Federal Register, Volume 79 Issue 46 (Monday, March 10, 2014)

[Federal Register Volume 79, Number 46 (Monday, March 10, 2014)]
[Rules and Regulations]
[Pages 13231-13252]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-05050]

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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Parts 301 and 602

[TD 9661]
RIN 1545-BL26

Information Reporting by Applicable Large Employers on Health
Insurance Coverage Offered Under Employer-Sponsored Plans

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Final regulations.

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SUMMARY: This document contains final regulations providing guidance to

[[Page 13232]]

employers that are subject to the information reporting requirements
under section 6056 of the Internal Revenue Code (Code), enacted by the
Affordable Care Act (generally employers with at least 50 full-time
employees, including full-time equivalent employees). Section 6056
requires those employers to report to the IRS information about the
health care coverage, if any, they offered to full-time employees, in
order to administer the employer shared responsibility provisions of
section 4980H of the Code. Section 6056 also requires those employers
to furnish related statements to employees that employees may use to
determine whether, for each month of the calendar year, they may claim
on their individual tax returns a premium tax credit under section 36B
(premium tax credit). The regulations provide for a general reporting
method and alternative reporting methods designed to simplify and
reduce the cost of reporting for employers subject to the information
reporting requirements under section 6056. The regulations affect those
employers, employees and other individuals.

DATES: Effective Date: These regulations are effective on March 10,
2014.
Applicability Date: For dates of applicability, see Sec. Sec.
301.6056-1(m) and 301.6056-2(b).

FOR FURTHER INFORMATION CONTACT: Ligeia Donis at (202) 317-6846 (not a
toll-free number).

SUPPLEMENTARY INFORMATION:

Paperwork Reduction Act

The collection of information contained in these final regulations
has been reviewed and approved by the Office of Management and Budget
in accordance with the Paperwork Reduction Act of 1995 (44 U.S.C.
3507(d)) under control number 1545-2251.
The collection of information in these regulations is in Sec. Sec.
301.6056-1, and 301.6056-2. This information is collected in accordance
with the return and employee statement requirements under section 6056
and is used to administer section 4980H and the premium tax credit. The
likely respondents are employers that are applicable large employers,
as defined under section 4980H(c)(2).
An agency may not conduct or sponsor, and a person is not required
to respond to, a collection of information unless it displays a valid
control number assigned by the Office of Management and Budget.
The burden for the collection of information contained in these
final regulations will be reflected in the burden on Form 1095-C or
another form that the IRS designates, which will request the
information in the final regulations.
Books or records relating to a collection of information must be
retained as long as their contents may become material in the
administration of any internal revenue law. Generally, tax returns and
tax return information are confidential, as required by 26 U.S.C. 6103.

Background

Sections I through V of the preamble (``Background'') describe the
statutory provisions governing the information reporting requirements,
as well as related statutory provisions. Sections VI through XIII of
the preamble (``Explanation of Provisions and Summary of Comments'')
describe and explain how these regulations implement the statutory
provisions of section 6056 and include a discussion of alternative
reporting methods and simplifications that are adopted in these final
regulations. As is typical of regulations on information reporting,
these regulations refer generally to additional information that may be
required under applicable forms and instructions. Sections IX.B and C
of the preamble set forth the specific data elements that will be
included with the reporting, including the data elements that will be
provided through the use of an indicator code.

I. Reporting Requirements for Applicable Large Employers (Section 6056)

Section 6056 \1\ requires applicable large employers, as defined in
section 4980H(c)(2), to file returns at the time prescribed by the
Secretary with respect to each full-time employee and to furnish a
statement to each full-time employee by January 31 of the calendar year
following the calendar year for which the return must be filed. Section
6056 specifies certain information that must be reported on the return
and related statement and authorizes the Secretary to require
additional information and determine the form of the return. Section
6055 requires information reporting by any person that provides minimum
essential coverage to an individual during a calendar year, which
information relates to the section 5000A individual shared
responsibility provisions. Sections 6055 and 6056 are effective for
periods beginning after December 31, 2013; however, Notice 2013-45
(2013-31 IRB 116) provides transition relief from the section 6056
information reporting requirements (and section 4980H), as well as the
section 6055 information reporting requirements, so that reporting is
not required with respect to 2014.
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\1\ Section 6056 was enacted by section 1514(a) of the Patient
Protection and Affordable Care Act, Public Law 111-148 (124 Stat.
119 (2010)), amended by the Health Care and Education Reconciliation
Act of 2010, Public Law 111-152 (124 Stat. 1029 (2010)), and further
amended by the Department of Defense and Full-Year Continuing
Appropriations Act of 2011, Public Law 112-10 (125 Stat. 38 (2011))
(collectively, the Affordable Care Act).
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Proposed regulations under section 6056 were published in the
Federal Register on September 9, 2013 (REG-136630-12 [78 FR 54996]).
The proposed regulations provide guidance on the reporting method
proposed to implement the statutory provisions of section 6056
(referred to as the general method), and discuss a variety of potential
simplified reporting methods, on which public comments were requested.
Comments responding to the proposed regulations and potential
simplified reporting methods were submitted and are available for
public inspection at www.regulations.gov or upon request. A public
hearing was conducted on November 18, 2013.
Treasury and the IRS have sought to develop final information
reporting rules that will be as streamlined, simple, and workable as
possible, consistent with effective implementation of the law. This has
reflected a considered balancing of the importance of (1) minimizing
cost and administrative tasks for reporting by entities and
individuals, (2) providing individuals the information to complete
their tax returns accurately, including with respect to the individual
shared responsibility provisions and potential eligibility for the
premium tax credit, and (3) providing the IRS with information needed
for effective and efficient tax administration. After consideration of
all of the comments and testimony, as well as the comments previously
submitted in response to Notice 2012-33 (2012-20 IRB 912), the proposed
regulations are adopted as amended by this Treasury Decision. The
amendments are discussed in the Summary of Comments and Explanation of
Provisions section of this preamble.

II. Shared Responsibility for Employers (Section 4980H)

Section 6056 reporting is needed for the administration of section
4980H. Generally, a payment will be assessed under section 4980H if the
employer either does not offer minimum essential coverage to its full-
time employees (and their dependents) or the coverage offered is not
affordable or does not

[[Page 13233]]

provide minimum value, and one or more of the full-time employees
receive a premium tax credit for purchase of coverage on an Affordable
Insurance Exchange (Exchange).\2\ Section 4980H(c)(2) defines the term
``applicable large employer'' as, with respect to a calendar year, an
employer that employed an average of at least 50 full-time employees on
business days during the preceding calendar year. Generally, for
purposes of determining applicable large employer status, a full-time
employee includes any employee who was employed on average at least 30
hours of service per week and any full-time equivalents determined
pursuant to section 4980H(c)(2)(E). As provided in section
4980H(c)(2)(C)(i), all employers treated as a single employer under
section 414(b), (c), (m), or (o) are treated as one employer for
purposes of determining applicable large employer status. Section 4980H
contains rules for determining whether an employer qualifies as an
applicable large employer, including special rules addressing an
employer's first year of existence. See section 4980H(c)(2)(C).
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\2\ An Exchange is also referred to in other published guidance
as a Marketplace.
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Section 4980H is effective for months after December 31, 2013;
however, Notice 2013-45 provides transition relief for 2014 for section
6056 reporting requirements which, given their role in administering
section 4980H, means that no payments will be assessed under section
4980H for 2014. On February 12, 2014, Treasury and the IRS released
final regulations under section 4980H (TD 9655 [79 FR 8544]).
The final regulations under section 4980H provide guidance on
determining applicable large employer status and determining full-time
employee status, including defining and providing rules for calculating
hours of service. See Sec. Sec. 54.4980H-1(a)(24) (definition of hours
of service), 54.4980H-2 (determination of applicable large employer
status), and 54.4980H-3 (determination of full-time employee status).

III. Premium Tax Credit (Section 36B)

Section 6056 reporting is also essential to the administration of
the premium tax credit under section 36B, which was added by the
Affordable Care Act. The advanceable and refundable section 36B premium
tax credit helps individuals and families afford health insurance
coverage purchased through an Exchange. An employee is not eligible for
the premium tax credit to subsidize the cost of Exchange coverage if
the employee is offered affordable minimum essential coverage under an
employer-sponsored plan that provides minimum value, or if the employee
enrolls in an employer-sponsored plan that provides minimum essential
coverage. For purposes of the premium tax credit, an employer-sponsored
plan is affordable if the employee's required contribution for the
lowest-cost self-only minimum value coverage offered does not exceed
9.5 percent of the employee's household income. Since an employer
ordinarily will not know an employee's household income, the final
section 4980H regulations provide various safe harbors for determining
affordability for purposes of section 4980H based on information
available to the employer. Those safe harbors do not affect
affordability for purposes of the premium tax credit, so that an
employer will be treated as having offered affordable health care
coverage for purposes of section 4980H if it meets one of the safe
harbors under the section 4980H regulations even if the coverage is not
treated as affordable to the individual employee for purposes of the
premium tax credit. An employee who is offered affordable minimum
essential coverage providing minimum value under an employer-sponsored
plan but instead purchases coverage on an Exchange will not be eligible
for a premium tax credit (and if such an employee's spouse or
dependents are also offered coverage under the employer-sponsored plan
but instead purchase coverage on an Exchange, they also will not be
eligible for a premium tax credit on the Exchange). Individuals and the
IRS will use the information reported under section 6056 on the cost of
the lowest-cost employer-sponsored self-only minimum essential coverage
that provides minimum value for purposes of verifying an individual's
eligibility for the premium tax credit.
Individuals, including employees, may be eligible for advance
payments of the premium tax credit (APTC), which are administered by
HHS and paid to issuers on behalf of individuals who enrolled in
Exchange coverage. Individuals who do not request APTC also may be
eligible to claim the premium tax credit on their Federal income tax
returns if they purchased coverage on an Exchange and were not offered
employer-sponsored minimum essential coverage that was affordable and
provided minimum value. The IRS and employees will use the information
provided on the section 6056 return and employee statement to determine
whether an employee is eligible for the premium tax credit. Note that
in connection with providing APTC, the Exchanges will employ a
verification process.

IV. Individual Shared Responsibility (Section 5000A)

The Affordable Care Act also added section 5000A to the Code.
Section 5000A provides that every individual must have minimum
essential coverage, qualify for an exemption, or include an additional
payment with their Federal income tax return. Taxpayers who can claim a
child or another individual as a dependent for federal income tax
purposes are responsible for making the payment if the dependent does
not have minimum essential coverage or an exemption.
Section 5000A(f)(1)(B) provides that minimum essential coverage
includes coverage under an eligible employer-sponsored plan. Under
section 5000A(f)(2) and Sec. 1.5000A-2(c)(1), an eligible employer-
sponsored plan is, with respect to an employee, (1) group health
insurance coverage offered by, or on behalf of, an employer to an
employee that is either (a) a governmental plan within the meaning of
section 2791(d)(8) of the Public Health Service Act (42 U.S.C. 300gg-
91(d)(8)), (b) any other plan or coverage in the small or large group
market within a State, or (c) a grandfathered health plan, as defined
in section 5000A(f)(1)(D), offered in a group market, or (2) a self-
insured group health plan under which coverage is offered by, or on
behalf of, an employer to an employee. Section 5000A(f)(3) and
regulations under that section provide that minimum essential coverage
does not include coverage consisting solely of excepted benefits
described in section 2791(c)(1), (c)(2), (c)(3), or (c)(4) of the
Public Health Service Act or regulations issued under these provisions.
See Sec. 1.5000A-2(g).

V. Information Reporting by Providers of Coverage (Issuers, Self-
Insuring Employers, and Sponsors of Certain Government-Sponsored
Programs) (Section 6055)

The Affordable Care Act also added section 6055 to the Code,
providing for information reporting for the administration of section
5000A. The section 6055 reporting requirements are effective for years
beginning after December 31, 2013; however, as noted above in section I
of this preamble, Notice 2013-45 provides transition relief for 2014
from the section 6055 reporting requirements so that the reporting is
not required with respect to 2014. Section 6055 requires information
reporting by any person that provides minimum essential coverage to an

[[Page 13234]]

individual during a calendar year, including coverage provided under an
eligible employer-sponsored plan, and the furnishing to taxpayers of a
related statement covering each individual listed on the section 6055
return. The information reported under section 6055 may be used by
individuals and the IRS to verify the months (if any) in which they
were covered by minimum essential coverage. Treasury and the IRS are
issuing final regulations under section 6055 (TD 9660) concurrently
with these final regulations.

Summary of Comments and Explanation of Provisions

In general, in addition to the changes described elsewhere in this
preamble, the final regulations adopt non-substantive changes that were
made to certain sections of the proposed regulations in order to
increase consistency with the final regulations under section 6055
issued concurrently with these final regulations. In addition, the
proposed regulations provided that reporting entities must file section
6056 information returns electronically if they file 250 returns of any
type. The final regulations provide that reporting entities must file
section 6056 returns electronically if they file 250 returns under
section 6056. These changes are discussed later in this preamble.

