2018-01-18_SS_1545-2252rTP

7

Supporting Statement

Internal Revenue Service

1545-2252

TD 9660

Information Reporting of Minimum Essential Coverage

(Form 1094-B and Form 1095-B)

1. CIRCUMSTANCES NECESSITATING COLLECTION OF INFORMATION

Under the Patient Protection and Affordable Care Act, Public Law 111-148, and the Health Care and Education Reconciliation Act, Public Law 111-152, health insurance issuers, employer-sponsored self-insured plans, government-sponsored programs and other persons who provide minimum essential coverage must report information concerning individuals who are enrolled in the coverage

TD 9660 contains final regulations that amend the Income Tax Regulations (26 CFR part 1) under sections 6055 and 6081 and the Procedure and Administration Regulations (26 CFR part 301) under sections 6011, 6721, and 6722, relating to the requirement for providers of minimum essential coverage (as defined in section 5000A(f)) to report to the IRS certain information about individuals covered by minimum essential coverage and to provide a statement to the individuals.

(a) Information required to be reported. Section 6055(b)(1) provides that all information returns reporting minimum essential coverage are to contain

(1) the name, address, and taxpayer identification number of the primary insured and each other individual covered under the policy or plan;

(2) the dates each individual was covered under minimum essential coverage during the calendar year;

(3) in the case of health insurance coverage, whether the coverage is a qualified health plan offered through an Exchange;

(4) if the coverage is a qualified health plan offered through an Exchange, the amount (if any) of any advance payment of the premium tax credit under section 1412 of the ACA or of any cost-sharing reduction under section 1402 of the ACA for each covered individual, and

(5) other information that the IRS requires under the associated regulations.

Section 6055(b)(2) provides that information returns for minimum essential coverage provided by a health insurance issuer through an employer’s group health plan also include

(1) the name, address, and employer identification number of the employer maintaining the plan, the portion of the premium to be paid by the employer, and any other information that the IRS may require (under the associated regulations) for administering the tax credit under section 45R (credit for employee health insurance expenses of small employers).

The IRS developed Form 1095-B, Health Insurance Coverage Statement under the authority of IRC section 6055 which was added by ACA, P.L. 111-148, section 1502(a) to report certain information to the IRS and to taxpayers about individuals who are covered by minimum essential coverage and therefore are not liable for the individual shared responsibility payment. Form 1094-B serves as a transmittal for Form 1095-B.

2. USE OF DATA

Beginning in 2014, individuals generally must maintain minimum essential coverage or incur liability for a penalty under section 5000A of the Internal Revenue Code (Code). The collection of information is necessary to determine whether individuals are enrolled in minimum essential coverage.

3. USE OF IMPROVED INFORMATION TECHNOLOGY TO REDUCE BURDEN

Reporting entities will use electronic media to compile and provide the information to the Internal Revenue Service, but may provide paper information statements to most individuals.

4. EFFORTS TO IDENTIFY DUPLICATION

The information obtained through this collection is unique and is not already available for use or adaptation from another source.

5. METHODS TO MINIMIZE BURDEN ON SMALL BUSINESSES OR OTHER SMALL ENTITIES

It has been determined that these final regulations are 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.

All of the ACA forms, including Forms 1094-B and 1095-B, were designed with minimizing taxpayer burden in mind. Care was taken to require that issuers provide only the information necessary to fulfill their reporting obligations. Both large and small businesses benefit from this approach to forms design.

6. CONSEQUENCES OF LESS FREQUENT COLLECTION ON FEDERAL PROGRAMS OR POLICY ACTIVITIES

A less frequent collection on federal programs would result in the IRS unable to determine the correct amount of depreciation deduction that should be allowed on the tax return thereby engendering the inability of IRS to meet its mission.

7. SPECIAL CIRCUMSTANCES REQUIRING DATA COLLECTION TO BE INCONSISTENT WITH GUIDELINES IN 5 CFR 1320.5(d)(2)

There are no special circumstances requiring data collection to be inconsistent with Guidelines in 5 CFR 1320.5(d)(2).

