Employer Reporting Improvement Act (HR 3801) Signed Into Law

The “Employer Reporting Improvement Act” (H.R. 3801) makes several amendments to the Internal Revenue Code of 1986, primarily concerning employer reporting requirements related to health insurance coverage. Here’s a breakdown of the key provisions and their effective dates:

  • TIN Reporting Flexibility: This provision allows the Secretary of the Treasury to permit the substitution of an individual’s full name and date of birth for their Taxpayer Identification Number (TIN) on returns if the reporting entity is unable to collect the TIN, codifying an existing practice.[^1] This applies to returns with a due date after December 31, 2024.
  • Electronic Statements: This provision states that individuals are considered to have consented to receive health coverage statements electronically if they have previously consented to electronic delivery with their employer, unless they revoke consent in writing.[^2] This applies to statements with a due date after December 31, 2024. This provision affects statements required under both sections 6055 and 6056 of the code.
  • Time for Response: The Act requires the Secretary to allow applicable large employers at least 90 days to respond to a proposed assessment of the employer shared responsibility payment before taking further action.[^3] This provision is effective for assessments proposed in taxable years beginning after the date of the enactment of this Act (December 23, 2024).
  • Statute of Limitations on Penalty Assessment: This provision establishes a 6-year statute of limitations for assessing penalties related to the employer shared responsibility payment, beginning from the due date of the return under section 6056 or the date the return was filed, if later.[^4] This applies to returns that are due after December 31, 2024.

The purpose of the Act is to streamline health care reporting requirements, protect dependent privacy, and offer employers more flexibility and time to respond to potential penalties. It addresses issues that arose from the Affordable Care Act (ACA) which required employers to annually report health insurance coverage data to the IRS. This data is used to determine if an employee’s health coverage offer is affordable, and incorrect reporting or failure to offer affordable coverage can lead to financial penalties for the employer. The Act aims to reduce burdens on employers, provide more certainty, and ensure fairness in the penalty assessment process.

[^1]: IRC §6055(b)(1)

[^2]: IRC §6056(c)

[^3]: IRC §4980H(d)

[^4]: IRC §6501(n)