VI. Introduction

This Explanation of Provisions (Sections VI through XIII of this
preamble) addresses the comments that were received and describes the
provisions of these final regulations implementing the section 6056
reporting provisions discussed in the Background portion of the
preamble. Specifically, this section includes the following:

Section VII Key Terms
Section VIII ALE Member Subject to Section 6056 Requirements With
Respect to Full-Time Employees
Section IX General Method--Content, Manner, and Timing of
Information Required To Be Reported to the IRS and Furnished to
Full-Time Employees
Section X Alternative Methods for Section 6056 Information Reporting
for Eligible ALE Members
Section XI Other Possible Alternative Methods Not Adopted in the
Final Regulations
Section XII Person Responsible for Section 6056 Reporting
Section XIII Applicability of Information Return Requirements and
Penalty Relief for 2015

VII. Key Terms

These regulations under section 6056 use a number of terms that are
defined in other Code provisions or regulations. For example, section
6056(f) provides that any term used in section 6056 that is also used
in section 4980H shall have the same meaning given to the term by
section 4980H. The final regulations provide for the following defined
terms:
A. Applicable Large Employer has the same meaning as in section
4980H(c)(2) and Sec. 54.4980H-1(a)(4).
B. Applicable Large Employer Member has the same meaning as in
Sec. 54.4980H-1(a)(5). All persons treated as a single employer under
section 414(b), (c), (m), or (o) are treated as one employer for
purposes of determining applicable large employer status.\3\ Under
these regulations, the section 6056 filing and furnishing requirements
are applied separately to each person comprising the applicable large
employer consistent with the approach taken in the section 4980H
regulations with respect to the determination of any assessable payment
under section 4980H. The person or persons that comprise the applicable
large employer are referred to as applicable large employer members
(and referred to elsewhere in this preamble as ALE members).
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\3\ Until further guidance is issued, government entities,
churches, and a convention or association of churches may apply a
reasonable, good faith interpretation of section 414(b), (c), (m),
and (o) in determining whether a person or group of persons is an
applicable large employer and whether a particular entity is an
applicable large employer member. See section V.D. of the preamble
to the final section 4980H regulations (TD 9655).
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C. Dependent has the same meaning as in Sec. 54.4980H-1(a)(12).
D. Eligible Employer-Sponsored Plan has the same meaning as in
section 5000A(f)(2) and Sec. 1.5000A-2(c)(1).
E. Full-time Employee has the same meaning as in section
4980H(c)(4) and Sec. 54.4980H-1(a)(21), but only as applied to the
determination and calculation of liability under section 4980H(a) and
(b) with respect to any individual employee (and therefore not
including full-time equivalent employees as defined in Sec. 54.4980H-
1(a)(22)). The final regulations under section 4980H define an employee
for purposes of section 4980H as an individual who is an employee under
the common law standard, and as not including a leased employee (as
defined in section 414(n)(2)), a sole proprietor, a partner in a
partnership, a 2-percent S corporation shareholder, or a worker
described in section 3508.
F. Governmental Unit and Agency or Instrumentality of a
Governmental Unit. The term governmental unit is defined as the
government of the United States, any State or political subdivision of
a State, or any Indian tribal government (as defined in section
7701(a)(40)) or subdivision of an Indian tribal government (as defined
in section 7871(d)). The regulations do not define the term agency or
instrumentality of a governmental unit for purposes of section 6056,
but reserve on the issue. Until future guidance is issued that defines
the term for purposes of section 6056, an entity may determine whether
it is an agency or instrumentality of a governmental unit based on a
reasonable and good faith interpretation of existing rules relating to
agency or instrumentality determinations for other federal tax
purposes.
G. Minimum Essential Coverage has the same meaning as in section
5000A(f) and the regulations issued under that section.
H. Minimum Value has the same meaning as in section 36B and any
applicable guidance. See proposed Sec. 1.36B-6.
I. Person has the same meaning as provided in section 7701(a)(1)
and the related regulations.

VIII. ALE Member Subject to Section 6056 Requirements With Respect to
Full-Time Employees

As indicated earlier in section VII.B of this preamble, an ALE
member is any person that is an applicable large employer or a member
of an aggregated group (determined under section 414(b), 414(c), 414(m)
or 414(o)) that is determined to be an applicable large employer. Under
these regulations, the section 6056 filing and statement furnishing
requirements apply on a member-by-member basis to each ALE member, even
though the determination of whether an entity is an applicable large
employer is made at the aggregated group level.\4\ For example, if an
applicable large employer is comprised of a parent corporation and 10
wholly-owned subsidiary corporations, there are 11 ALE members (the
parent corporation and each of the 10 subsidiary corporations). Under
these regulations, each ALE member with full-time employees is the
entity responsible for filing and furnishing statements with respect to
its full-time employees under section 6056. This is consistent with the
manner in which any potential assessable payments under section

[[Page 13235]]

4980H will be calculated and administered.
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\4\ Government entities, churches, and a convention or
association of churches should, for purposes of section 6056
reporting, use an interpretation of section 414(b), (c), (m), and
(o) that is consistent with that used for purposes of section 4980H
in determining whether a person or group of persons is an applicable
large employer and whether a particular entity is an applicable
large employer member. See Sec. 54.4980H-2(b)(4).
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Some commenters requested that the applicable large employer be
permitted to report and furnish statements on a consolidated basis, or
that the sponsor of a health plan offering coverage to employees of
more than one ALE member plan be permitted to report and furnish
statements on behalf of all the employers of employees eligible to
participate in the plan. While these regulations do not adopt these
suggestions, Treasury and the IRS understand that ALE members may
benefit from the assistance of a third party in preparing these
returns, for example a third-party plan administrator or a related ALE
member tasked with preparing the returns for all the members of that
applicable large employer. For a discussion of how these third parties
may help an ALE member fulfill its reporting obligations, see section
XII.C of this preamble.
The section 6056 return will form the basis for the process leading
to any assessment of the ALE member under section 4980H, which is
determined separately with respect to each ALE member. Any assessable
payment would be calculated based on the relevant information related
to the number of full-time employees of each ALE member and the nature
of the offer of coverage, if any, made to each of that ALE member's
full-time employees for each calendar month. Accordingly, the ALE
member is the appropriate taxpayer to file the return relating to its
potential tax liability.
Whether an employee is a full-time employee is determined under
section 4980H(c)(4) and any applicable guidance. See Sec. Sec.
54.4980H-1(a)(21) and 54.4980H-3. This includes any full-time employees
who may perform services for multiple ALE members within the applicable
large employer.\5\ Under these regulations, only ALE members with full-
time employees are subject to the filing and statement furnishing
requirements of section 6056 (and only with respect to their full-time
employees). Accordingly, ALE members without any full-time employees
are not subject to the section 6056 reporting requirements.
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\5\ For example, if a full-time employee performs services for
two ALE members within an applicable large employer during a
calendar month, the employee is treated as the employee of the ALE
member for which the employee was credited the majority of the hours
of service for that month. See Sec. 54.4980H-5(d). Because an ALE
member must report for any employee that is its full-time employee
for one or more months of the year, all ALE members that are an
employer of an employee that is its full-time employee for one or
more months of the calendar year must file and furnish a section
6056 return with respect to services performed by the employee
reflecting the months in which the employee was a full-time employee
of that ALE member.
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Generally, the ALE member providing the section 6056 reporting is
the common law employer. An ALE member that is a qualified subchapter S
subsidiary under section 1361(b)(3)(B) or an entity described in Sec.
301.7701-2(c)(2)(i) (collectively, a disregarded entity) is treated as
an entity separate from its owner for purposes of section 4980H and
section 6056 under Sec. Sec. 1.1361-4(a)(8)(i)(E) and 301.7701-
2(c)(2)(v)(A)(5) for periods after December 31, 2014. See TD 9655.
Therefore, the reporting requirements under section 6056 apply to an
ALE member that is a disregarded entity, and not to its owner.\6\
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\6\ Section 301.7701-2(c)(2)(v)(B) provides that an entity that
is disregarded as an entity separate from its owner for any purpose
under Sec. 301.7701-2 is treated as a corporation with respect to
the reporting requirements under section 6056.
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IX. General Method--Content, Manner, and Timing of Information
Required To Be Reported to the IRS and Furnished to Full-Time Employees

This section describes the general method for reporting to the IRS
and furnishing statements to employees pursuant to section 6056 that is
set forth in these regulations. This general method is available for
all employers and with respect to reporting for all full-time
employees. These regulations also provide alternative reporting
methods, which in some cases may be available only with respect to a
certain group or groups of employees. In those cases, with respect to
those employees for whom an alternative reporting method is not
available, the employer must use the general method. In any case, the
alternative reporting methods are optional so that an employer may
choose to report for any or all of its full-time employees using the
general method even if an alternative reporting method is available.
For a further description of the alternative reporting methods, see
section X of this preamble.

A. Information Reporting to the IRS

In accordance with section 6056, the regulations provide for each
ALE member to file a section 6056 return with respect to its full-time
employees. Similar to the separate Form W-2, Wage and Tax Statement,
filed by an employer for each employee and the Form W-3, Transmittal of
Wage and Tax Statements, filed as a transmittal form for the Forms W-2,
these regulations provide that a separate return is required for each
full-time employee, accompanied by a single transmittal form for all of
the returns filed for a given calendar year.
Many commenters recommended that the regulations allow combined
information reporting under sections 6055 and 6056 for applicable large
employers that sponsor self-insured plans and must report under both
sections. The proposed regulations did not provide for combined
reporting. In an effort to minimize taxpayer burden and streamline the
reporting process as authorized by section 6056(d), while minimizing
the need for employers and the IRS to build multiple systems to
accommodate multiple forms, these final regulations adopt this
suggestion by providing for use by all ALE members of a single combined
form for reporting the information required under both section 6055 and
section 6056.
Accordingly, as a general method, these regulations provide that
the section 6056 return may be made by filing Form 1094-C (a
transmittal) and Form 1095-C (an employee statement), or other forms
the IRS designates. Alternatively, the section 6056 return may be made
by filing a substitute form. Under these regulations, a substitute form
must include all of the information required to be reported on Forms
1094-C and 1095-C or other forms the IRS designates and comply with
applicable revenue procedures or other published guidance relating to
substitute returns. See Sec. Sec. 301.6056-1(d)(2) and 601.601(d)(2).
For a discussion of substitute statements for employees, see section
IX.D of this preamble.
Form 1095-C will be used by ALE members to satisfy the section 6055
and 6056 reporting requirements, as applicable. An ALE member that
sponsors a self-insured plan will report on Form 1095-C, completing
both sections to report the information required under both sections
6055 and 6056. An ALE member that provides insured coverage will also
report on Form 1095-C, but will complete only the section of Form 1095-
C that reports the information required under section 6056. Section
6055 reporting entities that are not ALE members or are not reporting
in their capacity as employers, such as health insurance issuers, self-
insured multiemployer plans, and providers of government-sponsored
coverage, will report under section 6055 on Form 1095-B. In accordance
with usual procedures, these forms will be made available in draft form
in the near future.
In response to comments, Treasury and the IRS also considered
suggestions to use, for section 6055 and 6056 reporting purposes,
information that

[[Page 13236]]

employers communicate to employees about employer-sponsored coverage
prior to employees' potential enrollment in Exchange coverage. These
comments observed that, under the Affordable Care Act, employers
provide pre-enrollment information to employees by various means,
including information in the Notice of Coverage Options provided to
employees pursuant to the requirements under section 18B of the Fair
Labor Standards Act \7\ and the Employer Coverage Tool developed by the
Department of Health and Human Services (HHS) that supports the
application for enrollment in a qualified health plan and insurance
affordability programs.\8\
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\7\ On May 8, 2013, the Department of Labor issued Technical
Release 2013-02 providing temporary guidance under Fair Labor
Standards Act section 18B, as well as model notices. See Technical
Release 2013-02, model notice for employers who offer a health plan
to some or all employees, and model notice for employers who do not
offer a health plan, available at http://www.dol.gov/ebsa/healthreform/regulations/coverageoptionsnotice.html Guidance on the
Notice to Employees of Coverage.
\8\ Available at https://www.healthcare.gov/downloads/ECT_Application_508_130615.pdf.
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Treasury and the IRS have considered and coordinated with the
Departments of HHS and Labor regarding the various provisions with a
view to identifying ways to make the entire process as effective and
efficient as possible for all parties. That said, the various reports
are designed for different purposes, and pre-enrollment reporting
regarding anticipated employer coverage in an upcoming coverage year is
unlikely to be helpful to individual taxpayers in accurately completing
their tax returns more than a year later (and after the coverage year
has already ended). Among other issues, the pre-enrollment information
may not be readily available to individuals at the time they are filing
their tax returns, could be confused with other information (such as
the pre-enrollment information provided to the individual pertaining to
the coverage year following the calendar year to which the tax return
relates), may not include certain information, like premiums, necessary
for tax administration, and is in a format that does not facilitate
easy transfer to the appropriate location on the Federal income tax
return. In addition, the pre-enrollment information is generally not
specific to the particular employee's experience at the employer. For
these reasons, these regulations do not adopt these suggestions.

B. Information Required To Be Reported and Furnished

Except as otherwise provided as part of an alternative reporting
method, these final regulations provide that each ALE member reports on
the section 6056 information return the same information set forth in
the proposed regulations. Specifically, the final regulations require
the following information: (1) The name, address, and employer
identification number of the ALE member, and the calendar year for
which the information is reported; (2) the name and telephone number of
the ALE member's contact person; (3) a certification as to whether the
ALE member offered to its full-time employees (and their dependents)
the opportunity to enroll in minimum essential coverage under an
eligible employer-sponsored plan, by calendar month; (4) the number of
full-time employees for each calendar month during the calendar year,
by calendar month; (5) for each full-time employee, the months during
the calendar year for which minimum essential coverage under the plan
was available; (6) for each full-time employee, the employee's share of
the lowest cost monthly premium for self-only coverage providing
minimum value offered to that full-time employee under an eligible
employer-sponsored plan, by calendar month; and (7) the name, address,
and taxpayer identification number of each full-time employee during
the calendar year and the months, if any, during which the employee was
covered under an eligible employer-sponsored plan. In addition, these
regulations provide, as with other information reporting, that the
section 6056 information return may request such other information as
the Secretary may prescribe or as may be required by forms or
instructions.
Some commenters requested that ALE members be permitted to provide
the name and telephone number of a third party in the part of the
section 6056 return requesting the name and telephone number of the ALE
member's contact person. An ALE member may provide the name and
telephone number of any contact person, whether an employee of the ALE
member or an agent of the ALE member, acting on behalf of the ALE
member for purposes of section 6056 reporting.
Some commenters requested that the final regulations not require
the reporting of social security numbers for an employee's spouse or
dependents. Neither the proposed regulations nor these final
regulations require reporting of such information for purposes of
section 6056.\9\ These final regulations require only that an ALE
member report the social security number of the full-time employee.
---------------------------------------------------------------------------

\9\ However, section 6055 requires reporting of taxpayer
identification numbers for a responsible individual's spouse and/or
dependents enrolled in minimum essential coverage.
---------------------------------------------------------------------------

