Information Reporting by Applicable Large Employers on Health Insurance Coverage Offered Under Employer-Sponsored Plans, 13231-13252 [2014-05050]

Agencies

• Internal Revenue Service
• DEPARTMENT OF THE TREASURY

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


-----------------------------------------------------------------------

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.

-----------------------------------------------------------------------

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.
---------------------------------------------------------------------------

    \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).
---------------------------------------------------------------------------

    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).
---------------------------------------------------------------------------

    \2\ An Exchange is also referred to in other published guidance 
as a Marketplace.
---------------------------------------------------------------------------

    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).
---------------------------------------------------------------------------

    \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).
---------------------------------------------------------------------------

    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.
---------------------------------------------------------------------------

    \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).
---------------------------------------------------------------------------

    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.
---------------------------------------------------------------------------

    \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.
---------------------------------------------------------------------------

    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\
---------------------------------------------------------------------------

    \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.
---------------------------------------------------------------------------

 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\
---------------------------------------------------------------------------

    \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 https://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.
---------------------------------------------------------------------------

    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 https://www.dol.gov/ebsa/faqs/faq-aca9.html 
and https://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