers and payroll service providers should continue to use the existing 2017 withholding tables and systems, according to the IRS announcement.

To address the timing of the recent changes, the IRS announced its expected timeline for updates:

  • The IRS anticipates issuing initial guidance in January.
  • It anticipates implementing tax changes in February.
  • Employers and payroll service providers will be encouraged to implement the changes in February.

Full details are available on the IRS website.
Sources:

https://www.nytimes.com/2017/12/21/upshot/individual-health-insurance-mandate-end-impact.html

http://fortune.com/2017/12/20/tax-bill-individual-mandate-obamacare/

About the Author

As Compliance Expert at SmartLinx, Tom Jegou oversees SmartLinx innovations in our payroll and compliance systems. Tom is focused on transforming client needs into leading-edge products. Tom leads cross-functional teams from a product's conception through to its launch. Tom led the design of the 1095-C and Payroll-Based Journal reporting features in the WorkLinxTM suite. Since 1996, Tom has worked with every aspect of Human Capital Management Systems. He has defined, supported, implemented and managed Payroll, Time and Labor and HR systems. Tom is a Certified Payroll Professional through American Payroll Association.

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