Some commenters requested that the final regulations permit
employers to report dates of coverage rather than months of coverage.
Other commenters requested that ALE members be permitted to provide the
information on a payroll period basis, rather than a monthly basis, to
address situations in which coverage is provided based on payroll
periods. Other commenters requested that the ALE member be permitted to
report by multi-month periods, rather than on a monthly basis, such as
stating that coverage was offered January through October of a
particular year. As provided in the final regulations under section
4980H and adopted by cross-reference in these regulations, the
individuals who are full-time employees of an ALE member for a
particular calendar month generally may be identified on a weekly basis
or a payroll period basis that approximates the calendar month. See
Sec. Sec. 54.4980H-3(c)(3) and 54.4980H-3(d)(1)(ii). However, both
section 4980H and the premium tax credit are administered based on the
calendar month, so that whether the individual identified as a full-
time employee was offered coverage for the entire calendar month is
relevant to the administration of both Code provisions. Accordingly,
ALE members are required to report on the basis of the twelve calendar
months with respect to the coverage offered (or not offered) to each
full-time employee.
As part of the effort to minimize the cost and administrative steps
associated with the reporting requirements, the final regulations omit
information that is not relevant to individual taxpayers or the IRS for
purposes of administering the premium tax credit and section 4980H or
that is already provided at the same time through other means.
Specifically, consistent with the proposed regulations, these final
regulations do not require the reporting of the following four data
elements (and a more detailed description of the data elements that
will be included is provided later in this section of the preamble):
First, the final regulations do not require the reporting of the
length of any permissible waiting periods under section 4980H,\10\
because the length of

[[Page 13237]]

a waiting period is not relevant for administration of the premium tax
credit or section 4980H or for an individual in preparing his or her
tax return. However, Treasury and the IRS anticipate that information
will be requested, using an indicator code, regarding whether coverage
was not offered to an employee during certain months because of a
permissible waiting period under section 4980H, since this information
is relevant to the administration of section 4980H.
---------------------------------------------------------------------------

\10\ References throughout this preamble to permissible waiting
periods under section 4980H refer to any periods that are included
in the term limited non-assessment period, as defined in Sec.
54.4980H-1(a)(26).
---------------------------------------------------------------------------

Second, these regulations do not require reporting of the
employer's share of the total allowed costs of benefits provided under
the plan because this information also is not relevant to the
administration of the premium tax credit and section 4980H. In
contrast, whether the employer-sponsored plan provides minimum value
coverage is relevant information; accordingly, Treasury and the IRS
anticipate that information will be requested, using an indicator code.
Some commenters requested that information on the employer contribution
continue to be required because it would be informative to the
employee. Given that this information is not relevant to tax
administration, and generally may be discerned by the employee from the
information reported at the same time on the Form W-2, Box 12 using
Code DD pursuant to section 6051(a)(14) (reporting of the total value
of employer-provided health benefits provided to the employee), these
regulations do not adopt this suggestion.
Third, these regulations do not require the reporting of the
monthly premium for the lowest-cost option in each of the enrollment
categories (such as self-only coverage or family coverage) under the
plan. Rather, because only the lowest-cost option of self-only coverage
providing minimum value offered under any of the enrollment categories
for which the employee is eligible is relevant to the determination of
whether coverage is affordable (and thus to the administration of the
premium tax credit and section 4980H), that is the only cost
information requested.
Fourth, the regulations do not require the reporting of the months,
if any, during which any of the employee's dependents were covered
under the plan. Instead, the regulations require reporting only
regarding whether the employee was covered under a plan. Information
relating to the months, if any, during which any of the employee's
dependents were covered under the plan will be reported as part of the
section 6055 information return associated with that employee's
coverage, whether on the combined Form 1095-C return submitted by an
ALE member with a self-insured plan or otherwise on the Form 1095-B
return submitted by the insurance company or other person providing the
minimum essential coverage.
Some commenters requested that information related to whether the
employee was covered under a plan not be required to be reported as
part of the section 6056 reporting because that information will be
reported on the section 6055 return. Although this information is
required to be reported under section 6055 and section 6056, this
suggestion is not adopted in the final regulations because the
employee's coverage under the eligible employer-sponsored plan means
that the employee is not eligible for the premium tax credit. However,
under the final regulations, ALE members with self-insured group health
plans will now use a combined Form 1095-C to satisfy the section 6055
and section 6056 reporting requirements and will therefore only be
required to report on a single form information regarding whether an
employee was covered. ALE members that provide insured coverage will
report information regarding whether an employee was covered once on
the section 6056 section of the combined Form 1095-C and will leave the
section of the form pertaining to section 6055 information blank.
Under the regulations, each ALE member must file and furnish the
section 6056 return and employee statement using its EIN. Any ALE
member that does not have an EIN may easily apply for one online, or by
telephone, fax, or mail. See Publication 1635, Employer Identification
Number, for further information at www.irs.gov.
To assist in administering section 4980H and the premium tax
credit, the IRS will need certain information not specifically set
forth under section 6056 but authorized under section 6056(b)(2)(F).
Under the general method of section 6056 reporting, the following
information will be reported through the use of indicator codes for
some information, as part of the section 6056 return (as well as the
number of individual employee statements being submitted):
(1) Information as to whether the coverage offered to full-time
employees and their dependents under an employer-sponsored plan
provides minimum value and whether the employee had the opportunity to
enroll his or her spouse in the coverage;
(2) the total number of employees, by calendar month;
(3) whether an employee's effective date of coverage was affected
by a permissible waiting period under section 4980H, by calendar month;
(4) whether the ALE member had no employees or otherwise credited
any hours of service during any particular month, by calendar month;
(5) whether the ALE member is a person that is a member of an
aggregated group, determined under section 414(b), 414(c), 414(m), or
414(o), and, if applicable, the name and EIN of each employer member of
the aggregated group constituting the applicable large employer on any
day of the calendar year for which the information is reported;
(6) if an appropriately designated person is reporting on behalf of
an ALE member that is a governmental unit or any agency or
instrumentality thereof for purposes of section 6056, the name,
address, and identification number of the appropriately designated
person;
(7) if an ALE member is a contributing employer to a multiemployer
plan, whether, with respect to a full-time employee, the employer is
not subject to an assessable payment under section 4980H due to the
employer's contributions to the multiemployer plan; and
(8) if a third party is reporting for an ALE member with respect to
the ALE member's full-time employees, the name, address, and
identification number of the third party (in addition to the name,
address, and EIN of the ALE member already required under the final
regulations).
Some commenters requested that further explanation be provided
regarding the meaning of the provision included in the proposed
regulations asking whether an ALE member was conducting business. To
clarify the intent, this provision is changed to require an ALE member,
using an indicator code, to report any months during which no employees
were providing services or otherwise being credited with hours of
service for the ALE member.
Some commenters requested that employers not be required to report
whether they expect to be an ALE member the following year. This
comment is adopted in the final regulations.
Some commenters requested that employers be required to report
information in addition to what was described in the proposed
regulations. Commenters requested that employers be required to report
information relating to the look-back measurement

[[Page 13238]]

method for determining full-time employee status set forth in Sec.
54.4980H-3(d). Specifically, commenters requested that employers be
required to report on each variable hour employee who may be subject to
the look-back measurement method. For variable hour employees, as
defined in Sec. 54.4980H-1(a)(49), commenters requested that employers
be required to report the administrative and stability period start and
end dates and length, as well as the months in which coverage was
offered. Commenters also requested that the cost of coverage available
to spouses and dependents be reported. Although Treasury and the IRS
agree that this information may be helpful to employees and their
spouses and dependents in certain circumstances, reporting such
information on the section 6056 return is not necessary for the
administration of the premium tax credit or section 4980H and is not
directly relevant to the employee in determining whether the employee
is eligible for a premium tax credit and is accurately claiming the
credit on the employee's individual tax return. Accordingly, this
suggestion is not incorporated in the final regulations.
Other commenters requested that the section 6056 return provide a
means to indicate whether an employee is a tribal member who is exempt
from the individual shared responsibility provision under section
5000A(e). Because an individual's exempt status for purposes of section
5000A is not relevant to the administration of the premium tax credit
or section 4980H, this suggestion is not incorporated in the final
regulations.

C. Use of Indicator Codes To Provide Information With Respect to a
Particular Full-Time Employee

In an effort to simplify and streamline the section 6056 reporting
process under the general section 6056 reporting rules, Treasury and
the IRS anticipate that certain information described above as applied
to a particular full-time employee will be reported to the IRS, and
furnished to the full-time employee, through the use of a code rather
than by providing specific or detailed information. Specifically, it is
contemplated that the following information will be reported with
respect to each full-time employee for each calendar month using a
code: \11\
---------------------------------------------------------------------------

\11\ Section XV of the preamble to the section 4980H final
regulations provides certain transition relief for 2015. Treasury
and the IRS anticipate that additional indicator codes will be
available on the section 6056 return to indicate that an employer is
using the transition relief.
---------------------------------------------------------------------------

(1) Minimum essential coverage meeting minimum value was offered
to:
a. the employee only;
b. the employee and the employee's dependents only;
c. the employee and the employee's spouse only; or
d. the employee, the employee's spouse and dependents;
(2) coverage was not offered to the employee and:
a. any failure to offer coverage will not result in a payment under
section 4980H(a) or (b), for example because the employee was in a
limited non-assessment period for certain employees, as defined in
Sec. 54.4980H-1(a)(26);
b. the employee was not a full-time employee;
c. the employee was not employed by the ALE member during that
month; or
d. no other code or exception applies;
(3) coverage was offered to the employee for the month although the
employee was not a full-time employee for that month;
(4) the employee was covered under the plan; and
(5) the ALE member met one of the affordability safe harbors under
Sec. 54.4980H-5(e)(2) with respect to the employee.
It is anticipated that if multiple codes apply with respect to a
full-time employee for a particular calendar month, the reporting
format will accommodate the necessary codes.

D. Section 6056 Statements to Full-time Employees

Under the general section 6056 reporting rules set forth in these
regulations, every ALE member required to file a section 6056 return
must furnish a section 6056 employee statement to each of its full-time
employees that includes the name, address and EIN of the ALE member and
the information required to be shown on the section 6056 return with
respect to the full-time employee. The section 6056 employee statement
is not required to include a copy of the transmittal form that
accompanies the return. As part of the alternative reporting methods,
in certain circumstances, other methods of furnishing information to an
employee may be sufficient. For a detailed description of these
alternative reporting methods, see section X of this preamble.
Some employers may wish to have the flexibility to use a substitute
type of statement to provide the necessary information to full-time
employees. These regulations provide that the section 6056 employee
statement may be made by furnishing a copy of the section 6056 return
on Form 1095-C (or another form the IRS designates) or a substitute
employee statement for that full-time employee. Under these
regulations, a substitute statement must include the information
required to be shown on the section 6056 return filed with the IRS with
respect to that employee and must comply with applicable revenue
procedures or other published guidance relating to substitute
statements. See Sec. 601.601(d)(2). These regulations provide that
section 6056 employee statements on Form 1095-C or another form the IRS
designates may identify the employee using an IRS truncated TIN rather
than the social security number or other identifying number of the
employee shown on the corresponding information return filed with the
IRS. See the proposed regulations on IRS Truncated Taxpayer
Identification Numbers (REG-148873-09 [78 FR 913]).

E. Time for Filing Section 6056 Returns and Furnishing Employee
Statements

1. In General
These regulations provide that section 6056 returns must be filed
with the IRS annually, no later than February 28 (March 31 if filed
electronically) of the year immediately following the calendar year to
which the return relates. This is the same filing schedule applicable
to other information returns with which employers are familiar, such as
Forms W-2 and 1099. Because Notice 2013-45 provides transition relief
for section 6056 reporting with respect to 2014, the first section 6056
returns required to be filed are for the 2015 calendar year and must be
filed no later than March 1, 2016 (February 28, 2016, being a Sunday),
or March 31, 2016, if filed electronically. In addition, the
regulations provide that the section 6056 employee statements be
furnished annually to full-time employees on or before January 31 of
the year immediately following the calendar year to which the employee
statements relate. This means that the first section 6056 employee
statements (meaning the statements for 2015) must be furnished no later
than February 1, 2016 (January 31, 2016, being a Sunday). However, see
section X.C of this preamble for a discussion of the 2015 section 6056
transition relief available for employers eligible for the transition
relief set forth in section XV.D.6 of the preamble to the final
regulations under section 4980H (2015 section 4980H transition relief
for employers with at least 50 and less than 100 full-time employees
(including full-time equivalent employees) that meet certain
conditions).

[[Page 13239]]

Some commenters asked for use of an alternate filing date for
employers whose health plan is not a calendar year plan. While Treasury
and the IRS understand that employers may collect information on a plan
year basis, employees will need to receive their section 6056 employee
statements early in the calendar year in order to have the requisite
information to correctly and completely file their income tax returns
covering the calendar year and reflecting any available premium tax
credit for that calendar year. For this reason, these regulations do
not adopt this suggestion.
The final regulations do not include rules regarding extensions of
the time to file section 6056 returns. This topic is addressed in the
final regulations under section 6055, which include amendments to the
regulations under section 6081 relating to general rules on extensions
of time to file to include returns under both sections 6055 and 6056.
The final section 6055 regulations cross-reference the amendments to
the regulations under section 6081; these regulations also include this
cross-reference.
2. Voluntary Reporting for Calendar Year 2014
Under Notice 2013-45 and the proposed regulations, in preparation
for the application of the section 4980H provisions beginning in 2015,
employers were encouraged to voluntarily comply for 2014 (that is, by
filing and furnishing section 6056 returns and statements in early
2015) with the information reporting provisions as described in the
proposed regulations, and to maintain or expand health coverage in
2014. At the time the notice and proposed regulations were issued,
Treasury and the IRS anticipated that at least as to the general method
of reporting, the final regulations would not differ significantly from
the proposed regulations. While the information required to be provided
to the IRS and furnished to employees has remained largely unchanged
under the general method of reporting, in response to comments on the
proposed regulations the format in which that information is provided
has changed significantly to streamline the process and reduce
administrative burden. Specifically, under the final regulations, as
suggested in comments, all ALE members will file a single combined
return providing the relevant section 6056 information and, as
applicable, also the relevant section 6055 information.
Given this change in the information reporting provisions in
response to commenters' feedback on the proposed regulations, employers
that wish to voluntarily comply with the information reporting
provisions with respect to 2014 should do so in accordance with these
final regulations (generally meaning providing both section 6056 and,
if applicable, section 6055 information on a single form). Treasury and
the IRS continue to anticipate that real-world testing of reporting
systems and plan designs, built in accordance with the terms of these
final regulations, through voluntary compliance for 2014 will
contribute to a smoother transition to full implementation for 2015.

