Saturday, January 9, 2016


I hope all of you had a very Merry Christmas and a Happy and Safe New Year.  As an accountant, the dropping of the ball in Times Square also signifies the start of another Tax Season!  Here is a very quick, and brief update on what's new in taxes for the 2016 filing season (meaning the filing of the 2015 income tax returns).

Hooray for Congress!?  Isn't it just great to see how responsive Congress is to the needs of the American Public?  Instead of waiting until the absolute last minute this year, Congress passed the Protecting Americans from Tax Hikes Act or PATH Act of 2015 on December 18, 2015.  (Yes, that is the real name of the bill).  This law extends and makes permanent many of the income tax provisions that expired December 31, 2014, retroactive to January 1, 2015.

Not wanting to make things too easy for taxpayers and their advisers, Congress also included provisions that have an impact on most people's income tax returns, in the Trade Preferences Extension Act of 2015 and the Defending Public Safety Employees' Retirement Act.  Both of these pieces of legislation were signed into law on January 29, 2015.  As they say in the As Seen on TV Commercials, "But wait, that's not all!"  On July 31, 2015, the President signed the 2015 Highway Funding Bill (H. R. 3236).  In order to provide the funding for this bill, Congress included some additional tax law changes in this piece of legislation.

The PATH Act includes provisions that impact approximately 24 different provisions of the tax code which had expired on December 31, 2014.

What's new with ACA (the Affordable Care Act, aka Obama Care)?

The IRS is the Federal Agency that has been charged with the enforcement of the ACA and for making sure that every individual has health insurance or pays a fine if they do not qualify for one of the exclusions.  To do this, the IRS set up three new reporting forms, Forms 1095-A, 1095-B and 1095-C.  These are forms which must be provided to every individual in the United States (or family) to show if they met the requirements of the law for the entire year.  The forms are issued as follows:  Form 1095-A is issued by the Marketplace Exchanges to individuals obtaining coverage through the marketplace.  This usually means that they received a premium tax credit.  The Form 1095-B is issued by insurance companies to individuals who obtain private insurance directly from an insurance company, and not through the Exchange or who work for a small employer.  Form 1095-C is to be issued by the large employers that are required to offer affordable health insurance to their employees.  These forms were originally required to be provided to individuals by January 31, 2015 for the 2014 calendar year, which was the first year that individuals were required to have insurance. The provision of the law requiring insurance companies and large employers to provide these forms in 2015 was dropped, and they were given until January 31, 2016 to provide the forms for 2015.

As a tax preparer, I am required to verify that the information included on the return agrees with the information on these forms.  This all sounds easy enough, right?  "But wait, that's not all!"

In the last week of December, 2015, the IRS issued Notice 2016-4, which extends the due dates for the 2015 information reporting requirements, both to the individuals and to the IRS, by 60 days.  This applies only to the insurance companies and large employers, and means that they are not required to provide the Forms 1095-B or 1095-C to the individuals until March 31, 2016.

This means that, as a preparer, if you do not have the Form 1095-B or 1095-C, I either have to independently verify your insurance coverage or wait until you have the form and can verify the information on your return before the return can be filed.  Failure to do so could result in significant penalties for both the taxpayer and the taxpreparer, if the information on the Form 1095 does not agree with what is reported to the IRS.  We are still waiting to see if the IRS will provide some form of relief to taxpayers and taxpreparers.

There is some hope, I have been hearing from a number of clients that they have already received their Form 1095-B from the insurance company.  It is possible that most insurance companies were not anticipating the delay in the filing dates and have already sent out the forms or will be sending them very soon.  Hopefully, this will be the same for many of the large employers required to file Form 1095-C.

Remember, NOW is the time to start gathering your tax documents.  Even if you don't have the Form 1095-B or 1095-C, get everything else together and bring it in.

Please let me know if you have any questions.

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