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The New Deadline To Furnish Form 1095-C To Employees Is March 2, 2023
The IRS finalized regulations extending the deadline for employers to furnish Form 1095-C to employees. (See 87 Fed. Reg. 76569, December 15, 2022.) Beginning January 1, 2023, the deadline is permanently extended 30 days from January 31 to March 2 of the year following the calendar year to which the statement relates. For minimum essential coverage provided in 2022, the deadline to furnish statements to employees is March 2, 2023. Since the extension is automatic, the regulations removed the option for employers to submit a written request for an extension for a good cause and the IRS’s discretion to prescribe any other automatic extension.
Applicable large employers are required to file information returns and furnish written statements with respect to the health insurance if any, that the employer offers to full-time employees. The IRS uses the information returns to administer the employer-shared responsibility provisions of the Affordable Care Act. The IRS has generally designated Form 1095-C to meet the requirement that applicable large employers furnish individual employees with a written statement identifying the offer of employer-sponsored minimum essential coverage.
While the due date to furnish Forms 1095-C has been permanently extended to March 2, applicable large employers are still required to file Forms 1094-C and 1095-C with the IRS on or before February 28th, if filing on paper, or March 31st, if filing electronically. Notably, employers filing 250 or more returns are required to file electronically. Employers that would like an automatic 30-day extension to file Forms 1094-C and 1095-C must submit Form 8809 on or before the due date of the returns.
Employers who fail to furnish or file statements by the deadlines are subject to penalties unless the failure is due to reasonable cause and not to willful neglect.
Lawsuit to Watch: David G. Williams v. Amazon.com Services, LLC
Senior software development engineer David G. Williams filed a lawsuit against his employer Amazon to recoup expenses he incurred while working from home. Under California Labor Code Section 2802, employers are required to indemnify employees for all necessary expenditures or losses incurred as a direct consequence of the employee discharging his or her duties. Due to California’s Stay-at-Home orders in March 2020, Williams was sent to work from home and claims he incurred expenses for his home internet, equipment, electricity, and home office infrastructure by working remotely.
Williams filed the lawsuit as a proposed class action on behalf of himself and all other California residents who are or were employed by Amazon. Williams alleges that the typical amount of expenses owed is $50 to $100 per class member. There are at least 4,200 members in the proposed class, who worked 110,000 months in aggregate. The amount in controversy is estimated to be $5,500,000 on the low end.
Amazon filed a motion to dismiss the lawsuit and raised three arguments about why it was not responsible for its employees’ work-from-home expenses. First, Amazon claimed that the government, and not Amazon, imposed the lockdown which necessitated that employees work from home. Amazon claimed that Williams was trying to capitalize on the pandemic by using Labor Code Section 2802 to seek reimbursement for his remote work expenses. The court held that it did not matter if Amazon itself was not the but-for cause for the shift to remote work. The court determined that Amazon expected Williams to continue to work from home after the Stay-at-Home orders were imposed, which was sufficient for Williams’ Labor Code Section 2802 claim to continue.
Second, Amazon argued that employees had incurred no additional or incremental expenses by working from home. The court disagreed with Amazon and found that the duties of an engineer plausibly require the use of physical space, internet, and electricity.
Third, Amazon claimed that Williams did not take advantage of Amazon’s expense reimbursement policies. Amazon argued that Williams did not ever submit a single reimbursement request and there were no facts showing Amazon knew or had reason to know about the expenses. Amazon’s position was that an employer needs information about the expense before it can reimburse the expense. The court found that as a major tech company, Amazon surely knew or at the very least, had reason to know, that its engineers who worked from home were incurring basic costs related to their duties.
The court denied Amazon’s motion to dismiss, which allows Williams’ proposed class action to move forward.
Note: Public agencies should monitor developments in this proposed class action lawsuit to see how the court interprets an employer’s obligations under Labor Code Section 2802 as it relates to work-from-home expenses.
Williams v. Amazon.com Services, LLC, 2022 WL 1769124 (N.D. Cal., Jun. 1, 2022).
Reminder: Increase to Health FSA Contribution Limit
The 2023 annual limit for employee salary reductions for contributions to health FSAs is $3,050 (up from $2,750 in 2022). For Section 125 cafeteria plans that permit the carryover of unused funds, the maximum health FSA carryover is $610. The annual limit for employee salary reductions for contributions to dependent care assistance programs (DCAPs) remains at $5,000. For more information, see IRS Revenue Procedure 2022-38.
Reminder: The 2023 Standard Mileage Rate
The 2023 standard mileage rate is 65.5 cents per mile driven for business use. This rate is used to calculate the reimbursable and deductible costs of operating a vehicle for business purposes. The rate applies to electric, hybrid, gasoline, and diesel-powered vehicles. Employers also have the alternative option of calculating the actual costs of using a vehicle rather than using the IRS’s standard mileage rate.
The 2023 standard mileage rate is 3 cents higher than the rate at the end of 2022. In the middle of 2022, the IRS enacted a mid-year increase to the standard mileage rate by 4 cents to account for the increase in fuel prices. LCW will continue to monitor any future changes to the standard mileage rate for this year.
ACA Compliance Question: Look Back Measurement Method Safe Harbor
Does your agency use a Look Back Measurement Method Safe Harbor (LBSH) to calculate who is a full-time employee for ACA purposes? More importantly, does your agency have a written policy establishing the LBSH? Agencies that are applicable to large employers (50 or more full-time equivalent employees) and use the LBSH should have a written policy establishing the terms of the LBSH. Let us know if we can help.
BENEFITS BEST PRACTICES TIMELINE
Each month, LCW will present a monthly benefits timeline of best practices. This timeline is intended to apply to agencies that are applicable to large employers for Affordable Care Act (ACA) purposes. LCW encourages public agencies to use the timeline as a guideline.
- Forms 1094-C and 1095-C are due February 28, 2023, if filing on paper (or March 31, 2023, if filing electronically). Employers filing 250 or more returns must file electronically.
- Prepare to furnish Form 1095-C to each full-time employee by March 2, 2023, for the 2022 calendar year.
- Furnish Form 1095-C to each full-time employee by March 2, 2023, for the 2022 calendar year.
- Forms 1094-C and 1095-C are due March 31, 2023, if filing electronically (due earlier on February 28, 2023, if filing on paper).