F. Manner of Filing of Section 6056 Information Returns and Furnishing
of Section 6056 Employee Statements

Treasury and the IRS understand that electronic filing is often
easier and more efficient for taxpayers, and several commenters
requested that employers be permitted to file section 6056 returns
electronically. Some commenters requested that the proposed regulations
be modified so that the section 6056 return would not be aggregated
with other returns for purposes of determining whether the returns are
required to be filed electronically. The final regulations adopt these
suggestions. Consistent with other tax information reporting
requirements, the final regulations require electronic filing of
section 6056 information returns (Forms 1094-C and 1095-C) except for
an ALE member filing fewer than 250 returns under section 6056 during
the calendar year, and provide that only section 6056 returns are
counted in applying the 250 return threshold for section 6056
reporting. The final regulations under section 6055, issued
contemporaneously with these final regulations, amend Sec. 301.6011-2
to add forms in the 1094 and 1095 series. Proposed Sec. 301.6011-9
will be removed in a separate document.
Each section 6056 return for a full-time employee is counted as a
separate return. ALE members filing fewer than 250 returns during the
calendar year may choose to make the section 6056 returns on the
prescribed paper form, but are permitted (and encouraged) to file
section 6056 returns electronically. This requirement for electronic
filing is the same as the current requirements for other information
returns.
In addition to electronic filing, Treasury and the IRS understand
that electronic methods are often a simpler and more efficient method
to supply employees with the required information, and several
commenters requested that employers be permitted to electronically
furnish section 6056 employee statements to full-time employees. In
response, the regulations permit electronic furnishing of section 6056
employee statements if notice, consent, and hardware and software
requirements modeled on existing rules are met. To provide rules for
electronic furnishing with which employers are already familiar, these
final regulations, consistent with the proposed regulations, adopt a
process substantially similar to the process currently in place for the
electronic furnishing of employee statements (that is, Forms W-2)
pursuant to section 6051 and applicable regulations.
Some commenters requested that ALE members be permitted simply to
post the information on a Web site accessible to the employee (similar
to the current process available to plan administrators of group health
plans for furnishing Summary of Benefits and Coverage (SBCs)),\12\ or
to provide the information to an employee only upon request. Other
commenters requested that the ALE member not be required to obtain
consent to furnish the information electronically. For many employees,
the information provided in the section 6056 employee statement will be
essential to the accurate preparation of their individual tax return
with respect to a claim for the premium tax credit. Because the
employee's eligibility for the premium tax credit will be based on
household income for that taxable year, which the employer will not
know, the employer will not be able to determine the identity of the
employees for which the section 6056 information is relevant. Moreover,
given the individualized nature of the information required to be
furnished to a full-time employee on a section 6056 employee statement
and its intended use in preparing the

[[Page 13240]]

employee's individual tax return, permitting an employer to furnish
such information electronically without first having obtained the
employee's consent to such electronic furnishing would be inconsistent
with the current procedures for other information returns. Unlike
section 6056 employee statements that contain individualized
information, SBCs are the same for a particular benefit package under
the plan. For these reasons, the regulations require that with respect
to each full-time employee to whom the information is required to be
furnished, the ALE member must obtain consent from the employee before
the section 6056 employee statement may be provided electronically.
---------------------------------------------------------------------------

\12\ The procedures for providing SBCs electronically via
internet posting are found at 26 CFR 54.9815-2715(a)(4), 29 CFR
2590.715-2715(a)(4), and 45 CFR 147.200(a)(4). For participants and
beneficiaries covered under the plan, the plan must meet the
requirements of the Department of Labor's regulations at 29 CFR
2520-104b-1. Notably, the internet posting option is for SBCs
provided by an issuer to a plan or by a plan to participants and
beneficiaries who are eligible but not enrolled in coverage, and
requires that the format of the posting be readily accessible, that
the SBC is provided in paper form free of charge upon request, and
that the issuer or plan provide timely notification by paper or
email that the SBC is available on the internet and the internet
address. See Q1 of FAQs about Affordable Care Act Implementation
(Part IX), available at http://www.dol.gov/ebsa/faqs/faq-aca9.html
and http://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs9.html, which allows SBCs to be provided
electronically to participants and beneficiaries in connection with
their online enrollment or online renewal of coverage under the
plan, and allows SBCs to be provided electronically to participants
and beneficiaries who request an SBC online.
---------------------------------------------------------------------------

With respect to the consent requirement, some ALE members requested
that an employee's consent to receive the Form W-2 electronically be
deemed a consent to also receive the employee statement under section
6056 electronically. Because an employee cannot provide an informed
consent to receive a statement electronically about which he or she
does not have information, and because the information furnished on the
section 6056 employee statement will be relevant in determining the
employee's eligibility for the premium tax credit, any consent given
must specifically identify the section 6056 return. Additionally, the
requirement for affirmative consent to receive section 6056 employee
statements electronically is consistent with the requirements for other
tax information returns (See Sec. Sec. 1.6050S-2; 1.6050S-4; 31.6051-
1(j); Rev. Proc. 2012-17, 2012-10 I.R.B. 453; 2014 General Instructions
for Forms 1097, 1099, 1098, 3921, 3922, 5498, and W-2G, page 12).
Accordingly, the final regulations are consistent with all other tax
information reporting regulations and do not adopt this suggestion.
Some commenters also requested confirmation that the section 6056
employee statement and the section 6055 employee statement (if the
section 6055 employee statement is provided by the ALE member) may be
provided in the same mailing, and in the same mailing as the Form W-2,
in cases in which two or more of those forms are provided by mailing to
the same employee. Because the final regulations provide for ALE
members to combine section 6055 and section 6056 reporting, ALE members
will be providing only a single employee statement (with the section
6056 information and, with respect to employers with a self-insured
group health plan, section 6055 information). Additionally, there is no
requirement that employers mail information returns separately, and the
regulations under sections 6051 do not prohibit furnishing in the same
mailing as the Form W-2. Accordingly, employers are permitted to mail
to an employee in the same mailing one or more of the required
information returns such as the combined section 6055 and section 6056
employee statement and the Form W-2.

X. Alternative Methods for Section 6056 Information Reporting for
Eligible ALE Members

In developing these regulations, Treasury and the IRS have sought
to develop alternative reporting methods that will minimize the cost
and administrative tasks for employers, consistent with the statutory
requirements to file an information return with the IRS and furnish an
employee statement to each full-time employee. Comments suggested that,
at least for some employers, the collection, assembling and processing
of the necessary data into an appropriate format for filing may not be
necessary if the employer offers sufficient coverage to make it
unlikely that the employer will be subject to an assessable payment
under section 4980H because its employees will generally be ineligible
for a premium tax credit. In response to these concerns and as part of
the development of the proposed regulations, Treasury and the IRS
formulated certain potential simplified reporting methods described in
section XI of the preamble to the proposed regulations and requested
comments on those methods and on other possible simplified approaches
that would minimize compliance costs while providing sufficient and
timely information to individual taxpayers and the IRS. After
considering all of the comments, Treasury and the IRS have formulated
the alternative reporting methods described in this section X of the
preamble as optional alternatives to the general reporting method.
The information provided to the IRS and the employee pursuant to
section 6056 is important for administering section 4980H and the
premium tax credit. However, in some circumstances, only some of the
information required under the general method is necessary. Treasury
and the IRS have identified specific groups of employees for whom
alternative reporting would provide sufficient information, and
alternative reporting approaches for these groups are outlined below.
In many situations, not every full-time employee of an employer fits
into the groups of employees for which an alternative reporting method
is available. In that case, the employer would continue to use the
general reporting method in the regulations for those full-time
employees for whom an alternative reporting method is not applicable.
Commenters noted that many employers, especially larger employers, may
choose not to use an alternative reporting method because an
insufficient number or an insufficient portion of their employees will
be eligible for the alternative reporting method so that it is not
advantageous to use. However, it is anticipated that many employers
will find use of an alternative reporting method preferable to the
general reporting method because a sufficient number of their employees
will fit into one or more of the alternative method categories
described below, and the more extensive reporting will be required only
for a sufficiently limited number of their employees.
Subsections A through C of this section X of this preamble describe
alternative methods of reporting under section 6056 that are permitted
under these final regulations. Each of these methods is optional for
the reporting employer, and, except as otherwise specified, does not
affect any reporting obligations under section 6055.

Subsection A Reporting Based on Certification of Qualifying Offers
Subsection B Option To Report Without Separate Identification of Full-
Time Employees If Certain Conditions Related to Offers of Coverage Are
Satisfied (98 Percent Offers)
Subsection C Reporting for Applicable Large Employers With Fewer Than
100 Full-Time Employees Eligible for Transition Relief Under Section
4980H
Subsection D Combinations of Alternative Reporting Methods

A. Reporting Based on Certification of Qualifying Offers

1. In General
Under the final regulations, an ALE member that satisfies specific
requirements is permitted to certify that it offered certain coverage
(a qualifying offer, as defined in this section X.A.1) to one or more
of its full-time employees and to report simplified section 6056 return
information with respect to those employees. Under this alternative
method, the ALE member also could provide a simplified employee
statement in lieu of a copy of the Form 1095-C to each full-time
employee who received a qualifying offer for all 12 months of the
calendar year. To be eligible to use this alternative method with
respect to full-time employees, the

[[Page 13241]]

ALE member must certify that for all months during the year in which
the employee was a full-time employee with respect to whom a section
4980H assessable payment could apply,\13\ the ALE member (1) offered
minimum essential coverage providing minimum value at an employee cost
for employee-only coverage not exceeding 9.5 percent of the mainland
single federal poverty line to one or more of its full-time employees,
and (2) offered minimum essential coverage to the employee's spouses
and dependents (a qualifying offer). For this purpose, the applicable
federal poverty line is the federal poverty line as defined in Sec.
54.4980H-1(a)(19), as calculated and applied to the 48 contiguous
states and the District of Columbia. If the employee cost of the
employee-only coverage does not exceed 9.5 percent of the mainland
single federal poverty line, then, regardless of the size of the
employee's household or other income or loss of any member of the
employee's household, either the employer's coverage will be affordable
for purposes of the premium tax credit or the employee's household
income will be less than 100 percent of the federal poverty line so the
employee will generally not be an applicable taxpayer for purposes of
eligibility for the premium tax credit.
---------------------------------------------------------------------------

\13\ If the employee was not offered coverage by the employer, a
section 4980H assessable payment might not apply, for example, for a
month in which an employee was not a full-time employee or was in a
permissible waiting period or initial measurement period under
section 4980H and the associated regulations.
---------------------------------------------------------------------------

For this purpose, an ALE member is treated as offering coverage to
an employee's spouse or dependents even if the employee does not have a
spouse or dependent, provided that the employee would have been able to
elect such coverage if the employee did have a spouse or dependent.
Note that an ALE member utilizing the transition relief provided in the
final section 4980H regulations pertaining to the offer of coverage to
dependents in 2015 will not be treated as offering coverage to an
employee's dependents for purposes of this alternative reporting
method. Treasury and the IRS anticipate that the certification of
eligibility based on the qualifying offer will be made as part of the
section 6056 transmittal submitted by the ALE member.
Treasury and the IRS anticipate that an ALE member eligible for and
using this certification method will provide further information
depending on the circumstances of the qualifying offer. With respect to
employees for whom the qualifying offer was made for all 12 months of
the calendar year, Treasury and the IRS anticipate that the ALE member
will be treated as reporting the required section 6056 information if
it completes Form 1095-C by providing particular information about the
employee, specifically the employee's name, social security number, and
address, and indicates, using an indicator code, that a qualifying
offer was made for all 12 months of the calendar year. In addition, the
ALE member will be treated as fulfilling the requirement under section
6056 to furnish information to those employees if it provides each of
them, by January 31 of the year following the year to which the offer
applies, either a copy of the Form 1095-C filed with the IRS, or a
general statement in a format prescribed by the IRS informing the
employee that the employee, the employee's spouse (if any), and the
employee's dependents (if any) received a qualifying offer for all 12
months of the calendar year for which the ALE member is reporting, and
therefore the employee and the employee's spouse (if any) and
dependents (if any) are generally ineligible for a premium tax credit
for all of those 12 months.
Some ALE members may provide a qualifying offer for all 12 months
of a calendar year to employees who are employed during the entire
year, but are not full-time employees for one or more months during the
calendar year. These ALE members may elect to report for these
employees using the certification method, and to furnish those
employees with a copy of Form 1095-C filed with the IRS or the
prescribed statement, or may use the general reporting method with
respect to those employees.
For each employee who received a qualifying offer for fewer than 12
months of the calendar year, for example because the full-time employee
was an employee for fewer than 12 months of the calendar year (for
example, because the employee was hired or terminated employment during
the calendar year or was in a permissible waiting period under section
4980H or look-back measurement period under section 4980H for one or
more months), the ALE member will file and furnish section 6056 returns
and statements under the general reporting method. The ALE member will
report information under the general reporting method for those months
for which a qualifying offer was not received, but may use an indicator
code to report for months for which the qualifying offer was received,
in accordance with forms and instructions. However, see section X.A.2
of this preamble for an alternative method applicable to 2015.
2. Alternative Method Based on Certification of Qualifying Offers for
2015
Solely for 2015, an ALE member may use an alternative method as
described below. To utilize this method the ALE member must (1) certify
that it has made a qualifying offer (as described in section X.A.1) to
at least 95 percent of its full-time employees and to their spouses and
dependents, and (2) in lieu of providing a Form 1095-C (or another form
the IRS designates) to its employees, satisfy its section 6056
furnishing requirement with respect to all of its full-time employees
by furnishing a statement to each of its full-time employees, by
January 31 of the year following the year to which the statement
relates. The statement will be in a format prescribed by the IRS and
the form of the statement may vary depending on whether the employee
received a qualifying offer from the employer for all, some, or none of
the months of the calendar year. As with section X.A.1, if the
qualifying offer applied to an employee to all 12 months of the
calendar year, it is anticipated that the statement will inform the
employee that the employee and the employee's spouse (if any) and
dependents (if any) will not be eligible to claim a premium tax credit
for any of the twelve calendar months. If the qualifying offer did not
apply to an employee for all 12 months of the calendar year, it is
anticipated the statement will inform the employee that the employee
and the employee's spouse (if any) and dependents (if any) may be
eligible to claim a premium tax credit for one or more of the 12
calendar months. The statement furnished to the employee must include a
contact name and contact telephone number for the ALE member from whom
further information may be obtained regarding the offer of coverage
that may affect the eligibility of the employee (or any spouse or
dependents of the employee) for the premium tax credit. The contact
name and telephone number can be a name and telephone number at the ALE
member or at another entity, such as a third party administrator, that
is authorized to provide information on behalf of the ALE member.
If the ALE member meets the two conditions described above, then
the employer will be treated as reporting the required section 6056
information to the IRS if it files with the IRS Form 1095-C, providing
the employee's name, social security number, and address, and
indicates, using an indicator code,

[[Page 13242]]

either that a qualifying offer was made for all 12 months or the
specific months of the calendar year or it was not, and provides the
statement to the employee. Further details will be provided in forms
and instructions.
This alternative reporting method for 2015 is optional and an ALE
member may use any other available reporting method.