8. CONSULTATION WITH INDIVIDUALS OUTSIDE OF THE AGENCY ON AVAILABILITY OF DATA, FREQUENCY OF COLLECTION, CLARITY OF INSTRUCTIONS AND FORMS, AND DATA ELEMENTS

Current Activity

We received no comments during the comment period in response to the Federal Register notice (82 FR 59265), dated October 24, 2017.

Historical Activity

On September 9, 2013, a notice of proposed rulemaking (REG–132455–11) was published in the Federal Register (78 FR 54986). Written comments responding to the proposed regulations were received. A public hearing was held on November 19, 2013. The comments are available for public inspection at www.regulations.gov or on request. After consideration of all the comments, the proposed regulations are adopted as amended by Treasury decision, (TD 9660) and were published on March 10, 2014 (79 FR 13227). These final regulations also include certain nonsubstantive revisions to increase consistency with final regulations issued under section 6056 (TD 9661) contemporaneously with these regulations.

In response to the Federal Register Notice dated September 2, 2014 (79 F. R. 52118), we received comments from three organizations that raised issues and concerns with the proposed Form 1094-B (Transmittal of Health Coverage Information Returns), Form 1095-B (Health Coverage), and the related instructions.

The IRS developed Forms 1094–B and 1095–B under the authority of Internal Revenue Code section 6055, added by P.L. 111–148, Patient Protection and Affordable Care Act (ACA), section 1502(a). Section 6055(a) requires every health insurance issuer, sponsor of a self-insured health plan, government agency that administers government sponsored health insurance programs and other entity that provides minimum essential coverage to file annual returns reporting information for each individual for whom minimum essential coverage is provided. Form 1094–B, serves as a transmittal for Form 1095–B, Health Coverage.

IRS reviewed all the comments that were submitted. Many of the comments requested clarifications on certain items or line numbers or additional examples. Most of these requests will be adopted and will be addressed in the final release of the instructions for Forms1094-B and 1095-B.

Specifically, two separate commenters asked that the forms and instruction be clarified so that filers are aware that they can report Taxpayer Identification Numbers (TIN), in addition to Social Security Numbers (SSNs).  In general, IRS forms and instructions refer to SSNs rather than TINs. The early release of the Forms 1094-B and 1095-B and instructions followed this protocol.  Notwithstanding, in response to the comments received, we have clarified the instructions to put filers on notice that they may report SSN or other TIN. 

In addition, one commenter asked that we clarify that filers are not required to provide TIN or SSN for the individual listed on Part I of the Form 1095-B, if that individuals is not enrolled in the coverage being reported on the form. In response, the IRS clarified in the instructions that in this circumstance, no SSN or TIN is required.

Finally, one commentator asked that language be added to note that “your issuer is required to report your complete TIN to the IRS if you have one and are enrolled in the issuer’s health plan.” As noted, we clarified that a TIN can be reported. The instructions the recipient receives have been modified and now read “Line 2 reports your social security number (SSN) or other taxpayer identification number (TIN), if applicable. For your protection, this form may show only the last four digits. However, the coverage provider is required to report your complete SSN or other TIN, if applicable to the IRS.”

Some of the comments that were not adopted were outside the scope of Forms 1094-B and 1095-B.  For example, one commenter requested that the IRS expand the Taxpayer Identification Number (TIN) Matching Program to filers of information returns required under Code section 6055.  It is our understanding that the IRS does not have the legal authority to do so.  Another comment requested relief for a de minimis number of missing TINs.  We believe this would require additional legal guidance to be issued before it could be described in instructions to a form.

Similarly, a comment requested additional period of transition relief from TIN solicitation.  We note that initial reporting has already been delayed for a year and there is already a relaxed compliance standard for 2015.  In any event, we believe further relief is more appropriately granted in legal guidance rather than form instructions.  

9. EXPLANATION OF DECISION TO PROVIDE ANY PAYMENT OR GIFT TO RESPONDENTS

No payment or gift has been provided to any respondents.

10. ASSURANCE OF CONFIDENTIALITY OF RESPONSES

Generally, tax returns and tax return information are confidential as required by 26 U.S.C. 6103.

