[Federal Register Volume 81, Number 148 (Tuesday, August 2, 2016)]
[Proposed Rules]
[Pages 50671-50680]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-18100]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Parts 1 and 301

[REG-103058-16]
RIN 1545-BN23


Information Reporting of Catastrophic Health Coverage and Other 
Issues Under Section 6055

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Notice of proposed rulemaking.

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SUMMARY: This document contains proposed regulations relating to 
information reporting of minimum essential coverage under section 6055 
of the Internal Revenue Code (Code). Health insurance issuers, certain 
employers, and others that provide minimum essential coverage to 
individuals must report to the IRS information about the type and 
period of coverage and furnish related statements to covered 
individuals. These proposed regulations affect health insurance 
issuers, employers, governments, and other persons that provide minimum 
essential coverage to individuals.

DATES: Written or electronic comments and requests for a public hearing 
must be received by October 3, 2016.

ADDRESSES: Send submissions to: CC:PA:LPD:PR (REG-103058-16), Room 
5203, Internal Revenue Service, P.O. Box 7604, Ben Franklin Station, 
Washington, DC 20044. Submissions may be hand-delivered Monday through 
Friday between the hours of 8 a.m. and 4 p.m. to CC:PA:LPD:PR (REG-
103058-16), Courier's Desk, Internal Revenue Service, 1111 Constitution 
Avenue NW., Washington, DC 20224, or sent electronically via the 
Federal eRulemaking Portal at http://www.regulations.gov (IRS REG-
103058-16).

FOR FURTHER INFORMATION CONTACT: Concerning the proposed regulations 
under section 6055, John B. Lovelace, (202) 317-7006; concerning the 
proposed regulations under section 6724, Hollie Marx, (202) 317-6844; 
concerning the submission of comments, Regina Johnson, (202) 317-6901 
(not toll-free calls).

SUPPLEMENTARY INFORMATION: 

Paperwork Reduction Act

    The collection of information contained in this notice of proposed 
rulemaking has been submitted to the Office of Management and Budget in 
accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 
3507(d)). Comments on the collection of information should be sent to 
the Office of Management and Budget, Attn: Desk Officer for the 
Department of the Treasury, Office of Information and Regulatory 
Affairs, Washington, DC 20503, with copies to the Internal Revenue 
Service, Attn: IRS Reports Clearance Officer, SE:W:CAR:MP:T:T:SP, 
Washington, DC 20224. Comments on the collection of information should 
be received by October 3, 2016. Comments are specifically requested 
concerning:
    Whether the proposed collection of information is necessary for the 
proper performance of the functions of the IRS, including whether the 
information will have practical utility;
    How the quality, utility, and clarity of the information to be 
collected may be enhanced;
    How the burden of complying with the proposed collection of 
information may be minimized, including through the application of 
automated collection techniques or other forms of information 
technology; and
    Estimates of capital or start-up costs and costs of operation, 
maintenance, and purchase of services to provide information.

[[Page 50672]]

    The collection of information in these proposed regulations is in 
Sec.  1.6055-1. The collection of information will be used to determine 
whether an individual has minimum essential coverage under section 
1501(b) of the Patient Protection and Affordable Care Act (26 U.S.C. 
5000A(f)). The collection of information is required to comply with the 
provisions of section 6055. The likely respondents are health insurers, 
self-insured employers or other sponsors of self-insured health plans, 
and governments that provide minimum essential coverage.
    The burden for the collection of information contained in these 
proposed regulations will be reflected in the burden on Form 1095-B, 
Health Coverage, or another form that the IRS designates, which will 
request the information in the proposed regulation.
    An agency may not conduct or sponsor, and a person is not required 
to respond to, a collection of information unless it displays a valid 
control number assigned by the Office of Management and Budget.

Background

    Under section 5000A, individuals must for each month have minimum 
essential coverage, qualify for a health coverage exemption, or make an 
individual shared responsibility payment with their income tax returns. 
Section 6055 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, and 
must furnish a statement to the covered individuals containing the same 
information. The information reported under section 6055 allows 
individuals to establish, and the IRS to verify, that the individuals 
were covered by minimum essential coverage for months during the year.
    Information returns under section 6055 generally are filed using 
Form 1095-B. A separate and distinct health coverage-related reporting 
requirement under section 6056 requires that certain large employers 
report information on Form 1095-C, Employer-Provided Health Insurance 
Offer and Coverage. Self-insured employers required to file Form 1095-C 
use Part III of that form, rather than Form 1095-B, to report 
information required under section 6055 for individuals enrolled in the 
self-insured employer-sponsored coverage. These proposed regulations 
provide guidance under section 6055 only, which relates to Form 1095-B 
and Form 1095-C, Part III. These proposed regulations do not affect 
information reporting under section 6056 on Form 1095-C, Parts I and 
II.
    Under section 5000A(f)(1), various types of health plans and 
programs are minimum essential coverage, including: (1) Specified 
government-sponsored programs such as Medicare Part A, the Medicaid 
program under Title XIX of the Social Security Act (42 U.S.C. 1936 and 
following sections), the Children's Health Insurance Program under 
Title XXI of the Social Security Act (42 U.S.C. 1397aa and following 
sections) (CHIP), the TRICARE program under chapter 55 of Title 10, 
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), and coverage under the 
Nonappropriated Fund Health Benefits Program under section 349 of 
Public Law 103-337, (2) coverage under an eligible employer-sponsored 
plan, (3) coverage under a plan in the individual market (such as a 
qualified health plan offered through an Affordable Insurance Exchange 
(Exchange, also known as a Marketplace)), (4) coverage under a 
grandfathered health plan, and (5) other coverage recognized as minimum 
essential coverage by the Secretary of Health and Human Services, in 
coordination with the Secretary of the Treasury.
    Under section 5000A(f)(3) and Sec.  1.5000A-2(g) of the Income Tax 
Regulations, coverage that consists solely of excepted benefits 
described in section 2791(c)(1), (c)(2), (c)(3), or (c)(4) of the 
Public Health Service Act (42 U.S.C. 300gg-91(c)), and the regulations 
under that section, is not minimum essential coverage. Section 1.5000A-
2(b)(2) lists government-sponsored programs that provide limited 
benefits and which are not minimum essential coverage.
    Under section 5000A(f)(4), an individual who is a bona fide 
resident of a United States possession for a month is treated as having 
minimum essential coverage for that month.
    Notice 2015-68, 2015-41 I.R.B. 547, provides guidance on various 
issues under section 6055. In Notice 2015-68, the Treasury Department 
and the IRS stated that they intend to propose regulations under 
section 6055 addressing certain of these issues and requested comments. 
Comments were requested about the application of the reasonable cause 
rules under section 6724 to section 6055 reporting, in particular as 
applied to taxpayer identification number (TIN) solicitation and 
reporting.