B. Option To Report Without Separate Identification of Full-Time
Employees If Certain Conditions Related to Offers of Coverage Are
Satisfied (98 Percent Offers)

In section XI.B of the preamble to the proposed regulations,
Treasury and the IRS stated that they understand that some employers
offer minimum essential coverage to all or nearly all of their
employees, and are able to accurately represent that the only employees
not offered coverage are also not full-time employees. An employer
making an offer of minimum essential coverage to all of its full-time
employees would not owe an assessable payment under section 4980H(a),
which requires such an offer only to 95 percent of an employer's full-
time employees. See Sec. 54.4980H-4(a). However, while the employer
might know that it is offering such coverage to a group consisting of
almost all of its full-time employees and some of its other employees,
the employer might not have determined, in the case of each employee in
the offeree group, whether that employee is, in fact, a full-time
employee or not. This might arise, for example, if an employer offers
such coverage to all of its employees whose hours of service average at
least 20 hours per week. Section XI.B of the preamble to the proposed
regulations suggested a possible approach under which employers
offering coverage to 100 percent of their full-time employees would be
permitted to provide section 6056 reporting without determining whether
each employee offered coverage is a full-time employee and without
specifying the number of the employer's full-time employees.
Some commenters requested that eligibility to use this simplified
method be expanded to include an employer that can represent that it
offered coverage to substantially all of its full-time employees, and
requested that ``substantially all'' be defined for this purpose as at
least 95 percent of the full-time employees. These commenters suggested
that while some employers may be able to certify that they meet a 100
percent offer standard, other, especially larger, employers could not
be certain that an offer had been extended to every full-time employee
(including employees who were full-time employees for only certain
months of the year).
In response to these concerns, the final regulations relax the
condition on use of this simplified method, which allows the employer
to report without identifying or specifying the number of full-time
employees. To be eligible to use this method under the final
regulations, an employer must certify on its transmittal form that it
offered, to at least 98 percent of the employees on whom it reports in
its section 6056 return. For this purpose, coverage is treated as
affordable if the cost of employee-only coverage satisfies any
applicable affordability safe harbor under the section 4980H final
regulations. Setting the level at 98 percent will help ensure that the
employer has offered coverage to at least 95 percent of its full-time
employees and therefore is not subject to an assessable payment under
section 4980H(a), without knowing which reported employees are full-
time and which are part-time. While this alternative method allows
reporting without identifying or specifying the number of full-time
employees, it does not exempt the employer from any penalties that
might apply for failure to report with respect to any full-time
employee. Thus, reporting is still required under the normal rules for
all full-time employees, including those employees not offered
coverage. Accordingly, to the extent the employer fails to report with
respect to any full-time employee, the alternative method described
here will not affect the application of any generally applicable
penalties for failure to report (subject to any relief that might be
provided for under these regulations or other applicable guidance), and
the possible application of any such penalties will not preclude the
employer from using this simplified alternative method if the employer
satisfies the 98 percent condition.
As noted, the 98 percent offer is required to provide minimum value
and be affordable for purposes of section 4980H to avoid overburdening
employers and the IRS with the need to determine at a later date
whether a substantial number of employees who received a premium tax
credit were full-time employees. If an employer were permitted to
report under section 6056 on a large number of employees who were
offered coverage that either was not minimum value or not affordable,
the reporting could include large numbers of employees who may well be
eligible to claim a premium tax credit on the Exchange, without
identifying the employee's status as a full-time employee. In such a
case, both employers and the IRS would be overburdened with the process
of determining at a later date whether any employees who received a
premium tax credit were full-time employees with respect to whom the
employer is liable for an assessable payment under section 4980H(b).
The 98 percent standard helps avoid the need for excessive inquiries to
employers as to whether particular employees claiming a premium tax
credit were full-time employees.

Example: Employer has 1,000 employees who are expected to have
at least 27 hours of service per week in a calendar year. Employer
does not want to determine which of these employees are full-time
employees for purposes of section 4980H. Before the start of the
year, Employer makes an offer of minimum essential coverage
providing minimum value that is affordable for section 4980H
purposes to 990 of these 1,000 employees and reports under section
6056 for all 1,000 employees. Because Employer has satisfied the
conditions set forth in this section X.B, Employer is not required
to report either the total number of full-time employees for the
year or whether any particular employee was a full-time employee for
any calendar month during the year. If an employee included as part
of the return declines the offer of coverage and properly claims a
premium tax credit with respect to coverage provided through an
Exchange for one or more months during the calendar year, and the
employer is contacted by the IRS to determine whether the employer
did or did not owe an assessable payment under section 4980H(b), the
employer could determine at that point whether the employee was a
full-time employee for those months and supply that information to
the IRS.

C. Reporting for Applicable Large Employers With Fewer Than 100 Full-
Time Employees Eligible for Transition Relief Under Section 4980H

To assist applicable large employers that are in the smaller size
range, such as those with at least 50 full-time employees but fewer
than 100 full-time employees (including full-time equivalent
employees), in transitioning into compliance with section 4980H, the
final regulations provide transition relief from section 4980H for 2015
(plus, in the case of any non-calendar plan year that begins in 2015,
the portion of the 2015 plan year that falls in 2016). See section
XV.D.6 of the preamble to the final regulations under section 4980H for
a description of eligibility conditions for transition relief. (Note
section 4980H does not apply to employers with fewer than 50 full-time
employees (including full-time equivalent employees)). Employers

[[Page 13243]]

eligible for this section 4980H transition relief will still report
under section 6056 for 2015 in accordance with these final regulations.
As part of this transition relief, the ALE member must certify on
its section 6056 transmittal form for calendar year 2015 (that is, for
the section 6056 transmittal form that will be filed in 2016), as
prescribed by the form and instructions, that it meets the eligibility
requirements set forth in section XV.D.6(a)(1) through (3) of the
preamble to the final regulations under section 4980H. ALE members with
non-calendar year plans will certify with regard to their 2015 plan
year, including the months of their 2015 plan year that fall in
calendar year 2015, on the section 6056 transmittal form for 2015 (that
is for the section 6056 transmittal form that will be filed in 2016),
and will certify with regard to the months of their 2015 plan year that
fall in calendar year 2016 on the section 6056 transmittal form for
2016 (that is the section 6056 transmittal form that will be filed in
2017).

D. Combinations of Alternative Reporting Methods

The alternative reporting methods described above would apply to
particular groups of employees that in many cases would not be
identical. An employer is permitted to use different alternative
reporting methods for different employees at the employer's election,
as specified in forms and instructions.

XI. Other Possible Alternative Methods Not Adopted in the Final
Regulations

A. Mandatory Self-Insured No-Cost Minimum Value Coverage

In section IX.B of the preamble to the proposed regulations,
Treasury and the IRS stated they were considering whether employers
that provide mandatory minimum value coverage to an employee, an
employee's spouse, and an employee's dependents, with no employee
contribution, could file and furnish only the return required under
section 6055, include a code on the employee's Form W-2, and complete
only summary information on the section 6056 transmittal form.
This alternative method of reporting was not adopted because its
use would leave gaps in information needed for tax administration of
the premium tax credit, in particular because codes will not be used on
the Form W-2 to report months of mandatory minimum essential coverage
providing minimum value.
However, an ALE member that offers no-cost minimum essential
coverage providing minimum value coverage to all of its employees will
not be liable for a potential assessable payment under section 4980H
for any month in which an employee received such an offer. Thus, ALE
members will be treated as reporting the required section 6056
information if the employer files a Form 1095-C statement and provides
particular information about the employee, specifically the employee's
name, social security number, and address, and indicates using a code
if the coverage was offered for all 12 calendar months or for some
months of the year if, for example, the employee was not full-time in
certain months or was no longer employed. The employer must also
furnish each employee a copy of the Form 1095-C filed with the IRS. See
also section X.A.1., Reporting Based on Certification of Qualifying
Offers, of this preamble for a description of alternative reporting
available.
If a self-insured employer is an ALE member, the employer will
report the coverage information on the part of the Form 1095-C that is
required under section 6055. If the ALE member offers no cost mandatory
minimum essential coverage providing minimum value to all its
employees, it will use an indicator code on the Form 1094-C transmittal
to indicate that it offered this type of coverage. Self-insured
employers that are not ALE members will file the section 6055
information return under section 6055. Further details will be provided
in forms and instructions.

B. Eliminating Section 6056 Employee Statements in Favor of Form W-2
Reporting for Certain Groups of Employees Offered Coverage

The proposed regulations outlined a possible alternative reporting
method under which employers would be permitted in certain
circumstances to report offers of minimum value coverage on Form W-2,
in accordance with the form and instructions, instead of reporting the
offers to the IRS on a section 6056 return or furnishing a section 6056
employee statement to the employee. The proposed regulations specified
that this possible alternative method, if permitted, could be used only
for an employee employed by the employer for the entire calendar year
in which the offer, the individuals to whom the offer is made, and the
employee contribution for the lowest-cost option for self-only coverage
providing minimum value, all remained the same for all twelve months of
the calendar year.
Commenters indicated that such a proposed alternative reporting
method, if permitted, would need to be expanded to be available for
employees offered coverage under their employer's plan for less than a
full calendar year or for whom the offer of coverage changed during the
calendar year in order to be useful. Specifically, commenters suggested
that additional codes or other modifications to the Form W-2 should be
made so that the alternative reporting method could be extended to
employees who were not employed for the entire calendar year or not
employed as full-time employees during the entire calendar year, were
not offered coverage for the entire calendar year, or for whom the cost
of coverage changed during the calendar year.
Expanding the alternative reporting method as requested would leave
gaps in information that is needed for tax administration. For example,
if used for employees who were not employed during the full calendar
year, the reporting would not provide any information regarding the
particular calendar months for which coverage was offered (or not
offered). Even if the employer represented that the coverage was
offered during all periods of employment, the reporting could not be
reconciled, for example, with another Form W-2 received by the employee
from another employer using the same reporting method. That is because
while both employers would report the number of months coverage was
offered, that information would not be sufficient to determine whether
offers of coverage were overlapping (because the employee was employed
simultaneously at both employers). Additionally, for months for which
coverage was not offered, information as to whether the employee was
employed and also the reason coverage was not offered during certain
months of the calendar year would not be captured (for example, the
employee was in a permissible waiting period under section 4980H or
employed but not as a full-time employee).
The specific reason coverage was not offered is relevant to the
administration of section 4980H because the failure to offer coverage
for certain reasons does not result in an assessable payment under
section 4980H for a calendar month, even if the full-time employee
receives a premium tax credit for that month. More codes and other data
to be reported on the Form W-2 would be needed to administer section
4980H and the premium tax credit.
Commenters noted that, unless expanded, this proposed alternative
reporting method would be of little use to most large employers.

[[Page 13244]]

Other commenters suggested that the increase in complexity and, in
some cases, modifications to the Form W-2, should not be made because
the Form W-2 is such an established and integral part of the payroll
and tax system. These commenters noted that revising Form W-2 would
result in additional administrative burden and substantial added cost
to employers given the need to modify the payroll and online systems
and could result in delayed furnishing of Forms W-2 to employees or
require corrected Forms W-2 to account for new information related to
offers of coverage. Commenters further noted that revised Forms W-2
could create confusion among employees, particularly since the addition
of information related to offers of coverage would likely result in an
increase in the number of pages of the Form W-2, requiring time for
employees to understand the changes, and possibly resulting in
disruptions in the preparation of individual tax returns. Treasury and
the IRS agree with the commenters that the suggested expansions of this
alternative reporting method are in some cases not feasible, and in
other cases do not provide sufficient administrative simplification to
warrant the proposed increase in the complexity of the data reported on
the Form W-2. Given that it is not feasible to expand this proposed
alternative method, that commenters indicated the method is not
workable as proposed because it does not reduce cost or burden for
employers, and that other simplified reporting methods are available,
including the combination of section 6055 and section 6056 reporting
for employers, the final regulations do not adopt this alternative
reporting method.

C. Voluntarily Reporting Section 6056 Elements During or Prior to the
Year of Coverage

Some commenters have expressed an interest in voluntarily reporting
information about the coverage they offer their employees prior to the
end of a coverage year, for example at their open enrollment or before
the open enrollment at the Exchanges, on the theory that earlier
section 6056 reporting to the IRS could lead to greater efficiency in
the employer verification system employed by Exchanges to determine
eligibility for premium tax credits.
A proposal of this kind would need to address a number of issues.
The regulations under section 6103 do not authorize the IRS to share
taxpayer information in this manner. Even if this information sharing
were permitted, individuals would not receive the information for their
tax return preparation proximate to when they are completing their tax
returns. In addition, the information about the offer of coverage
before the year starts may change during the calendar year. Gaps in
complete and timely information increase the need for additional
follow-up communication among employers, employees, and the IRS.
Also, offering 2 sets of reporting alternatives with filing
occurring at different time periods would present challenges. Because
the reporting options would be voluntary, different reporting protocols
and regimes would need to be established and would need to accommodate
employer choices to change the method of reporting from year to year.
The multiple forms, procedures, and protocols would create complexity
and be difficult to administer. Accordingly, the final regulations do
not adopt this approach.

