Reporting Series: Good Faith Transition Relief
IRS Notice 2017-70 extended two requirements pertaining to 2016 IRS reporting – one was the due date for furnishing Forms 1095 to individuals (extended to 3/2/2017), and the other was for good faith transition relief from Section 6721/6722 penalties.
But what does this mean exactly?
Good faith transition relief was extended to 2016 due to the challenges involved in developing new procedures and systems to accurately collect and report information in compliance with IRS Section 6055/6056 reporting requirements. To qualify for the relief, employers must show they made a good faith effort to comply, both when furnishing Forms 1095 to individuals and filing Forms 1094 and 1095 with the IRS.
The relief protects employers who made a good faith effort from penalties under Section 6721 (for incomplete or incorrect filing with the IRS) and Section 6722 (for incomplete or incorrect furnishing of statements to individuals). This relief applies to missing and inaccurate taxpayer identification numbers and dates of birth, as well as other information required on the return or statement. It is important to note that this relief does not apply if an employer does not make a good faith effort to comply with the reporting requirements or does not meet the applicable deadlines.