Persons Required To Report

    Under Sec.  1.6055-1(c)(1)(iii), the executive department or agency 
of the governmental unit that provides coverage under a government-
sponsored program is the reporting entity for government-sponsored 
minimum essential coverage. Section 1.6055-1(c)(3)(i) specifically 
provides that the State agency that administers the Medicaid or CHIP 
program, respectively, must report government-sponsored coverage under 
section 6055. Notice 2015-68 provides that Medicaid and CHIP agencies 
in U.S. possessions or territories are not required to report Medicaid 
and CHIP coverage because an individual eligible for that coverage is 
generally a bona fide resident of the possession or territory who is 
deemed to have minimum essential coverage under section 5000A(f)(4) 
and, therefore, does not require reporting under section 6055 to verify 
compliance with section 5000A.
    In general, under Sec.  1.6055-1(c)(1)(ii) the reporting entity for 
coverage under a self-insured group health plan is the plan sponsor. 
Section 1.6055-1(c)(2) provides rules for identifying which entity is 
the plan sponsor of a self-insured group health plan for purposes of 
section 6055. For this purpose, the employer is the plan sponsor of a 
self-insured group health plan established by a single employer 
(determined without aggregating related entities under section 414). If 
the plan or arrangement is established or maintained by more than one 
employer (including a Multiple Employer Welfare Arrangement (as defined 
in section 3(40) of the Employee Retirement Income Security Act of 1974 
(ERISA)), and the plan is not a multiemployer plan (as defined in 
section 3(37) of ERISA), each participating employer is a plan sponsor 
with respect to that employer's employees. For a self-insured group 
health plan or arrangement that is a multiemployer plan, the plan 
sponsor is the association, committee, joint board of trustees, or 
other similar group of representatives of the parties who establish or 
maintain the plan. For a self-insured group health plan or arrangement 
maintained solely by an employee organization, the plan sponsor is the 
employee organization.
    The existing regulations at Sec.  1.6055-1(d)(2) provide that no 
reporting is required for minimum essential coverage that provides 
benefits in addition or as a supplement to other coverage that is 
minimum essential coverage if the primary and supplemental coverage 
have the same

[[Page 50673]]

plan sponsor or the coverage supplements government-sponsored minimum 
essential coverage. Notice 2015-68 explained that this rule had proven 
to be confusing, and, accordingly, the Treasury Department and the IRS 
intended to propose regulations providing that (1) if an individual is 
covered by multiple minimum essential coverage plans or programs 
provided by the same provider, reporting is only required for one of 
the plans or programs; and (2) reporting generally is not required for 
an individual's minimum essential coverage to the extent that the 
individual is eligible for that coverage only if the individual is also 
covered by other minimum essential coverage for which section 6055 
reporting is required.

Information Required To Be Reported

    Under section 6055(b) and Sec.  1.6055-1(e)(1), providers of 
minimum essential coverage must report to the IRS (1) the name, 
address, and employer identification number (EIN) of the reporting 
entity required to file the return; (2) the name, address, and TIN, or 
date of birth if a TIN is not available, of the responsible individual 
(except that a reporting entity may, but is not required to, report the 
TIN of a responsible individual not enrolled in the coverage); (3) the 
name and TIN, or date of birth if a TIN is not available, of each 
individual who is covered under the policy or program; and (4) the 
months of coverage for each covered individual.\1\ Section 1.6055-
1(b)(11) provides that the responsible individual includes a primary 
insured, employee, former employee, uniformed services sponsor, parent, 
or other related person named on an application who enrolls one or more 
individuals, including him or herself, in minimum essential coverage.
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    \1\ The Affordable Care Act also added section 6056, which 
requires that applicable large employers file and furnish statements 
containing information related to offers of coverage, if any, made 
to each full-time employee. To complete these statements properly, 
employers must have each employee's TIN. In accordance with the 
requirements of a different Code section (section 3402(f)(2)(A)), 
employers should have already sought each employee's TIN in advance 
of the deadline for filing and furnishing statements required under 
section 6056. Therefore, the TIN solicitation rules in these 
proposed regulations only apply to information reporting under 
section 6055 (which in the case of an applicable large employer 
providing coverage under a self-insured plan, includes information 
reporting on Form 1095-C, Part III).
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    In addition, under Sec.  1.6055-1(e)(2), for coverage provided by a 
health insurance issuer through a group health plan, information 
returns must report (1) the name, address, and EIN of the employer 
maintaining the plan, and (2) any other information that the Secretary 
requires for administering the credit under section 45R (relating to 
the tax credit for employee health insurance expenses of small 
employers).
    A reporting entity that fails to comply with the filing and 
statement furnishing requirements of section 6055 may be subject to 
penalties for failure to file timely a correct information return 
(section 6721) or failure to furnish timely a correct statement 
(section 6722). See section 6724(d); see also Sec.  1.6055-1(h)(1). 
These penalties may be waived if the failure is due to reasonable cause 
and is not due to willful neglect. See section 6724(a). In particular, 
under Sec.  301.6724-1(a)(2) of the Procedure and Administration 
Regulations penalties are waived if a reporting entity demonstrates 
that it acted in a responsible manner and that the failure is due to 
significant mitigating factors or events beyond the reporting entity's 
control. For purposes of section 6055 reporting, if the information 
reported on a return is incomplete or incorrect as a result of a change 
in circumstances (such as a retroactive change in coverage), a failure 
to timely file or furnish a corrected document is a failure to file a 
correct return or furnish a correct statement under sections 6721 and 
6722. See Sec.  1.6055-1(h)(2).
    In general, under Sec.  301.6724-1(e) a person will be treated as 
acting in a responsible manner if the person properly solicits a TIN 
but does not receive it. For this purpose, proper solicitation of a TIN 
involves an initial solicitation and two subsequent annual 
solicitations. In general, an initial solicitation is made when the 
relationship between the reporting entity and the taxpayer is 
established. If the reporting entity does not receive the TIN, the 
first annual solicitation is generally required by December 31 of the 
year in which the relationship with the taxpayer begins (January 31 of 
the following year if the relationship begins in December). Generally, 
if the TIN is still not provided, a second annual solicitation is 
required by December 31 of the following year. Similar rules applying 
to filers who file or furnish information reports with incorrect TINs 
are in Sec.  301.6724-1(f).
    The preamble to the section 6055 regulations (T.D. 9660, 79 FR 
13220) provides short-term relief from reporting penalties for 2015 
coverage. Specifically, the IRS will not impose penalties under 
sections 6721 and 6722 on reporting entities that can show that they 
have made good faith efforts to comply with the information reporting 
requirements. This relief applies to incorrect or incomplete 
information, including TINs or dates of birth, reported on a return or 
statement.