D. Reporting for Employees Potentially Ineligible for the Premium Tax
Credit

Some commenters have requested an exemption from reporting for
employers that have many employees who are relatively highly paid, on
the theory that those employees are unlikely to be eligible for a
premium tax credit. The assumption is that a relatively highly paid
employee's household income is likely to exceed 400 percent of the
federal poverty line and therefore the employee is unlikely to qualify
for a premium tax credit. The precondition of a section 4980H(b)
assessable payment--that the employee receive a premium tax credit--is
unlikely to be satisfied.
Treasury and the IRS have considered this request and have
concluded that such an exemption would not be useful for many employers
or administrable. Employers would not be in a position to know the
correlation between an employee's Form W-2 wages and household income
with sufficient accuracy to determine whether an employee may be
eligible for the premium tax credit. The only pertinent information the
employer retains is the employee's annual wages, yet the poverty level
from which the premium tax credit income ceiling is determined varies
considerably based on family size (which employers may not know). In
addition, employees for whom an employer may use an affordability safe
harbor based on wages for purposes of compliance with section 4980H
might still be eligible for a premium tax credit based on their
household income.
The preamble to the proposed regulations requested comments as to
whether there is a level of Form W-2 wages at which such a
determination might be made with sufficient confidence, and whether
that level of wages would be so high as not to be of practical use to
employers. Comments indicated that some employers would be interested
in exploring options that would permit them to not file a section 6056
return for an employee if, for example, the employee's wages were
$150,000, except if the employer has actual knowledge that the coverage
would be unaffordable to the employee's family. Other commenters
indicated that if additional follow-up would be required it would
create further economic and administrative burden, such that it would
be doubtful that the method would be utilized. Additionally, the vast
majority of employers would be required to report with respect to at
least some full-time employees with lower income than this threshold.
Accordingly, the final regulations do not adopt this suggestion.

XII. Person Responsible for Section 6056 Reporting

Under the regulations, in general, each ALE member must file a
section 6056 return with respect to its full-time employees for a
calendar year.

A. Special Rules for Governmental Units: Designation

In accordance with section 6056(e), these regulations provide that
in the case of any ALE member that is a governmental unit or any agency
or instrumentality thereof (together referred to in this preamble as a
governmental unit), that governmental unit may report under section
6056 on its own behalf or may appropriately designate another person or
persons to report on its behalf.\14\ For purposes of designation,
another person is appropriately designated for purposes of the filing
and furnishing requirements of section 6056 if that other person is
part of or related to the same governmental unit as the ALE member. For
example, a political subdivision of a state may designate the state,
another political subdivision of the state, or an agency or
instrumentality of the foregoing as the designated person for purposes
of section 6056 reporting. The person designated might be the
governmental unit that operates the relevant health plan or the
governmental unit that does other

[[Page 13245]]

information reporting on behalf of the designating governmental unit.
If the designation is accepted by the designee and is made before the
filing deadline, the designated governmental unit is the designated
entity responsible for section 6056 reporting.
---------------------------------------------------------------------------

\14\ Until further guidance is issued, government entities,
churches, and a convention or association of churches may apply a
reasonable, good faith interpretation of section 414(b), (c), (m),
and (o) in determining whether a person or group of persons is an
applicable large employer.
---------------------------------------------------------------------------

The person (or persons) appropriately designated for this purpose
would report under section 6056 on behalf of the ALE member.
Accordingly, the person (or persons) appropriately designated is (are)
the person(s) responsible for section 6056 reporting on behalf of the
ALE member and subject to the penalties for failure to comply with
information return requirements under sections 6721 and 6722. However,
the ALE member remains subject to section 4980H.
Under these regulations, a separate section 6056 return must be
filed for each ALE member for which the appropriately designated person
is reporting. The designated entity would provide the name of both the
designated entity and the ALE member for which it is reporting.
Additionally, the regulations require that there be a single identified
section 6056 transmittal (Form 1094-C) reporting aggregate employer-
level data for all full-time employees of the ALE member (including
full-time employees of the ALE member the reporting for which has been
transferred to a designated person), and that there be only one section
6056 employee statement (Form 1095-C) for each full-time employee of
the ALE member with respect to employment with that ALE member. Further
details will be provided in forms and instructions.
These regulations further provide that the designation under
section 6056(e) must be in writing, must contain certain language, must
be signed by both the ALE member and the designated person, and must be
effective under all applicable laws. These regulations also require
that the designation set forth the name and EIN of the designated
person, and appoint that person as the person responsible for reporting
under section 6056 on behalf of the ALE member. The designation must
contain information identifying the category of full-time employees
(which may be full-time employees eligible for a specified health plan,
or in a particular job category, provided that the specific employees
covered by the designation can be identified) for which the designated
person is responsible for reporting under section 6056 on behalf of the
ALE member. If the designated person is responsible for reporting under
section 6056 for all full-time employees of an ALE member, the
designation should so indicate.
The designation must also contain language that the designated
person agrees that it is the appropriately designated person under
section 6056(e), and an acknowledgement that the designated person is
responsible for reporting under section 6056 on behalf of the ALE
member and subject to the requirements of section 6056 and the
information reporting penalty provisions of sections 6721 and 6722. The
designation must also set forth the name, address, and EIN of the ALE
member, identifying the ALE member as the person subject to the
requirements of section 4980H. These regulations provide that an
equivalent applicable statutory or regulatory designation containing
similar language will be treated as a written designation for purposes
of section 6056(e). The designation will not be submitted to the IRS
and should be maintained under the normal record-retention rules under
section 6103.

B. ALE Members Participating in Multiemployer Plans

Several commenters noted that the unique structure of many
multiemployer plans means that some of the information relevant to the
section 6056 return, such as the employee contribution (if any) for the
lowest-cost self-only coverage providing minimum value, is held by the
multiemployer arrangement. On the other hand, some of the information
relevant to the section 6056 return, such as whether a participant is a
full-time employee for a particular month, is held by the ALE member.
As noted by commenters, this may make the preparation, filing, and
furnishing of the returns challenging.
In response to this operating structure and its impact on the
administration of section 4980H, section XV.E of the preamble to the
final regulations under section 4980H provides that until further
guidance is issued, employers generally will be treated as having met
their obligations under section 4980H with respect to a full-time
employee if the employer is required by a collective bargaining
agreement (or appropriate related participation agreement) to
contribute on behalf of that employee to a multiemployer plan that
provides coverage, to individuals who satisfy the plan's eligibility
conditions, meeting the affordability and minimum value requirements
and that offers coverage to those individuals' dependents. Commenters
to the section 6056 proposed regulations noted that an employer could
also provide this information with respect to its full-time employees
and thereby provide the information to the IRS that is relevant to the
administration of section 4980H. However, that reporting would not
provide all the relevant information needed to administer the premium
tax credit because the employer's contribution to the multiemployer
plan on behalf of an employee for a particular calendar month may not
necessarily align with whether the plan offered coverage to that
particular full-time employee, nor would it provide the amount of the
required employee contribution for the lowest-cost self-only coverage
providing minimum value.
Some commenters requested that the regulations apply the reporting
requirement to the multiemployer plan; however, section 6056 applies
the reporting and furnishing requirements only to the employer and not
the relevant plan in which the employee participates. In the
alternative, commenters requested that the regulations require the
multiemployer plan to transfer any information to which it has access
that is required to be reported under section 6056 to the contributing
employer in a timely manner and form. However, there is no authority
under section 6056 or elsewhere in the Code that would permit imposing
such a requirement on a multiemployer plan. Furthermore, given that
section 6056 does not apply to the multiemployer plan, and that the
return relates to the employer's potential liability under section
6056, Treasury and the IRS do not have the statutory authority to
transfer the reporting obligations from the relevant employer to the
multiemployer plan.
Some commenters suggested that the multiemployer plan be permitted
to submit the section 6056 return on behalf of the contributing
employers. Treasury and the IRS understand that the plan administrator
of a multiemployer plan may have better access than a participating
employer to certain information on eligible employees required to be
included as part of section 6056 reporting. For this reason, section
6056 reporting with respect to full-time employees on behalf of whom an
ALE member contributed to a multiemployer plan is permitted under an
approach whereby the multiemployer plan administrator would prepare
returns pertaining to the full-time employees covered by the collective
bargaining agreement eligible to participate in the multiemployer plan
and the ALE member would prepare returns pertaining to the remaining
full-time employees (those who are not

[[Page 13246]]

eligible to participate in a multiemployer plan). The administrator of
the multiemployer plan would file a separate section 6056 return for
each ALE member that is a contributing employer on behalf of whom it
files, providing the name, address, and identification number for both
the plan and the ALE member for whom it is reporting. In addition, the
multiemployer plan may assist the employer in furnishing statements to
the employees.
The regulations also require that there be a single identified
section 6056 transmittal (Form 1094-C) reporting aggregate employer-
level data for all full-time employees of the ALE member (including
full-time employees of the ALE member the reporting for which was done
by a multiemployer plan), and that there be only one section 6056
employee statement (Form 1095-C) for each full-time employee of the ALE
member with respect to the employee's employment with the ALE member.
Further details will be provided in forms and instructions.
The ALE member would remain the responsible person under section
6056 with respect to all of its full-time employees and accordingly
would be subject to any potential liability for failure to properly
file returns or furnish statements. To the extent the plan
administrator that prepares returns or statements required under
section 6056 is a tax return preparer, it is subject to the
requirements generally applicable to return preparers. See section
XII.C for information about third party reporting.

C. Section 6056 Reporting Facilitated by Third Parties

Treasury and the IRS understand that third party administrators or
other third party service providers are integral to the operation of
many employers' health plans, including with respect to compliance with
any reporting requirements. As requested by several commenters, ALE
members are permitted to contract with and use third parties to
facilitate filing returns and furnishing employee statements to comply
with section 6056, although ALE members remain responsible for
reporting under section 6056, with the exception of certain
governmental unit applicable large employers that properly designate
under section 6056(e). While these regulations do not provide guidance
on contractual or other reporting arrangements between private ALE
members and other parties, they do not prohibit these arrangements.
Such contractual arrangements would not transfer the potential
liability of the ALE member for failure to report and furnish under
section 6056 and the regulations, or the ALE member's potential
liability under section 4980H. To the extent the other party that
prepares returns or statements required under section 6056 is a tax
return preparer, it will be subject to the requirements generally
applicable to return preparers.
As one example, an ALE member that is a member of an aggregated
group of related entities (determined under section 414(b), 414(c),
414(m) or 414(o)) may facilitate the filing of returns and the
furnishing of employee statements on behalf of one or more of the other
ALE members of the aggregated group. Each other ALE member of the
group, for example, could have the ALE member that operates the
employer-sponsored plan facilitate the filing of section 6056 returns
and furnish section 6056 employee statements on its behalf.
In general, a separate section 6056 return must be filed for each
ALE member, providing that ALE member's EIN. If more than one third
party is facilitating reporting for an ALE member, for example, because
the ALE member has contracted with two or more third parties each of
which will facilitate reporting with respect to certain groups of the
ALE member's employees, or if the ALE member reports with respect to
some of its employees and has a third party report with respect to
other employees, there must be one authoritative section 6056
transmittal (Form 1094-C) reporting aggregate employer-level data for
all full-time employees of the ALE member. Additionally, there must be
only one section 6056 employee statement (Form 1095-C) for each full-
time employee with respect to each employee's employment with the ALE
member, so that all required information for a particular full-time
employee of the applicable large employer member is reflected on a
single Form 1095-C. Further details will be provided in forms and
instructions to accommodate third parties in facilitating section 6056
reporting for ALE members (including for third party service providers
and multiemployer plan administrators).

XIII. Applicability of Information Return Penalties and Penalty Relief
for 2015

These regulations provide that an ALE member that fails to comply
with the section 6056 information return and employee statement
requirements may be subject to the general reporting penalty provisions
under sections 6721 (failure to file correct information returns), and
6722 (failure to furnish correct payee statement). These regulations
also provide, however, that the waiver of penalty and special rules
under section 6724 and the applicable regulations, including abatement
of information return penalties for reasonable cause, apply. The final
regulations under section 6055 include amendments to the regulations
under sections 6721 and 6722 to include returns under both sections
6055 and 6056 in the definitions of information return and payee
statement. The final regulations under section 6056 cross-reference
those amendments to the regulations under sections 6721 and 6722.
In implementing new information reporting requirements, short term
relief from penalties frequently is provided. This relief generally
allows additional time to develop appropriate procedures for collection
of data and compliance with these new reporting requirements. After
considering the comments received, the IRS will not impose penalties
under sections 6721 and 6722 on ALE members that can show they make
good faith efforts to comply with the information reporting
requirements. Specifically, relief from penalties is provided under
sections 6721 and 6722 for returns and statements filed and furnished
in 2016 to report offers of coverage in 2015, but only for incorrect or
incomplete information reported on the return or statement, including
social security numbers. No relief is provided in the case of ALE
members that do not make a good faith effort to comply with these
regulations or that fail to timely file an information return or
statement. However, ALE members that fail to timely meet the
requirements of these regulations may be eligible for penalty relief if
the IRS determines that the standards for reasonable cause under
section 6724 are satisfied.

Effective/Applicability Dates

These regulations are effective March 10, 2014. These regulations
apply for calendar years beginning after December 31, 2014. Consistent
with Notice 2013-45, reporting entities will not be subject to
penalties for failure to comply with the section 6056 information
reporting provisions for 2014 (including the provisions requiring the
furnishing of employee statements in 2015 with respect to 2014).
Accordingly, a reporting entity will not be subject to penalties if it
first reports beginning in 2016 for 2015 (including the furnishing of
employee statements). Taxpayers are encouraged, however, to voluntarily
comply with section 6056 information reporting for 2014 by using any of
the available reporting methods set forth in these final regulations.

