Announcement 2021-17

The Internal Revenue Service has revoked its determination that the organizations listed below qualify as organizations described in sections 501(c)(3) and 170(c)(2) of the Internal Revenue Code of 1986.

Generally, the IRS will not disallow deductions for contributions made to a listed organization on or before the date of announcement in the Internal Revenue Bulletin that an organization no longer qualifies. However, the IRS is not precluded from disallowing a deduction for any contributions made after an organization ceases to qualify under section 170(c) (2) if the organization has not timely filed a suit for declaratory judgment under section 7428 and if the contributor (1) had knowledge of the revocation of the ruling or determination letter, (2) was aware that such revocation was imminent, or (3) was in part responsible for or was aware of the activities or omissions of the organization that brought about this revocation.

If on the other hand a suit for declaratory judgment has been timely filed, contributions from individuals and organizations described in section 170(c)(2) that are otherwise allowable will continue to be deductible. Protection under section 7428(c) would begin on December 20, 2021 and would end on the date the court first determines the organization is not described in section 170(c)(2) as more particularly set for in section 7428(c)(1). For individual contributors, the maximum deduction protected is $1,000, with a husband and wife treated as one contributor. This benefit is not extended to any individual, in whole or in part, for the acts or omissions of the organization that were the basis for revocation.

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Notice of Proposed Rulemaking

Information Reporting of Health Insurance Coverage and Other Issues

REG-109128-21

AGENCY : Internal Revenue Service (IRS), Treasury.

ACTION : Notice of proposed rulemaking

SUMMARY : This document contains proposed regulations providing that “minimum essential coverage,” as that term is used in health insurance-related tax laws, does not include Medicaid coverage that is limited to COVID-19 testing and diagnostic services provided under the Families First Coronavirus Response Act. The proposed regulations also would provide an automatic extension of time for providers of minimum essential coverage (including health insurance issuers, self-insured employers, and government agencies) to furnish individual statements regarding such coverage and would provide an alternative method for furnishing individual statements when the shared responsibility payment amount is zero. Additionally, the proposed regulations would provide an automatic extension of time for “applicable large employers” (generally employers with 50 or more full-time or full-time equivalent employees) to furnish statements relating to health insurance that the employer offers to its full-time employees. The proposed regulations would affect some taxpayers who claim the pre

mium tax credit; health insurance issuers, self-insured employers, government agencies, and other persons that provide minimum essential coverage to individuals; and applicable large employers.

DATES : Written or electronic comments and requests for a public hearing must be received by February 4, 2022. Requests for a public hearing must be submitted as prescribed in the “ Comments and Requests for a Public Hearing ” section.

ADDRESSES : Commenters are strongly encouraged to submit public comments electronically. Submit electronic submissions via the Federal eRulemaking Portal at www.regulations.gov (indicate IRS and REG-109128-21) by following the online instructions for submitting comments. Once submitted to the Federal eRulemaking Portal, comments cannot be edited or withdrawn. The Internal Revenue Service (IRS) expects to have limited personnel available to process public comments that are submitted on paper through mail. Until further notice, any comments submitted on paper will be considered to the extent practicable. The Department of the Treasury (Treasury Department) and the IRS will publish for public availability any comment submitted electronically, and to the extent practicable, on paper, to its public docket. Send paper submissions to: CC:PA:LPD:PR (REG-109128-21), Room 5203, Internal Revenue Service, P.O. Box 7604, Ben Franklin Station, Washington, DC 20044.

FOR FURTHER INFORMATION CONTACT : Concerning the proposed regulations, call Gerald Semasek, Office of Associate Chief Counsel (Income Tax and Accounting), (202) 317-7006 (not

a toll-free number); concerning submissions of comments and requests for a public hearing, call Regina Johnson at (202) 317-5177 (not a toll-free number) or send an email to publichearings@irscounsel. treas.gov.

SUPPLEMENTARY INFORMATION :

Background

This document contains proposed amendments to 26 CFR parts 1 (Income Tax Regulations) and 301 (Procedure and Administration Regulations) under sections 5000A, 6055, and 6056 of the Internal Revenue Code (Code).

1. Minimum Essential Coverage under Section 5000A

Beginning in 2014, under the Patient Protection and Affordable Care Act, Pub. L. 111-148,124 Stat. 119 (2010), and the Health Care and Education Reconciliation Act of 2010, Pub. L. 111-152, 124 Stat. 1029 (2010) (collectively, the Affordable Care Act or ACA), eligible individuals who purchase coverage under a qualified health plan through a Health Insurance Exchange (Exchange) established under section 1311 of the ACA may claim a premium tax credit under section 36B of the Code. Section 36B and § 1.36B-3 of the Income Tax Regulations provide that a taxpayer is allowed a premium tax credit only for months that are coverage months for individuals in the taxpayer’s family, as defined in § 1.36B-1(d). Under § 1.36B3(c)(1)(iii), a “coverage month” for an individual includes only those months the individual is not eligible for minimum essential coverage other than coverage in the individual market.

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Section 5000A was added to the Code by section 1501 of the ACA. Section 5000A(f)(1) defines “minimum essential coverage” to include various types of health plans and programs, including, for example, specified government-sponsored programs such as the Medicare program under Part A of title XVIII of the Social Security Act; the Medicaid program under Title XIX of the Social Security Act; the Children’s Health Insurance Program under Title XXI of the Social Security Act (CHIP); the TRICARE program under chapter 55 of Title 10, United States Code (U.S.C.); health care programs for veterans and other individuals under chapter 17 or 18 of Title 38, U.S.C.; coverage for Peace Corps volunteers under 22 U.S.C. 2504(e); coverage under the Nonappropriated Fund Health Benefits Program under section 349 of Public Law 103-337; and coverage under an eligible employer-sponsored plan. Section 1.5000A-2(b) (2) of the Income Tax Regulations lists certain government-sponsored programs that do not constitute minimum essential coverage.