Explanation of Provisions and Summary of Comments

1. Reporting of Catastrophic Plans

    Under Sec.  1.36B-5(a), Exchanges must report to the IRS 
information relating to qualified health plans in which individuals 
enroll through the Exchange. Under section 36B(c)(3)(A), the term 
qualified health plan has the same meaning as defined in section 1301 
of the Affordable Care Act except that it does not include a 
catastrophic plan described in section 1302 of the Affordable Care Act. 
Thus, Exchanges are not required to report on catastrophic coverage. 
Section 1.6055-1(d) provides that health insurance issuers need not 
report on coverage in a qualified health plan in the individual market 
enrolled in through an Exchange, because that information is generally 
reported by Exchanges pursuant to Sec.  1.36B-5. Thus, currently 
neither the Exchanges nor health insurance issuers are responsible for 
reporting coverage under a catastrophic plan.
    Effective administration of section 5000A generally requires 
reporting of all minimum essential coverage, including catastrophic 
plans in which individuals enroll through an Exchange. Accordingly, 
Notice 2015-68 indicated that the Treasury Department and the IRS 
intended to propose regulations under section 6055 to narrow the relief 
provided to issuers in Sec.  1.6055-1(d) by requiring issuers of 
catastrophic plans to report catastrophic plan coverage on Form 1095-B, 
effective for coverage in 2016 and returns and statements filed and 
furnished in 2017. Consistent with Notice 2015-68, the proposed 
regulations include this requirement but, to allow reporting entities 
sufficient time to implement these reporting requirements, are proposed 
to be effective for coverage in 2017 and returns and statements filed 
and furnished in 2018.
    Notice 2015-68 indicated that health insurance issuers could 
voluntarily report on 2015 catastrophic coverage (on returns and 
statements filed and furnished in 2016) and were encouraged to do so. 
Notice 2015-68 further provided that an issuer that reports on 2015 
catastrophic coverage will not be subject to penalties for these 
returns. Given the 2017 effective date for reporting of catastrophic 
coverage provided in these proposed regulations, health insurance 
issuers similarly may

[[Page 50674]]

voluntarily report on 2016 catastrophic coverage (on returns and 
statements filed and furnished in 2017) and are encouraged to do so. An 
issuer that reports on 2016 catastrophic coverage will not be subject 
to penalties for these returns.

2. Reporting of Coverage Under Basic Health Programs

    Section 1331 of the Affordable Care Act allows states to establish 
a Basic Health Program to provide an additional healthcare coverage 
option to certain individuals not eligible for Medicaid. See 42 CFR 
part 600. The Basic Health Program is designated as minimum essential 
coverage under 42 CFR 600.5.
    Section 5000A(f) does not identify the Basic Health Program as a 
government-sponsored program, but it closely resembles government-
sponsored coverage such as Medicaid and CHIP. Accordingly, Notice 2015-
68 indicated that the state agency that administers the Basic Health 
Program is the entity that must report that coverage under section 
6055. Consistent with Notice 2015-68, these proposed regulations 
provide that the State agency administering coverage under the Basic 
Health Program is required to report that coverage under section 6055.

3. Truncated TINs

    Section 6055(b) and Sec.  1.6055-1(e) require that health insurance 
issuers and carriers reporting coverage under insured group health 
plans report information about the employer sponsoring the plan, 
including the employer's EIN, to the IRS. Section 6055(c) and Sec.  
1.6055-1(g) require that health insurance issuers and carriers 
reporting information to the IRS furnish a statement to a taxpayer 
providing information about the filer and the covered individuals. 
Section 301.6109-4(b)(1) provides that the TIN of a person other than 
the filer, including an EIN, may be truncated on statements furnished 
to recipients unless, among other reasons, such truncation is otherwise 
prohibited by statute or regulations. Thus, under Sec.  1.6055-1(g)(3) 
of the existing regulations, a recipient's TIN may appear in the form 
of an IRS truncated taxpayer identification number (TTIN) on a 
statement furnished to the recipient. These proposed regulations amend 
the existing regulations to clarify that a TTIN is not an alternative 
identifying number; rather, it is one of the ways that a TIN may 
appear, subject to the rules in Sec.  301.6109-4(b)(1).
    Existing regulations do not address whether health insurance 
issuers and carriers are permitted to truncate a sponsoring employer's 
EIN on statements furnished to taxpayers. Notice 2015-68 advised that 
the Treasury Department and the IRS intended to propose regulations to 
clarify that the EIN of the employer sponsoring the plan may be 
truncated to appear as an IRS TTIN on statements health insurance 
issuers and carriers furnish to taxpayers. Consistent with Notice 2015-
68, the proposed regulations clarify that the EIN of the employer 
sponsoring the plan may be truncated to appear as an IRS TTIN on 
statements health insurance issuers and carriers furnish to taxpayers. 
Section 301.6109-4(b)(2)(ii) prohibits using TTINs if, among other 
things, a statute specifically requires the use of an EIN. While 
section 6055(b)(2)(A) requires that the information return filed with 
the IRS includes the employer's EIN, and section 6055(c)(1)(B) requires 
that the statement furnished to a taxpayer includes the information 
required to be shown on the information return with respect to such 
individual, the statute does not require that the full EIN appear on 
the statement furnished to taxpayers and the employer's EIN may be 
truncated to appear in the form of an IRS TTIN.

4. Plans for Which Reporting Is Not Required

    Information reporting under section 6055(a) is generally required 
of every person who provides minimum essential coverage to an 
individual during the year. In certain instances where the reporting 
would be duplicative, the existing regulations allow the person who 
provides supplemental coverage to forgo information reporting. This 
supplemental coverage rule in Sec.  1.6055-1(d)(2) was intended to 
eliminate duplicate reporting of an individual's minimum essential 
coverage under circumstances when there is reasonable certainty that 
the provider of the ``primary'' coverage will report. This rule has 
proven to be confusing.
    The Treasury Department and the IRS indicated in Notice 2015-68 
that regulations would be proposed to replace the existing rules. 
Accordingly, the proposed regulations provide that (1) if an individual 
is covered by more than one minimum essential coverage plan or program 
provided by the same reporting entity, reporting is required for only 
one of the plans or programs; and (2) reporting is not required for an 
individual's minimum essential coverage to the extent that the 
individual is eligible for that coverage only if the individual is also 
covered by other minimum essential coverage for which section 6055 
reporting is required. As in Notice 2015-68, the proposed regulations 
provide that the second rule applies to eligible employer-sponsored 
coverage only if the supplemental coverage is offered by the same 
employer that offered the eligible employer-sponsored coverage for 
which section 6055 reporting is required. These rules apply month by 
month and individual by individual.
    Thus, under the proposed regulations, applying the first rule, if 
for a month an individual is enrolled in a self-insured group health 
plan provided by an employer and also is enrolled in a self-insured 
health reimbursement arrangement (HRA) provided by the same employer, 
the reporting entity (the employer) is required to report only one type 
of coverage for that individual. If an employee is covered under both 
self-insured arrangements for some months of the year but retires or 
otherwise drops coverage under the non-HRA group health plan and is 
covered only under the HRA for other months, the employer must report 
coverage under the HRA for the months after the employee retires or 
drops the non-HRA coverage.
    Applying the second rule, reporting is not required for minimum 
essential coverage for a month if that coverage is offered only to 
individuals who are also covered by other minimum essential coverage, 
including Medicare, TRICARE, Medicaid, or certain employer-sponsored 
coverage, for which reporting is required. In these arrangements, the 
program for which reporting is required represents the primary coverage 
while the other minimum essential coverage is supplemental to the 
primary plan.
    Under the application of the second rule to eligible employer-
sponsored coverage, if an employer offers both an insured group health 
plan and an HRA for which an employee is eligible if enrolled in the 
insured group health plan, and an employee enrolls in both, the 
employer is not required to report the employee's coverage under the 
HRA. However, if an employee is enrolled in his or her employer's HRA 
and in a spouse's non-HRA group health plan, the employee's employer is 
required to report for the HRA, and the employee's spouse's employer 
(or the health insurance issuer or carrier, if the plan is insured) is 
required to report for the non-HRA group health plan coverage. The 
proposed regulations clarify that, for purposes of this rule, an 
employer is treated as offering minimum essential coverage that is 
offered by another employer with whom the employer is treated as a 
single employer under section 414(b), (c), (m), or (o).