[[Page 13247]]

Special Analyses

It has been determined that this Treasury decision is not a
significant regulatory action as defined in Executive Order 12866, as
supplemented by Executive Order 13563. Therefore, a regulatory
assessment is not required. It has also been determined that section
553(b) of the Administrative Procedure Act (5 U.S.C. Chapter 5) does
not apply to these regulations.
Sections 603 and 604 of the Regulatory Flexibility Act (5 U.S.C.
Chapter 6) (RFA) generally require agencies to prepare a regulatory
flexibility analysis addressing the impact of proposed and final
regulations, respectively, on small entities. Section 605(b) of the
RFA, however, provides that sections 603 and 604 shall not apply if the
head of the agency certifies that the rule will not have a significant
economic impact on a substantial number of small entities. For the
reasons set forth in the following paragraphs, it is hereby certified
that these regulations will not have a significant economic impact on a
substantial number of small entities.
The regulations under sections 6011 and 6056 affect employers that
are applicable large employers, as defined in section 4980H(c)(2). Some
small entities fall into this category. Therefore, it has been
determined that these regulations will affect a substantial number of
small entities. It has also been determined, however, that the economic
impact on entities affected by these regulations will not be
significant.
The regulations implement the underlying statute and the economic
impact is principally a result of the underlying statute, rather than
the regulations. The regulations direct employers that are applicable
large employers to file information returns with the IRS and to furnish
statements to employees providing information as required by section
6056. Specifically, the regulations require applicable large employers,
as defined in section 4980H(c)(2), to file a return with the IRS for
each full-time employee reporting certain information regarding the
health care coverage offered and provided to the employee for the year.
The regulations further require applicable large employers to furnish
to each full-time employee a copy of the return, or a substitute
statement, required to be filed by the applicable large employer with
respect to the employee. As discussed in the Summary of Comments and
Explanation of Provisions section of the preamble to this Treasury
Decision, Treasury and the IRS engaged in dialogue with stakeholders.
The final regulations address certain concerns that were expressed by
those stakeholders and minimize the cost and administrative steps
associated with the reporting requirements. Specifically, the
regulations limit the reporting requirements on applicable large
employers by only requiring them to file and furnish information that
is necessary for the IRS to administer section 4980H and the premium
tax credit, and information employees will need in order to complete
their tax returns. Additionally, the regulations limit the reporting
requirements by providing for alternative optional reporting methods
for certain employers that will permit in certain situations an
employer to provide more limited information on its return and employer
statement, thus lowering that employer's burden.
Based on these facts, a Regulatory Flexibility Analysis under the
Regulatory Flexibility Act (5 U.S.C. Chapter 6) is not required.
Pursuant to section 7805(f) of the Code, the proposed regulations
preceding these regulations were submitted to the Chief Counsel for
Advocacy of the Small Business Administration for comment on its impact
on small business.

Drafting Information

The principal author of these regulations is Ligeia M. Donis of the
Office of the Division Counsel/Associate Chief Counsel (Tax Exempt and
Government Entities). However, other personnel from the IRS and
Treasury participated in their development.

List of Subjects

26 CFR Part 301

Employment taxes, Estate taxes, Excise taxes, Gift taxes, Income
taxes, Penalties, Reporting and recordkeeping requirements.

26 CFR Part 602

Reporting and recordkeeping requirements.

Adoption of Amendments to the Regulations

Accordingly, 26 CFR parts 301 and 602 are amended as follows:

PART 301--PROCEDURE AND ADMINISTRATION

0
Paragraph 1. The authority citation for part 301 continues to read in
part as follows:

Authority: 26 U.S.C. 7805 * * *

0
Par. 2. Section 301.6056-1 is added to read as follows:

Sec. 301.6056-1 Rules relating to reporting by applicable large
employers on health insurance coverage offered under employer-sponsored
plans.

(a) In general. Section 6056 requires an applicable large employer
subject to the requirements of section 4980H to report certain health
insurance coverage information to the Internal Revenue Service, and to
furnish certain related employee statements to its full-time employees.
Paragraph (b) of this section contains definitions for purposes of this
section. Paragraph (c) of this section prescribes general rules for
filing the required information with the IRS and furnishing the
required employee statements to employees. Paragraphs (d) and (e) of
this section describe the information required to be reported on a
section 6056 information return and the time and manner for filing.
Paragraph (f) of this section provides information about the statement
required to be furnished to a full-time employee. Paragraph (g) of this
section prescribes the time and manner of furnishing the statement,
including extensions of time to furnish, to a full-time employee.
Paragraph (h) addresses corrections of returns. Paragraph (i) of this
section describes the information return penalties applicable to
section 6056 returns. Paragraph (j) of this section describes
alternative reporting methods available to certain applicable large
employers with certain employees. Paragraph (k) of this section
describes certain special rules applicable to applicable large
employers that are governmental units.
(b) Definitions--(1) In general. The definitions in this paragraph
(b) apply for purposes of this section.
(2) Applicable large employer. The term applicable large employer
has the same meaning as in section 4980H(c)(2) and Sec. 54.4980H-
1(a)(4) of this chapter.
(3) Applicable large employer member. The term applicable large
employer member has the same meaning as in Sec. 54.4980H-1(a)(5) of
this chapter.
(4) Dependent. The term dependent has the same meaning as in Sec.
54.4980H-1(a)(11) of this chapter.
(5) Eligible employer-sponsored plan. The term eligible employer-
sponsored plan has the same meaning as in section 5000A(f)(2) and Sec.
1.5000A-2(c)(1) of this chapter.
(6) Full-time employee. The term full-time employee has the same
meaning as in section 4980H and Sec. 54.5980H-1(a)(21) of this
chapter, as applied to the determination and calculation of liability
under section 4980H(a) and (b) with respect to any individual employee,
and not as applied to the

[[Page 13248]]

determination of status as an applicable large employer, if different.
(7) Governmental unit. The term governmental unit refers to the
government of the United States, any State or political subdivision
thereof, or any Indian tribal government (as defined in section
7701(a)(40)) or subdivision of an Indian tribal government (as defined
in section 7871(d)).
(8) Agency or instrumentality of a governmental unit. [Reserved]
(9) Minimum essential coverage. The term minimum essential coverage
has the same meaning as in section 5000A(f) and the regulations issued
under that section.
(10) Minimum value. The term minimum value has the same meaning as
in section 36B and any applicable regulations.
(11) Person. The term person has the same meaning as in section
7701(a)(1) and applicable regulations.
(c) Content and timing of reporting by applicable large employer
members.--(1) In general. Each applicable large employer member
required to make a return and furnish a related statement to its full-
time employees under section 6056 for a calendar year must make a
return and furnish the related statement using such form(s) as may be
prescribed by the Internal Revenue Service. An applicable large
employer member will satisfy its reporting requirements under section
6056 if it files with the Internal Revenue Service a return for each
full-time employee using Form 1095-C or another form the IRS
designates, and a transmittal form using Form 1094-C or another form
the IRS designates, as prescribed in this section and in the
instructions to the forms. Each Form 1095-C and the transmittal Form
1094-C will together constitute an information return to be filed with
the Internal Revenue Service.
(2) Reporting facilitated by third parties. A separate section 6056
information return must be filed for each applicable large employer
member. If more than one section 6056 information return is being filed
for an applicable large employer member, there must be one
authoritative section 6056 transmittal (Form 1094-C) reporting
aggregate employer-level data for all full-time employees of the
applicable large employer member, in accordance with forms and
instructions. Additionally, there must be only one section 6056
employee statement (Form 1095-C) for each full-time employee with
respect to that full-time employee's employment with the applicable
large employer member, so that all required information for a
particular full-time employee of the applicable large employer member
is reflected on a single Form 1095-C.
(d) Information required to be reported to the Internal Revenue
Service--(1) In general. Except as provided in paragraph (j) of this
section (relating to alternative reporting methods for eligible
applicable large employer members), every applicable large employer
member must make a section 6056 information return with respect to each
full-time employee. Each section 6056 information return must show--
(i) The name, address, and employer identification number of the
applicable large employer member,
(ii) The name and telephone number of the applicable large employer
member's contact person,
(iii) The calendar year for which the information is reported,
(iv) A certification as to whether the applicable large employer
member offered to its full-time employees (and their dependents) the
opportunity to enroll in minimum essential coverage under an eligible
employer-sponsored plan, by calendar month,
(v) The months during the calendar year for which minimum essential
coverage under the plan was available,
(vi) Each full-time employee's share of the lowest cost monthly
premium (self-only) for coverage providing minimum value offered to
that full-time employee under an eligible employer-sponsored plan, by
calendar month;
(vii) The number of full-time employees for each month during the
calendar year,
(viii) The name, address, and taxpayer identification number of
each full-time employee during the calendar year and the months, if
any, during which the employee was covered under the plan, and
(ix) Any other information specified in forms, instructions, or
published guidance, see Sec. Sec. 601.601(d) and 601.602 of this
chapter.
(2) Form of the return. A return required under this paragraph (d)
may be made on Forms 1094-C and 1095-C or other form(s) designated by
the Internal Revenue Service, or a substitute form. A substitute form
must include the information required to be reported on Forms 1094-C
and 1095-C and must comply with applicable revenue procedures or other
published guidance relating to substitute statements. See Sec.
601.601(d)(2) of this chapter.
(e) Time and manner for filing return. An applicable large employer
member must file the return and transmittal form required under
paragraph (d)(2) of this section on or before February 28 (March 31 if
filed electronically) of the year succeeding the calendar year to which
it relates in accordance with any applicable guidance and the
instructions to the form. An applicable large employer member must file
the return and transmittal form at the address specified on the return
form or its instructions. For extensions of time for filing returns
under this section, see Sec. Sec. 1.6081-1 and 1.6081-8 of this
chapter. See Sec. 301.6011-2 for rules relating to electronic filing.
(f) Statements required to be furnished to full-time employees--(1)
In general. Except as provided in paragraph (j) of this section, every
applicable large employer member required to file a return under
section 6056 must furnish to each of its full-time employees identified
on the return a written statement showing--
(i) The name, address and employer identification number of the
applicable large employer member, and
(ii) The information required to be shown on the section 6056
return with respect to the full-time employee.
(2) Form of the statement. A statement required under this
paragraph (f) may be made either by furnishing to the full-time
employee a copy of Form 1095-C or another form the IRS designates as
prescribed in this section and in the instructions to such forms, or a
substitute statement. A substitute statement must include the
information required to be shown on the return filed with the IRS and
must comply with requirements in published guidance (see Sec.
601.601(d)(2) of this chapter) relating to substitute statements. An
IRS truncated taxpayer identification number may be used as the
identifying number for an individual in lieu of the identifying number
appearing on the corresponding information return filed with the IRS.
(g) Time and manner for furnishing statements--(1) Time for
furnishing.--(i) In general. Each statement required by this section
for a calendar year must be furnished to a full-time employee on or
before January 31 of the year succeeding that calendar year in
accordance with applicable Internal Revenue Service procedures and
instructions
(ii) Extensions of time--(A) In general. For good cause upon
written application of the person required to furnish statements under
this section, the Internal Revenue Service may grant an extension of
time not exceeding 30 days in which to furnish such statements. The
application must be addressed to the Internal Revenue Service, and must
contain a full recital of the reasons for requesting the extension to
aid the Internal Revenue Service in determining

[[Page 13249]]

the period of the extension, if any, that will be granted. A request in
the form of a letter to the Internal Revenue Service, signed by the
applicant, suffices as an application. The application must be filed on
or before the date prescribed in paragraph (g)(1) of this section.
(B) Automatic extension of time. The Commissioner may, in
appropriate cases, prescribe additional guidance or procedures,
published in the Internal Revenue Bulletin (see Sec. 601.601(d)(2) of
this chapter), for automatic extensions of time to furnish to one or
more full-time employees the statement required under section 6056.
(2) Manner of furnishing. If mailed, the statement must be sent to
the full-time employee's last known permanent address or, if no
permanent address is known, to the employee's temporary address. For
purposes of this paragraph (g), an applicable large employer member's
first class mailing to the last known permanent address, or if no
permanent address is known, the temporary address, discharges the
requirement to furnish the statement. An applicable large employer
member may furnish the statement electronically in accordance with
Sec. 301.6056-2.
(h) Correction of returns. See Sec. 301.6056-1(i)(2).
(i) Penalties.--(1) In general. For provisions relating to the
penalty for failure to file timely a correct information return
required under section 6056, see section 6721 and the regulations under
that section. For provisions relating to the penalty for failure to
furnish timely a correct statement to full-time employees required
under section 6056, see section 6722 and the regulations under that
section. See section 6724 and the regulations under that section for
rules relating to the waiver of penalties if a failure to file timely
or accurately is due to reasonable cause and is not due to willful
neglect.
(2) Application of section 6721 and 6722 penalties to section 6056
reporting. For purposes of section 6056 reporting, if the information
reported on a return (including a transmittal) or a statement required
by this section is incomplete or incorrect as a result of a change in
circumstances (such as a retroactive change in coverage), a failure to
timely file or furnish a corrected document is a failure to file or
furnish a correct return or statement under sections 6721 and 6722.
(j) Alternative reporting methods for eligible applicable large
employer members. In lieu of the general reporting method described in
paragraph (d) of this section, eligible applicable large employer
members may use the following alternative reporting methods described
in this paragraph (j).
(1) Certification of qualifying offer. An applicable large employer
member is an eligible applicable large employer member and is treated
as meeting its reporting obligation under section 6056 if:
(i) The applicable large employer member certifies on the section
6056 transmittal form, in accordance with the form and the instructions
to the form, that it made a qualifying offer. A qualifying offer is an
offer to one or more of its full-time employees for all months during
the year for which the employee was a full-time employee and which are
not within a limited nonassessment period (as defined in Sec.
54.4980H-1(a)(26) of this chapter), of minimum essential coverage
providing minimum value at an employee cost for employee-only coverage
not exceeding 9.5 percent of the mainland single federal poverty line,
and that includes an offer of minimum essential coverage to the
employees' spouses and dependents. For this purpose, the applicable
federal poverty line is the federal poverty line as defined in Sec.
54.4980H-1(a)(19) of this chapter, as calculated and applied to the 48
contiguous states and the District of Columbia;
(ii) The applicable large employer member provides on the Form
1095-C or other form as designated by the IRS, in accordance with the
form and the instructions to the form, the information with respect to
each full-time employee to whom a qualifying offer, as defined in
paragraph (j)(1)(i) of this section, is made for all twelve months of
the applicable calendar year;
(iii) The applicable large employer member provides a statement to
each full-time employee to whom a qualifying offer (as defined in
paragraph (j)(1)(i) of this section) was made for all twelve months of
the applicable calendar year, in such form and manner as prescribed by
the Secretary, or a copy of the Form 1095-C filed with the IRS with
respect to that full-time employee; and
(D) The applicable large employer member files section 6056 returns
and furnishes section 6056 employee statements with respect to all
other full-time employees under the general reporting method described
in paragraph (d) of this section, in accordance with forms and
instructions.
(2) Option to report without separate identification of full-time
employees if certain conditions related to offers of coverage are
satisfied (98 percent offers). An applicable large employer member that
otherwise meets its reporting obligation under section 6056 is not
required to identify on its section 6056 return whether a particular
employee is a full-time employee for one or more calendar months of the
reporting year or report the total number of its full-time employees
for the reporting year, if it certifies that it offered minimum
essential coverage providing minimum value that was affordable under
section 4980H to at least 98 percent of the employees (and their
dependents) with respect to whom it reports for purposes of section
6056 in accordance with paragraph (d) of this section (regardless of
whether the employee is a full-time employee for purposes of section
4980H for a calendar month during the year).
(k) Special rules for governmental units--(1) Person appropriately
designated. In the case of any applicable large employer member that is
a governmental unit or any agency or instrumentality thereof, the
person or persons appropriately designated under section 6056(e) for
purposes of the filing and furnishing requirements of section 6056 must
be part of or related to the same governmental unit as the applicable
large employer member. The applicable large employer member must make
(or revoke) the designation before the earlier of the deadline for
filing the returns or furnishing the statements required by this
section. A person that has been appropriately designated under section
6056(e) must file a separate section 6056 return and transmittal for
each applicable large employer member for which the person is
reporting. The person appropriately designated under section 6056(e)
assumes responsibility for the section 6056 requirements on behalf of
the applicable large employer member for which the person is
designated. Notwithstanding the designation, a separate section 6056
information return must be filed for each applicable large employer
member that is a governmental unit. If more than one section 6056
information return is being filed for an applicable large employer
member, there must be one authoritative section 6056 transmittal (Form
1094-C) reporting aggregate employer-level data for all full-time
employees of the applicable large employer member, in accordance with
forms and instructions. In addition, notwithstanding the designation,
there must be only one section 6056 employee statement (Form 1095-C)
for each full-time employee with respect to that full-time employee's
employment with the applicable large employer member, so that all
required