Section 5000A requires that individuals have minimum essential coverage for each month in the taxable year, qualify for an exemption from the minimum essential coverage requirement, or make an individual shared responsibility payment upon filing a federal income tax return. Section 11081 of Public Law 115-97, 131 Stat. 2054, 2092 (2017), commonly referred to as the Tax Cuts and Jobs Act (TCJA), reduces the individual shared responsibility payment amount to zero for months beginning after December 31, 2018.

2. Information Reporting under Sections 6055 and 6056

Section 6055 of the Code provides that all persons who provide minimum essential coverage to an individual must report certain information to the IRS that identifies covered individuals and the period of coverage. See section 6055(a) and (b). Those persons also must furnish a statement to the covered individuals containing the same information. See section 6055(c). Under section 6055(a), (c)(2), and § 1.6055-1(f) and (g), every person that provides minimum essential coverage to an individual during the calendar year

is required to file with the IRS an information return and a transmittal on or before February 28 (March 31 if filed electronically) of the year following the calendar year to which it relates and to furnish to the responsible individual identified on the return a written statement on or before January 31 of the year following the calendar year to which the statement relates. The information returns and written statements must include certain information about the reporting entity, the name and taxpayer identification number (TIN) of the responsible individual, the name and TIN of each individual covered under the health policy, and any other information specified in IRS instructional materials. See § 1.6055-1(e) and (g)(4). The IRS generally has designated Form 1094-B, Transmittal of Health Coverage Informa- tion Returns, and Form 1095-B, Health Coverage, to meet the section 6055 requirements.

Section 6056 of the Code requires an applicable large employer (ALE), as defined in section 4980H(c) of the Code, that is required to meet the requirements of section 4908H to file annually information returns and furnish written statements in relation to the health insurance, if any, that the employer offers to its full-time employees. These information returns and written statements are needed in order to administer the employer shared responsibility provisions of section 4980H.

Under section 6056(a), (c)(2), and § 301.6056-1(e) and (g), every ALE or member of an aggregated group that is determined to be an ALE (ALE member) is required to file with the IRS an information return and a transmittal on or before February 28 (March 31 if filed electronically) of the year following the calendar year to which it relates and to furnish to full-time employees a written statement on or before January 31 of the year following the calendar year to which the statement relates. The IRS generally has designated Form 1094-C, Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns, and Form 1095-C, Employer-Provided Health Insurance Offer and Coverage, to meet the section 6056 requirements.

In addition, an ALE member that offers coverage through a self-insured health plan must complete the reporting required

under section 6055, specifically the information regarding each individual enrolled in the self-insured health plan, using Form 1095-C, Part III, rather than Form 1095B. ALE members use Form 1095-C, Part III, to meet the section 6055 reporting requirement for all employees. For individuals who are not full-time employees, ALE members report only certain information to reflect that the Form 1095-C is being used to complete the section 6055 reporting applicable to individuals who are not full-time employees, but not the section 6056 reporting applicable only to full-time employees.

The current regulations under sections 6055 and 6056 allow the IRS to grant an extension of time of up to 30 days to furnish Forms 1095-B and 1095-C for good cause shown. See §§ 1.6055-1(g)(4)(i)(B) ( 1 ) and 301.6056-1(g)(1)(ii)(A). Additionally, filers of Forms 1095-B, 1094-C and 1095-C may receive an automatic 30-day extension of time to file the forms with the IRS by submitting Form 8809, Application for Extension of Time to File Information Returns, on or before the due date for filing the forms. See §§ 1.6081-1 and 1.6081-8.

3. Information Reporting Penalties under Sections 6721 and 6722

Section 6721 imposes a penalty for failing to timely file an information return or for filing an incorrect or incomplete information return. Section 6722 imposes a penalty for failing to timely furnish an information statement or furnishing an incorrect or incomplete information statement. The section 6721 and 6722 penalties are imposed with regard to information returns and statements listed in section 6724(d), which include those required by sections 6055 and 6056. Section 6724 provides that no penalty will be imposed under section 6721 or 6722 with respect to any failure if it is shown that the failure is due to reasonable cause and not to willful neglect.

The preambles to the section 6055 and 6056 regulations provided that the IRS would not impose section 6721 and 6722 penalties on reporting entities for the reporting of 2015 health coverage and offers of coverage if those entities could show that they made good faith efforts

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to comply with the information reporting requirements (transitional good faith relief). See T.D. 9660, 79 FR 13220 at 13226 (Mar. 10, 2014); T.D. 9661, 79 FR 13231 at 13246 (Mar. 10, 2014). The transitional good faith relief covered incorrect or incomplete information, including TINs or dates of birth, reported on information returns or statements. The relief did not apply to a failure to timely file or furnish a return or statement, or when the filer failed to make a good faith effort to comply with the reporting requirements. The preambles to the section 6055 and 6056 regulations also stated that reporting entities failing to meet the reporting requirements of the regulations may have been eligible for penalty relief if the IRS determined the standards for reasonable cause under section 6724 were satisfied. The Treasury Department and the IRS reiterated the transitional good faith relief in Notice 2015-68, 2015-41 I.R.B. 547 (Oct. 13, 2015), and Notice 2015-87, 2015-52 I.R.B. 889 (Dec. 28, 2015).

Explanation of Provisions

1. Medicaid Coverage of COVID-19 Testing and Diagnostic Services under Section 5000A