[[Page 50675]]

    Separately, Notice 2015-68 also stated that, because Medicaid and 
CHIP coverage provided by the governments of American Samoa, the 
Commonwealth of the Northern Mariana Islands, Guam, Puerto Rico, and 
the U.S. Virgin Islands is generally made available only to individuals 
who are treated as having minimum essential coverage under section 
5000A(f)(4) (and, therefore, do not need section 6055 reporting to 
verify minimum essential coverage), the Medicaid and CHIP agencies in 
those U.S. possessions or territories are not required to report that 
coverage under section 6055. Consistent with that rule, the proposed 
regulations provide that reporting under section 6055 is not required 
with respect to Medicaid and CHIP agencies in U.S. possessions or 
territories.

5. TIN Solicitation

    Information reporting under section 6055 is subject to the penalty 
provisions of sections 6721 and 6722 for failure to file timely a 
correct information return or failure to furnish timely a correct 
statement to the individual. See Sec.  1.6055-1(h). The penalties may 
be waived under section 6724(a) if the failure is due to reasonable 
cause and not due to willful neglect; that is, if a reporting entity 
demonstrates that it acted in a responsible manner and that the failure 
is due to significant mitigating factors or events beyond the reporting 
entity's control. See Sec.  301.6724-1(a)(2). Under Sec.  301.6724-
1(e), in cases of a missing TIN, the reporting entity is treated as 
acting in a responsible manner in soliciting a TIN if the reporting 
entity makes (1) an initial solicitation when an account is opened or a 
relationship is established, (2) a first annual solicitation by 
December 31 of the year the account is opened (or January 31 of the 
following year if the account is opened in December), and (3) a second 
annual solicitation by December 31 of the year following the year in 
which the account is opened. Similar rules apply regarding incorrect 
TINs under Sec.  301.6724-1(f). The rules in Sec.  301.6724-1(e) and 
(f) were issued prior to the enactment of section 6055 and apply to 
most forms of information reporting.
    Comments received in response to the first notice of proposed 
rulemaking (REG-132455-11) under section 6055, published in the Federal 
Register (78 FR 54986) on September 9, 2013, raised concerns about the 
application of the TIN solicitation rules to section 6055 reporting. 
Accordingly, Notice 2015-68 provided that, pending the issuance of 
additional guidance, reporting entities will not be subject to 
penalties for failure to report a TIN if they comply with the 
requirements of Sec.  301.6724-1(e) with the following modifications: 
(1) The initial solicitation is made at an individual's first 
enrollment or, if already enrolled on September 17, 2015, the next open 
season, (2) the second solicitation (the first annual solicitation) is 
made at a reasonable time thereafter, and (3) the third solicitation 
(the second annual solicitation) is made by December 31 of the year 
following the initial solicitation. Notice 2015-68 also requested 
comments on the application of the reasonable cause rules under section 
6724 to section 6055 reporting.
    In response to the request for comments in Notice 2015-68, one 
commenter requested that the proposed regulations include detailed 
rules tailored to TIN solicitation for information returns required by 
section 6055. This commenter expressed concern that, because the 
current rules were designed primarily to apply to financial 
relationships, they are difficult to apply to section 6055 reporting, 
particularly the rules for demonstrating that the filer acted in a 
responsible manner as described in Sec.  301.6724-1(e) and (f). The 
Treasury Department and the IRS agree with the commenter that some 
modification to the rules in Sec.  301.6724-1(e) is warranted to 
account for the differences between information reporting under section 
6055 and information reporting under other provisions of the Code. 
Accordingly, the Treasury Department and the IRS propose regulations to 
provide specific TIN solicitation rules for section 6055 reporting. 
Until final regulations are released, reporting entities may rely on 
these proposed rules and Notice 2015-68. The preamble below also 
includes some additional transition rules that apply to reporting 
entities in certain situations.
    Section 301.6724-1(e)(1)(i) provides that an initial TIN 
solicitation must occur when an account (which includes accounts, 
relationships, and other transactions) is opened. Section 301.6724-1(e) 
does not define the term ``opened'' for this purpose. Commenters 
requested clarification as to how the term ``opened'' should be 
interpreted for purposes of reporting under section 6055. In the 
context of financial accounts, an account is generally considered 
opened on the first day it is available for use by its owner. In most 
cases, this would be shortly after the application to open that account 
is received, and this day would be no earlier than the day the 
application was received. Health coverage does not work in the same 
way. In some cases, the first effective date of health coverage is 
before the day the application was received, making it impractical to 
solicit TINs before the coverage takes effect. In other cases, the 
effective date of coverage may be months after the day the application 
was received. To account for this different timing, the proposed 
regulations provide that, for purposes of section 6055 reporting, an 
account is considered ``opened'' on the date the filer receives a 
substantially complete application for new coverage or to add an 
individual to existing coverage. Accordingly, health coverage providers 
may generally satisfy the requirement for the initial solicitation by 
requesting enrollees' TINs as part of the application for coverage.
    To address differences in the way financial accounts and health 
coverage are opened, the proposed regulations also change the timing of 
the first annual solicitation (the second solicitation overall) with 
respect to missing TINs. Under Sec.  301.6724-1(e)(1)(ii), a first 
annual solicitation must be made by December 31 of the year the account 
is opened (or by January 31 of the following calendar year if the 
account is opened in December). The timing of the first annual 
solicitation is dictated by the need to have accurate reporting of 
information to taxpayers and the IRS in preparation for the filing of 
an income tax return. Accounts, relationships, and other transactions 
may be opened or begun throughout the year, and may remain active 
indefinitely. It is beneficial to the IRS, filers, and taxpayers in the 
context of accounts, relationships, and other transactions to have a 
single deadline for the first annual solicitation at the end of the 
calendar year (or January if the account is opened in December).
    By contrast, health coverage is generally offered on an annual 
basis. While individuals may, depending on their circumstances, enroll 
in coverage at any point during the year, many covered individuals 
enroll in coverage during the open enrollment period, which is in 
advance of the beginning of the coverage year. The most common coverage 
year is the calendar year and many individuals enroll late each year 
for coverage the following year. For such individuals, requiring the 
first annual solicitation (the second solicitation overall) by December 
31 of the year in which the application is received is earlier than is 
necessary (because reporting is not due until more than a year later) 
and coincides with the end of a plan year, which is already the busiest 
time of year for coverage providers. To address these considerations, 
the proposed regulations