[[Page 13250]]

information for a particular full-time employee of the applicable large
employer member is reflected on a single Form 1095-C.
(2) Written designation. The designation under section 6056(e) must
be made in writing, must be signed by both the applicable large
employer member and the designated person, and must be effective under
all applicable laws. The designation must set forth the name, address,
and employer identification number of the designated person, and
appoint such person as the person responsible for reporting under
section 6056 on behalf of the applicable large employer member. The
designation must contain information identifying the category of full-
time employees (which may be full-time employees eligible for a
specified health plan, or in a particular job category, as long as the
specific employees covered by the designation can be identified) for
which the designated person is responsible for reporting under section
6056 on behalf of the applicable large employer member. If the
designated person is responsible for reporting under section 6056 for
all full-time employees of an applicable large employer member, the
designation must so indicate. The designation must contain language
that the designated person agrees and certifies that it is the
appropriately designated person under section 6056(e), and an
acknowledgement that the designated person is responsible for reporting
under section 6056 on behalf of the applicable large employer member
and subject to the requirements of section 6056, including for purposes
of information reporting requirements under sections 6721, 6722, and
6724. The designation must also set forth the name and employer
identification number of the applicable large employer member,
identifying the applicable large employer member as the person subject
to the requirements of section 4980H. An equivalent applicable
statutory or regulatory designation containing the language described
in this paragraph (k)(2) will be treated as a written designation for
purposes of section 6056(e) and this section. The designation will not
be submitted to the IRS and should be maintained under the normal
record-retention rules under section 6103.
(3) Application to alternative reporting methods. A person
designated under this paragraph (k) may use the alternative reporting
method identified in paragraph (j)(1) of this section for the full-time
employees for which it is reporting with respect to a particular
governmental unit if that particular governmental unit meets the
eligibility requirements with respect to those employees, but may use
the alternative reporting method identified in paragraph (j)(2) of this
section only if the governmental unit on whose behalf it is reporting
would itself be eligible to use that alternative reporting method.
(l) Additional guidance. The Commissioner may prescribe additional
guidance of general applicability, published in the Internal Revenue
Bulletin (see Sec. 601.601(d)(2) of this chapter) to provide
additional rules under section 6056, including rules permitting use of
alternative optional methods to meet reporting requirements.
(m) Effective/applicability date. This section applies for calendar
years beginning after December 31, 2014. Reporting entities will not be
subject to penalties under sections 6721 or 6722 for failure to comply
with the section 6056 reporting requirements for 2014 (for information
returns filed and for statements furnished to employees in 2015).

0
Par 4. Section 301.6056-2 is added to read as follows:

Sec. 301.6056-2 Electronic furnishing of statements.

(a) Electronic furnishing of statements--(1) In general. An
applicable large employer member required by Sec. 301.6056-1 to
furnish a statement (furnisher) to a full-time employee (a recipient)
as required by section 6056 may furnish the section 6056 employee
statement (the statement) in an electronic format in lieu of a paper
format, provided that the furnisher meets the requirements of
paragraphs (a)(2) through (a)(6) of this section. An applicable large
employer member who meets the requirements of paragraphs (a)(2) through
(6) of this section is treated as furnishing the statement in a timely
manner.
(2) Consent--(i) In general. The recipient must have affirmatively
consented to receive the statement in an electronic format. The
recipient may make the consent electronically in any manner that
reasonably demonstrates that the recipient can access the statement in
the electronic format in which it will be furnished to the recipient.
Alternatively, the recipient may make the consent in a paper document
if the recipient confirms the consent electronically.
(ii) Withdrawal of consent. The consent requirement of this
paragraph (a)(2) is not satisfied if the recipient withdraws the
consent and the withdrawal takes effect before the statement is
furnished. The furnisher may provide that a withdrawal of consent takes
effect either on the date it is received by the furnisher or on a
subsequent date. The furnisher may also provide that a recipient's
request for a paper statement will be treated as a withdrawal of the
recipient's consent.
(iii) Change in hardware or software requirements. If a change in
the hardware or software required to access the statement creates a
material risk that the recipient will not be able to access the
statement, the furnisher must, prior to changing the hardware or
software, provide the recipient with a notice. The notice must describe
the revised hardware and software required to access the statement and
inform the recipient that a new consent to receive the statement in the
revised electronic format must be provided to the furnisher. After
implementing the revised hardware and software, the furnisher must
obtain from the recipient, in the manner described in paragraph
(a)(2)(i) of this section, a new consent or confirmation of consent to
receive the statement electronically.
(iv) Examples. The following examples illustrate the rules of this
paragraph (a)(2):

Example 1. Furnisher F sends Recipient R a letter stating that
R may consent to receive the statement required under section 6056
electronically on a Web site instead of in a paper format. The
letter contains instructions explaining how to consent to receive
the statement electronically by accessing the Web site, downloading
the consent document, completing the consent document and emailing
the completed consent back to F. The consent document posted on the
Web site uses the same electronic format that F will use for the
electronically furnished statement. R reads the instructions and
accesses the Web site, downloads and completes the consent document,
and emails the completed consent back to F. R has consented to
receive the statement required under section 6056 electronically in
the manner described in paragraph (a)(2)(i) of this section.

Example 2. Furnisher F sends Recipient R an email stating that
R may consent to receive the statement required under section 6056
electronically instead of in a paper format. The email contains an
attachment instructing R how to consent to receive the statement
electronically. The email attachment uses the same electronic format
that F will use for the electronically furnished statement. R opens
the attachment, reads the instructions, and submits the consent in
the manner provided in the instructions. R has consented to receive
the statement required under section 6056 electronically in the
manner described in paragraph (a)(2)(i) of this section.
Example 3. Furnisher F posts a notice on its Web site stating
that Recipient R may receive the statement required under section
6056 electronically instead of in a paper

[[Page 13251]]

format. The Web site contains instructions on how R may access a
secure Web page and consent to receive the statement electronically.
The consent via the secure Web page uses the same electronic format
that F will use for the electronically furnished statement. R
accesses the Web site and follows the instructions for giving
consent. R has consented to receive section 6056 statements
electronically in the manner described in paragraph (a)(2)(i) of
this section.

(3) Required disclosures--(i) In general. Prior to, or at the time
of, a recipient's consent, a furnisher must provide to the recipient a
clear and conspicuous disclosure statement containing each of the
disclosures described in paragraphs (a)(3)(ii) through (viii) of this
section.
(ii) Paper statement. The furnisher must inform the recipient that
the statement will be furnished on paper if the recipient does not
consent to receive it electronically.
(iii) Scope and duration of consent. The furnisher must inform the
recipient of the scope and duration of the consent. For example, the
recipient must be informed whether the consent applies to each
statement required to be furnished after the consent is given until it
is withdrawn in the manner described in paragraph (a)(3)(v)(A) of this
section or only to the first statement required to be furnished
following the date of the consent.
(iv) Post-consent request for a paper statement. The furnisher must
inform the recipient of any procedure for obtaining a paper copy of the
recipient's statement after giving the consent described in paragraph
(a)(2)(i) of this section and whether a request for a paper statement
will be treated as a withdrawal of consent.
(v) Withdrawal of consent. The furnisher must inform the recipient
that--
(A) The recipient may withdraw a consent by writing (electronically
or on paper) to the person or department whose name, mailing address,
telephone number, and email address is provided in the disclosure
statement,
(B) The furnisher will confirm the withdrawal and the date on which
it takes effect in writing (either electronically or on paper), and
(C) A withdrawal of consent does not apply to a statement that was
furnished electronically in the manner described in this paragraph (a)
before the date on which the withdrawal of consent takes effect.
(vi) Notice of termination. The furnisher must inform the recipient
of the conditions under which a furnisher will cease furnishing
statements electronically to the recipient (for example, termination of
the recipient's employment with furnisher-employer).
(vii) Updating information. The furnisher must inform the recipient
of the procedures for updating the information needed to contact the
recipient. The furnisher must inform the recipient of any change in the
furnisher's contact information.
(viii) Hardware and software requirements. The furnisher must
provide the recipient with a description of the hardware and software
required to access, print, and retain the statement, and the date when
the statement will no longer be available on the Web site. The
furnisher must advice the recipient that the statement may be required
to be printed and attached to a Federal, State, or local income tax
return.
(4) Format. The electronic version of the statement must contain
all required information and comply with applicable revenue procedures
relating to substitute statements to recipients.
(5) Notice--(i) In general. If the statement is furnished on a Web
site, the furnisher must notify the recipient that the statement is
posted on a Web site. The notice may be delivered by mail, electronic
mail, or in person. The notice must provide instructions on how to
access and print the statement. The notice must include the following
statement in capital letters, ``IMPORTANT TAX RETURN DOCUMENT
AVAILABLE.'' If the notice is provided by electronic mail, the
foregoing statement must be on the subject line of the electronic mail.
(ii) Undeliverable electronic address. If an electronic notice
described in paragraph (a)(5)(i) of this section is returned as
undeliverable, and the correct electronic address cannot be obtained
from the furnisher's records or from the recipient, then the furnisher
must furnish the notice by mail or in person within 30 days after the
electronic notice is returned.
(iii) Corrected statement. If the furnisher has corrected a
recipient's statement as directed in Sec. 301.6056-1(k) and the
original statement was furnished electronically, the furnisher must
furnish the corrected statement to the recipient electronically. If the
original statement was furnished through a Web site posting and the
furnisher has corrected the statement, the furnisher must notify the
recipient that it has posted the corrected statement on the Web site
within 30 days of such posting in the manner described in paragraph
(a)(5)(i) of this section. The corrected statement or the notice must
be furnished by mail or in person if--
(A) An electronic notice of the Web site posting of an original
statement or the corrected statement was returned as undeliverable, and
(B) The recipient has not provided a new email address.
(6) Access period. Statements furnished on a Web site must be
retained on the Web site through October 15 of the year following the
calendar year to which the statements relate (or the first business day
after October 15, if October 15 falls on a Saturday, Sunday, or legal
holiday). The furnisher must maintain access to corrected statements
that are posted on the Web site through October 15 of the year
following the calendar year to which the statements relate (or the
first business day after such October 15, if October 15 falls on a
Saturday, Sunday, or legal holiday) or the date 90 days after the
corrected forms are posted, whichever is later.
(7) Paper statements after withdrawal of consent. A furnisher must
furnish a paper statement if a recipient withdraws consent to receive a
statement electronically and the withdrawal takes effect before the
statement is furnished. A paper statement furnished after the statement
due date under this paragraph (a)(7) is timely if furnished within 30
days after the date the furnisher receives the withdrawal of consent.
(b) Effective/applicability date. This section applies for calendar
years beginning after December 31, 2014. Reporting entities will not be
subject to penalties under section 6722 with respect to the reporting
requirements for 2014 (for statements furnished in 2015).

PART 602--OMB CONTROL NUMBERS UNDER THE PAPERWORK REDUCTION ACT

0
Par. 5. The authority citation for part 602 continues to read as
follows:

Authority: 26 U.S.C. 7805 * * *

0
Par. 6. In Sec. 602.101, paragraph (b) is amended by adding two
entries in numerical order to the table to read as follows:

Sec. 602.101 OMB Control numbers.

* * * * *
(b) * * *

------------------------------------------------------------------------
Current OMB
CFR part or section where identified and described control No.
------------------------------------------------------------------------

* * * * *
301.6056-1.............................................. 1545-2251
301.6056-2.............................................. 1545-2251

* * * * *
------------------------------------------------------------------------

[[Page 13252]]

Approved: March 2, 2014.
John Dalrymple,
Deputy Commissioner for Services and Enforcement.
Mark J. Mazur,
Assistant Secretary of the Treasury (Tax Policy).
[FR Doc. 2014-05050 Filed 3-5-14; 4:15 pm]
BILLING CODE 4830-01-P