11. JUSTIFICATION OF SENSITIVE QUESTIONS

A privacy impact assessment (PIA) has been conducted for information collected under this request as part of the “Affordable Care Act (ACA)” system and a Privacy Act System of Records notice (SORN) has been issued for this system under; IRS 24.030- Individual Master File, IRS 24.046-Customer Account Data Engine Business Master File, and IRS 34.037- Audit Trail and Security Records System. The Internal Revenue Service PIAs can be found at http://www.irs.gov/uac/Privacy-Impact-Assessments-PIA.

Title 26 USC 6109 requires inclusion of identifying numbers in returns, statements, or other documents for securing proper identification of persons required to make such returns, statements, or documents and is the authority for social security numbers (SSNs) in IRS systems.

12. ESTIMATED BURDEN OF INFORMATION COLLECTION

The burden for the collection of information contained in these final regulations (TD 9660) is reflected in the burden on Form 1094–B and 1095-B.

Transmittal of Health Coverage Information Returns (“aggregator” filing for insurance companies) – 1094-B: Filing Form 1094-B is voluntary for tax year 2015 and the number of voluntary issuers is uncertain, but it is estimated that there will be 430 issuers. The average time per issuer of 10 minutes reflects the fact that this is a cover page, there are very few lines to complete, and the information takes minimal effort to obtain.

Health Coverage - 1095-B: Filing Form 1095-B is voluntary for tax year 2015 and the number of voluntary filers is uncertain, but the estimated number of issuers is 430. The total number of Form 1095-B (one per insured “unit”) approaches 4,600,000. The per document average is slightly higher than Form 1095-A because the complexity of the required recordkeeping and reporting for Form 1095-B is beyond what is required in standard business practice. On the other hand, the average time per document is on the low side because the information needed to meet the recordkeeping and reporting requirements is maintained for other business reasons. Also, insurance companies are more likely to be large and, therefore, to have lower document-production costs as a result of the scale.

FY2017	1094-B	1095-B
Total Number of Issuers	30,000	30,000
Total Documents Issued	30,000	125,000,000
Average Time per Document (Minutes)	10	1
Total Time - All Issuers (Hours)	5,000	2,083,333

13. ESTIMATED TOTAL ANNUAL COST BURDEN TO RESPONDENTS

To ensure more accuracy and consistency across its information collections, IRS is currently in the process of revising the methodology it uses to estimate burden and costs. Once this methodology is complete, IRS will update this information collection to reflect a more precise estimate of burden and costs.

14. ESTIMATED ANNUALIZED COST TO THE FEDERAL GOVERNMENT

To ensure more accuracy and consistency across its information collections, IRS is currently in the process of revising the methodology it uses to estimate burden and costs. Once this methodology is complete, IRS will update this information collection to reflect a more precise estimate of burden and costs.

15. REASONS FOR CHANGE IN BURDEN

There is no change to this existing regulation. However, the agency has updated the number of respondents to reflect the most recent data available.

In the originating collection, the number of 1095-B forms was estimated for all of the users however it was reduced to 10% of the estimate in the submission because the filing was optional by the respondents. Since it was not yet a requirement, the filers would be a fraction of the filers when the requirement was enacted. With the renewal of the collection, and the requirement of the filing, the estimates have been updated to reflect the representative number of required respondents. The per form response has not changed.

	Requested	Program Change Due to New Statute	Program Change Due to Agency Discretion	Change Due to Adjustment in Agency Estimate	Change Due to Potential Violation of the PRA	Previously Approved
Annual Number of Responses	125,030,000	0	120,429,570	0	0	4,600,430
Annual Time Burden (Hr)	2,088,333	0	2,002,261	0	0	86,072

16. PLANS FOR TABULATION, STATISTICAL ANALYSIS AND PUBLICATION

There are no plans for tabulation, statistical analysis and publication.

17. REASONS WHY DISPLAYING THE OMB EXPIRATION DATE IS INAPPROPRIATE

IRS believes that displaying the OMB expiration date is inappropriate because it could cause confusion by leading taxpayers to believe that the regulation sunsets as of the expiration date. Taxpayers are not likely to be aware that the Service intends to request renewal of the OMB approval and obtain a new expiration date before the old one expires.

18. EXCEPTIONS TO THE CERTIFICATION STATEMENT

There are no exceptions to the certification statement.

Note: The following paragraph applies to all of the collections of information in this submission:

An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection of information displays a valid OMB control number. 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.