[[Page 50676]]

require that the first annual solicitation be made no later than 
seventy-five days after the date on which the account was ``opened'' 
(i.e., the day the filer received the substantially complete 
application for coverage), or, if the coverage is retroactive, no later 
than the seventy-fifth day after the determination of retroactive 
coverage is made. The deadline for the second annual solicitation 
(third solicitation overall) remains December 31 of the year following 
the year the account is opened as required by Sec.  301.6724-
1(e)(1)(iii).
    As noted above, taxpayers may rely on these proposed regulations 
and on Notice 2015-68 until final regulations are published. To provide 
additional relief and ensure that the requirements for the first annual 
and second annual solicitations may be satisfied with respect to 
individuals already enrolled in coverage, an additional rule is 
provided. Under this rule, if an individual was enrolled in coverage on 
any day before July 29, 2016, the account is considered opened on July 
29, 2016. Accordingly, reporting entities have satisfied the 
requirement for the initial solicitation with respect to already 
enrolled individuals so long as they requested enrollee TINs either as 
part of the application for coverage or at any other point before July 
29, 2016. The deadlines for the first and second annual solicitations 
are set by reference to the date the account is opened. Thus, the rule 
above that treats all accounts for individuals currently enrolled in 
coverage for which a TIN has not been provided as opened on July 29, 
2016, provides additional time for the annual solicitations as well. 
Specifically, consistent with Notice 2015-68, the first annual 
solicitation should be made at a reasonable time after July 29, 2016. 
For this purpose, a reporting entity that makes the first annual 
solicitation within 75 days of the initial solicitation will be treated 
as having made the second solicitation within a reasonable time. 
Reporting entities that have not made the initial solicitation before 
July 29, 2016 should comply with the first annual solicitation 
requirement by making a solicitation within a reasonable time of July 
29, 2016. Notice 2015-68 also provided that a reporting entity is 
deemed to have satisfied the initial, first annual, and second annual 
solicitations for an individual whose coverage was terminated prior to 
September 17, 2015, and taxpayers may continue to rely on this rule as 
well.
    Section 301.6724-1(e)(1)(v) provides that the initial and first 
annual solicitations relate to failures on returns filed for the year 
in which the account is opened (meaning that showing reasonable cause 
with respect to the year the account is opened generally requires 
making the initial and first annual solicitations in the year the 
account is opened). Because these proposed regulations provide that an 
account is considered opened for section 6055 purposes when a 
substantially complete application for that account is received, an 
account would, in some cases, be considered open in a year prior to the 
year for which coverage is actually effective and for which reporting 
is required. This would occur, for example, when a reporting entity 
receives an application during open enrollment for coverage effective 
as of the first day of the next coverage year. To ensure that reporting 
entities that make the initial solicitation and first annual 
solicitation are eligible for relief for the first year for which 
reporting is required, the proposed regulations provide that, for 
purposes of reporting under section 6055, the initial and first annual 
solicitations relate to failures on returns required to be filed for 
the year that includes the day that is the first effective date of 
coverage for a covered individual. Similarly, Sec.  301.6724-1(e)(1)(v) 
provides that the second annual solicitation relates to failures on 
returns filed for the year immediately following the year in which the 
account is opened and succeeding calendar years (meaning that showing 
reasonable cause with respect to years after the account is opened 
generally requires making the second annual solicitation during the 
year following the year the account is opened). As with the initial and 
first annual solicitations, the existing rule under Sec.  301.6724-
1(e)(1)(v) could provide relief for the wrong year when combined with 
the proposed definition of account opening under section 6055. 
Accordingly, the proposed regulations provide that the second annual 
solicitation relates to failures on returns filed for the year 
immediately following the year to which the first annual solicitation 
relates, and succeeding calendar years.
    In contrast to missing TINs, the Treasury Department and the IRS do 
not recognize a similar need to modify the existing first annual 
solicitation rules for incorrect TINs in Sec.  301.6724-1(f)(1)(ii). As 
with many other types of information reports, information reports of 
health coverage are generally filed after the end of the tax year, and 
thus, it is only after the tax year that a filer would generally 
receive notice of an incorrect TIN. Because the end of the tax year 
typically corresponds with the end of the coverage year, there is no 
reason to distinguish the timing of the correction of incorrect TINs 
for health coverage from all other types of accounts for which 
information reporting is required. Consequently, the proposed 
regulations do not alter the rules for incorrect TINs in Sec.  
301.6724-1(f)(1)(ii) and (iii) as applied to information reporting 
under section 6055. However, as with the rules regarding missing TINs 
under Sec.  301.6724-1(e)(1)(ii), the rules regarding incorrect TINs in 
Sec.  301.6724-1(f)(1)(i) make reference to the time an account is 
``opened.'' Accordingly, the proposed regulations, which provides that 
for purposes of section 6055 reporting an account is considered 
``opened'' at the time the filer receives an application for new 
coverage or to add an individual to existing coverage, also applies for 
purposes of the initial solicitation for incorrect TINs in Sec.  
301.6724-1(f)(1)(i).\2\
---------------------------------------------------------------------------

    \2\ A filer of the information return required under Sec.  
1.6055-1 may receive an error message from the IRS indicating that a 
TIN and name provided on the return do not match IRS records. An 
error message is neither a Notice 972CG, Notice of Proposed Civil 
Penalty, nor a requirement that the filer must solicit a TIN in 
response to the error message.
---------------------------------------------------------------------------

a. Application of the TIN Solicitation Rules to ``Responsible 
Individuals'' and ``Covered Individuals''
    A commenter requested clarification that the initial and annual 
solicitations of Sec.  301.6724-1(e)(1)(i) and (ii) need be made only 
to the responsible individual for all individuals covered under a 
single policy. The commenter further suggested that TIN solicitations 
made to a responsible individual be treated as TIN solicitations made 
to all individuals named on the responsible individual's policy.
    Under Sec.  1.6055-1(e)(1)(ii) and (iii), filers must report the 
TIN of each covered individual (who, under Sec.  301.6721-1(g)(5), are 
also ``payees''), and Sec.  1.6055-1(g)(1) requires that the TIN of 
each covered individual be shown on statements furnished to the 
responsible individual. Current Sec.  1.6055-1(g)(1) provides that, for 
purposes of the penalties under section 6722, the furnishing of a 
statement to the responsible individual is treated as the furnishing of 
a statement to a covered individual. This rule is intended to allow 
reporting entities to satisfy the section 6722 requirements for all 
covered individuals by furnishing the required statement only to the 
responsible individual. The Treasury Department and the IRS also intend 
for a similar rule to apply to the TIN solicitation rules under the 
section 6724 regulations. To clarify that this is how

[[Page 50677]]

these rules apply, the proposed regulations expressly provide that TIN 
solicitations (both initial and annual) made to the responsible 
individual for a policy or plan are treated as TIN solicitations of 
every covered individual on the policy or plan for purposes of Sec.  
301.6724-1(e)(1) and (f)(1). The filer does not need to make separate 
solicitations from the responsible individual for each covered 
individual nor does it need to separately solicit the TINs of each 
covered individual by contacting each covered individual directly. 
However, we decline to adopt the commenter's suggestion that a TIN 
solicitation made to a responsible individual be treated as a TIN 
solicitation made to all individuals named on that responsible 
individual's policy at any time, including those individuals added to a 
policy after the TIN solicitations. When a new individual is added to a 
policy, the coverage provider establishes a relationship with that 
individual. The individual is new to the filer, and it is the filer's 
responsibility to solicit that individual's TIN. Accordingly, to 
qualify for the penalty waiver, filers must solicit TINs for each 
individual added to a policy under the procedures outlined in Sec.  
301.6724-1(e)(1)(i) and (f)(1)(i); however, any other individual for 
whom the filer already has a TIN or already has solicited a TIN the 
prescribed amount of times need not be solicited again regardless of 
what changes take place during the filer's coverage of that individual.
b. Different Forms of TIN Solicitations
    A commenter to Notice 2015-68 requested that the provision of 
renewal applications to enrollees be permitted to satisfy the annual 
solicitation requirement for purposes of Sec.  301.6724-1(e)(1)(ii) and 
(iii) and (f)(1)(ii) and (iii) if those renewal applications request 
TINs from covered individuals. Under current law, TIN requests may be 
made in a number of different formats. The provision of a renewal 
application that requests TINs for all covered individuals satisfies 
the annual solicitation provisions of Sec.  301.6724-1(e)(1)(ii) and 
(iii) and (f)(1)(ii) and (iii) if it is sent by the deadline for those 
annual solicitations. Thus, no changes to the regulations are necessary 
for renewal applications to satisfy the annual solicitation 
requirement.
    The same commenter requested that the requirement in Sec.  
301.6724-1(e)(2)(i)(B) to provide the responsible individual with a 
Form W-9 should be eliminated. The commenter was concerned that this 
requirement imposes burdens on responsible individuals that make it 
less likely that they will respond to a TIN solicitation. Section 
301.6724-1(e)(2)(i)(B) requires that an annual solicitation include a 
``Form W-9 or an acceptable substitute . . .'' Thus, the existing 
regulations do not require that Form W-9 be sent. Filers are allowed to 
request TINs on an acceptable substitute for Form W-9, which includes a 
renewal application or other request for a TIN. Thus, this comment is 
not adopted.
    This commenter also requested that the requirement in Sec.  
301.6724-1(e)(2)(i)(C) that annual solicitations include a return 
envelope be eliminated, and, if not eliminated, that clarification be 
provided as to how this requirement applies to multiple TINs. Existing 
regulations include this requirement because individuals are more 
likely to comply with a TIN solicitation if that solicitation includes 
a return envelope. We see no reason that the requirement to include a 
return envelope, which exists for other information reporting 
provisions, should be removed for reporting under section 6055. Thus, 
the proposed regulations do not adopt this comment. However, filers may 
request more than one TIN at the same time and do not need to send 
separate envelopes with each request. For example, on a renewal 
application requesting the TINs for all covered individuals, filers 
need only provide one return envelope for that application or request.
c. Solicitations by Employers
    A commenter requested that employers be permitted to make TIN 
solicitations on behalf of filers. The commenter offered that employers 
are frequently in a better position than coverage providers to request 
TINs from the employers' employees and the employees' dependents, and, 
for practical reasons, it would make sense to allow employers to step 
in the shoes of the coverage provider for purposes of making the 
solicitations under Sec.  301.6724-1(e)(1) and (f)(1).
    Under existing regulations, actions taken by employers may satisfy 
the requirement for making an initial or annual TIN solicitation. 
Employers may, for example, provide their employees with applications 
for health coverage. If these applications request that the applicants 
provide TINs for all individuals to be covered, the coverage provider 
has made an initial solicitation for these individuals' TINs.
    The commenter further requested that a filer that arranges to have 
an employer take on responsibility for the TIN solicitations be treated 
as having met the penalty waiver requirements of Sec.  301.6724-1(e)(1) 
and (f)(1). Under existing regulations, qualifying for a penalty waiver 
requires that the solicitations actually be made. To avoid creating a 
less stringent standard in cases where an employer is acting on the 
filer's behalf, the proposed regulations do not adopt the commenter's 
proposal.
d. Electronic TIN Solicitations
    A commenter requested that filers be permitted to make annual TIN 
solicitations by electronic means if the responsible individual has 
consented to the receipt of information concerning his or her coverage 
in the same electronic format in which the annual solicitation is made. 
IRS Publication 1586, Reasonable Cause Regulations and Requirements for 
Missing and Incorrect Name/TINs (including instructions for reading CD/
DVDs), provides that filers may establish an electronic system for 
payees (including covered individuals) to receive and respond to TIN 
solicitations, provided certain listed requirements are met. IRS 
Publication 1586 can be found at www.irs.gov/forms-pubs. Because filers 
are already able to solicit TINs electronically, it is unnecessary to 
address the commenter's recommendation for electronic TIN solicitations 
with these proposed regulations.

Proposed Effective/Applicability Date

    These regulations are generally proposed to apply for taxable years 
ending after December 31, 2015, and may be relied on for calendar years 
ending after December 31, 2013.
    The only exception is the rules in section 1 of this preamble 
relating to reporting of coverage under catastrophic plans. Those rules 
are proposed to apply for calendar years beginning after December 31, 
2016. Health insurance issuers may voluntarily report on 2015 and 2016 
catastrophic coverage (on returns and statements filed and furnished in 
2016 and 2017 respectively). An issuer that reports on 2015 and/or 2016 
catastrophic coverage will not be subject to penalties for these 
returns.
    In addition, until these the proposed regulations are finalized, 
taxpayers may continue to rely on the rules provided in Notice 2015-68.

Special Analyses

    Certain IRS regulations, including this one, are exempt from the 
requirements of Executive Order 12866, as supplemented and reaffirmed 
by Executive Order 13563. Therefore, a regulatory impact assessment is 
not required.

[[Page 50678]]

    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.
    It is hereby certified that these regulations will not have a 
significant economic impact on a substantial number of small entities. 
This certification is based on the fact that the information collection 
required under these regulations is imposed under section 6055. 
Consistent with the statute, the proposed regulations require a person 
that provides minimum essential coverage to an individual to file a 
return with the IRS reporting certain information and to furnish a 
statement to the responsible individual who enrolled an individual or 
family in the coverage. These regulations primarily provide the method 
of filing and furnishing returns and statements under section 6055. 
Moreover, the proposed regulations attempt to minimize the burden 
associated with this collection of information by limiting reporting to 
the information that the IRS will use to verify minimum essential 
coverage and administer tax credits.
    Based on these facts, a Regulatory Flexibility Analysis under the 
Regulatory Flexibility Act (5 U.S.C. chapter 6) is not required.
    Pursuant to section 7805(f), this notice of proposed rulemaking 
will be submitted to the Chief Counsel for Advocacy of the Small 
Business Administration for comment on its impact on small business.

Statement of Availability of IRS Documents

    IRS Revenue Procedures, Revenue Rulings notices, notices and other 
guidance cited in this preamble are published in the Internal Revenue 
Bulletin (or Cumulative Bulletin) and are available from the 
Superintendent of Documents, U.S. Government Printing Office, 
Washington, DC 20402, or by visiting the IRS Web site at http://www.irs.gov.

Comments and Requests for Public Hearing

    Before these proposed regulations are adopted as final regulations, 
consideration will be given to any comments that are submitted timely 
to the IRS as prescribed in this preamble under the ``ADDRESSES'' 
heading. The Treasury Department and the IRS request comments on all 
aspects of the proposed rules. All comments will be available for 
public inspection at www.regulations.gov or upon request. A public 
hearing will be scheduled if requested in writing by any person that 
timely submits written comments. If a public hearing is scheduled, 
notice of the date, time, and place for the public hearing will be 
published in the Federal Register.

Drafting Information

    The principal author of these proposed regulations is John B. 
Lovelace of the Office of Associate Chief Counsel (Income Tax and 
Accounting). However, other personnel from the IRS and the Treasury 
Department participated in the development of the regulations.

List of Subjects

26 CFR Part 1

    Income taxes, Reporting and recordkeeping requirements.

26 CFR Part 301

    Employment taxes, Estate taxes, Excise taxes, Gift taxes, Income 
taxes, Penalties, Reporting and recordkeeping requirements.

Proposed Amendments to the Regulations

    Accordingly, 26 CFR parts 1 and 301 are proposed to be amended as 
follows:

PART 1--INCOME TAXES

0
Paragraph 1. The authority citation for part 1 continues to read in 
part as follows:

    Authority: 26 U.S.C. 7805 * * *

0
 Par. 2. Section 1.6055-1 is amended by:
0
1. Adding paragraphs (b)(13) and (14).
0
2. Redesignating paragraph (c)(1)(iv) as (c)(1)(v) and adding a new 
paragraph (c)(1)(iv).
0
3. Revising paragraphs (d)(1) and (2).
0
4. Redesignating paragraph (d)(3) as (d)(5) and adding a new paragraph 
(d)(3).
0
5. Adding paragraphs (d)(4) and (6).
0
6. Revising paragraph (g)(3).
0
7. Revising paragraph (h)(1).
0
8. Adding paragraph (h)(3).
0
9. Revising paragraph (j).
    The revisions and additions read as follows:


Sec.  1.6055-1  Information reporting for minimum essential coverage.

* * * * *
    (b) * * *
    (13) Catastrophic plan. The term catastrophic plan has the same 
meaning as in section 1302(e) of the Affordable Care Act (42 U.S.C. 
18022(e)).
    (14) Basic health program. The term basic health program means a 
basic health program established under section 1331 of the Affordable 
Care Act (42 U.S.C. 18051).
    (c) * * *
    (1) * * *
    (iv) The state agency that administers a Basic Health Program;
* * * * *
    (d) Reporting not required--(1) Qualified health plans. Except for 
coverage under a catastrophic plan, a health insurance issuer is not 
required to file a return or furnish a report under this section for 
coverage in a qualified health plan in the individual market enrolled 
in through an Exchange.
    (2) Duplicative coverage. If an individual is covered for a month 
by more than one minimum essential coverage plan or program provided by 
the same reporting entity, reporting is required for only one of the 
plans or programs for that month.
    (3) Supplemental coverage. Reporting is not required for minimum 
essential coverage of an individual for a month if that individual is 
eligible for that coverage only if enrolled in other minimum essential 
coverage for which section 6055 reporting is required and is not waived 
under this paragraph (d)(3). This paragraph (d)(3) applies with respect 
to eligible employer-sponsored coverage only if the supplemental 
coverage is offered by the same employer that offered the eligible 
employer-sponsored coverage for which reporting is required. For this 
purpose, an employer is treated as offering minimum essential coverage 
offered by any other person that is a member of a controlled group of 
entities under section 414(b) or (c), an affiliated service group under 
section 414(m), or an entity in an arrangement described under section 
414(o) of which the employer is also a member.
    (4) Certain coverage provided by Territories and Possessions. The 
agencies that administer Medicaid and the Children's Health Insurance 
Program in American Samoa, the Commonwealth of the Northern Mariana 
Islands, Guam, Puerto Rico, and the United States Virgin Islands are 
not required to report that coverage under section 6055.
* * * * *
    (6) Examples. The following examples illustrate the rules of this 
paragraph (d).

    Example 1. Upon being hired, Taxpayer A enrolls in a self-
insured major medical group health plan and a health reimbursement 
arrangement (HRA), both offered by A's employer, V. Both the group 
health plan and the HRA are minimum essential coverage, and V is the 
reporting entity for both. Because V is the reporting entity for 
both the self-insured major medical group health plan and the HRA, 
under paragraph (d)(2) of this section V must report under paragraph 
(a) of this section for either its self-insured major medical group 
health plan or its HRA for A

[[Page 50679]]

for the months in which A is enrolled in both plans.
    Example 2. Taxpayer B is enrolled in an insured employer-
sponsored group health plan offered by B's employer, W. B is also 
covered by an HRA offered by W. Under the terms of the HRA, B is 
eligible for the HRA because B is enrolled in W's insured employer-
sponsored group health plan. W's insured employer-sponsored group 
health plan is minimum essential coverage and, under paragraphs (a) 
and (c)(1)(i) of this section, the issuer of the insured employer-
sponsored group health plan must report coverage under the plan. 
Therefore, for the months in which B is enrolled in both plans, 
under paragraph (d)(3) of this section, W does not need to report 
the HRA for B because the issuer is required to report on coverage 
for B in the insured employer-sponsored group health plan offered by 
W for those months.
    Example 3. Taxpayer C enrolls in a Medicare Savings Program 
administered by X, a state Medicaid agency, which provides financial 
assistance with Medicare Part A premiums. Only individuals enrolled 
in Medicare Part A are offered coverage in this Medicare Savings 
Program. Medicare Part A is government-sponsored minimum essential 
coverage and, under paragraphs (a) and (c)(1)(iii) of this section, 
Medicare must report coverage under the program. Therefore, under 
paragraph (d)(3) of this section, X does not need to report under 
paragraph (a) of this section for C's coverage under the Medicare 
Savings Program.
    Example 4. Taxpayer E obtains a Medicare supplemental insurance 
(Medigap) policy that provides financial assistance with costs not 
covered by Medicare Part A from Z, a health insurance issuer. Only 
individuals enrolled in Medicare Part A are offered coverage under 
this Medigap policy. Medicare Part A is minimum essential coverage 
and, under paragraphs (a) and (c)(1)(iii) of this section, Medicare 
is required to report E's coverage under Medicare Part A. Therefore, 
under paragraph (d)(3) of this section, Z does not need to report 
E's coverage under the Medigap policy.
    Example 5. Taxpayer F is covered by an HRA offered by F's 
employer, P. F is also enrolled in a non-HRA group health plan that 
is self-insured and sponsored by F's spouse's employer, Q. P and Q 
are not treated as one employer under section 414(b), (c), (m), or 
(o). Under the terms of the HRA, F is eligible for the HRA only 
because F is enrolled in a non-HRA group health plan, which in this 
case is the group health plan offered by Q. However, because the HRA 
and the non-HRA group health plan are offered by different 
employers, paragraph (d)(3) of this section does not apply. 
Accordingly, under paragraphs (a) and (c)(2)(i)(A) of this section, 
P must report F's enrollment in the HRA, and Q must report F's (and 
F's spouse's) enrollment in the non-HRA group health plan.
* * * * *
    (g) * * *
    (3) Form of the statement. A statement required under this 
paragraph (g) may be made either by furnishing to the responsible 
individual a copy of the return filed with the Internal Revenue Service 
or on a substitute statement. A substitute statement must include the 
information required to be shown on the return filed with the Internal 
Revenue Service and must comply with requirements in published guidance 
(see Sec.  601.601(d)(2) of this chapter) relating to substitute 
statements. An individual's identifying number may be truncated to 
appear in the form of an IRS truncated taxpayer identification number 
(TTIN) on the statement furnished to the responsible individual. The 
identifying number of the employer may also be truncated to appear in 
the form of a TTIN on the statement furnished to the responsible 
individual. For provisions relating to the use of TTINs, see Sec.  
301.6109-4 of this chapter (Procedure and Administration Regulations).
* * * * *
    (h) * * * (1) In general. For provisions relating to the penalty 
for failure to file timely a correct information return required under 
section 6055, see section 6721 and the regulations under that section. 
For provisions relating to the penalty for failure to furnish timely a 
correct statement to responsible individuals required under section 
6055, see section 6722 and the regulations under that section. See 
section 6724, and the regulations thereunder, and paragraph (h)(3) of 
this section for provisions relating to the waiver of penalties if a 
failure to file or furnish timely or accurately is due to reasonable 
cause and not due to willful neglect.
* * * * *
    (3) Application of section 6724 waiver of penalties to section 6055 
reporting--(i) In general. Paragraphs (e) and (f) of Sec.  301.6724-1 
of this chapter, as modified by this paragraph (h)(3), apply to 
reasonable cause waivers of penalties under sections 6721 and 6722 for 
failure to file timely or accurate information returns or to furnish 
individual statements required to be filed or furnished under section 
6055.
    (ii) Account opened. For purposes of section 6055 reporting and the 
solicitation rules contained in paragraphs (i), (ii), (iii), and (v) of 
Sec.  301.6724-1(e)(1) of this chapter and paragraph (i) of Sec.  
301.6724-1(f)(1) of this chapter, an account is considered opened at 
the time the reporting entity receives a substantially complete 
application for coverage (including an application to add an individual 
to existing coverage) from or on behalf of an individual for whom the 
reporting entity does not already provide coverage.
    (iii) First annual solicitation deadline for missing TINs. In lieu 
of the deadline for the first annual solicitation contained in 
paragraph (ii) of Sec.  301.6724-1(e)(1) of this chapter, the first 
annual solicitation must be made on or before the seventy-fifth day 
after the date on which an account is opened (or, in the case of 
retroactive coverage, the seventy-fifth day after the determination of 
retroactive coverage is made). The period from the date on which the 
reporting entity receives an application for coverage to the last day 
on which the first annual solicitation may be made is the first annual 
solicitation period.
    (iv) Failures to which a solicitation relates--(A) Missing TIN. For 
purposes of reporting under section 6055 and the solicitation rules 
contained in paragraph (1) of Sec.  301.6724-1(e) of this chapter, the 
initial and first annual solicitations relate to failures on returns 
required to be filed for the year which includes the first effective 
date of coverage for a covered individual. The second annual 
solicitation relates to failures on returns filed for the year 
immediately following the year to which the first annual solicitation 
relates and for succeeding calendar years.
    (B) Incorrect TIN. For purposes of reporting under section 6055 and 
the solicitation rules contained in paragraph (i) of Sec.  301.6724-
1(f)(1) of this chapter, the initial solicitation relates to failures 
on returns required to be filed for the year which includes the first 
effective date of coverage for a covered individual.
    (v) Solicitations made to responsible individual. For purposes of 
reporting under section 6055 and the solicitation rules contained in 
Sec.  301.6724-1(e) and (f) of this chapter, an initial or annual 
solicitation made to the responsible individual is treated as a 
solicitation made to a covered individual.
* * * * *
    (j) Applicability date--(1) Except as provided in paragraphs (j)(2) 
and (3) of this section, this section applies for calendar years ending 
after December 31, 2014.
    (2) Paragraphs (b)(14), (c)(1)(v), (d)(2) through (6), and (g)(3) 
of this section apply to calendar years ending after December 31, 2015. 
Paragraphs (d)(2), (d)(3), and (g)(3) of Sec.  1.6055-1 as contained in 
26 CFR part 1 edition revision as of April 1, 2016, apply to calendar 
years ending after December 31, 2014 and beginning before January 1, 
2016.
    (3) Paragraphs (b)(13) and (d)(1) of this section apply to calendar 
years beginning after December 31, 2016.

[[Page 50680]]

Paragraph (d)(1) of Sec.  1.6055-1 as contained in 26 CFR part 1 
edition revised as of April 1, 2016, applies to calendar years ending 
after December 31, 2015 and beginning before January 1, 2017.

PART 301--PROCEDURE AND ADMINISTRATION

0
Par. 3. The authority for part 301 continues to read in part as 
follows:

    Authority:  26 U.S.C. 7805 * * *

0
Par. 4. Section 301.6724-1 is amended by adding a sentence to the end 
of paragraph (e)(1)(vi)(A) to read as follows:


Sec.  301.6724-1  Reasonable cause.

* * * * *
    (e) * * *
    (1) * * *
    (vi) Exceptions and limitations. (A) * * * See Sec.  1.6055-1(h)(3) 
of this chapter, which provides rules on the time, form, and manner in 
which a TIN must be provided for information returns required to be 
filed and individual statements required to be furnished under section 
6055.
* * * * *

John Dalrymple,
Deputy Commissioner for Services and Enforcement.
[FR Doc. 2016-18100 Filed 7-29-16; 11:15 am]
BILLING CODE 4830-01-P