§ 57.3 Reporting requirements and associated penalties. ( a ) *Reporting requirement* — ( 1 ) *In general.* Annually, each covered entity, including each controlled group that is treated as a single covered entity, must report its net premiums written for health insurance of United States health risks during the data year to the IRS by April 15th of the fee year on Form 8963, “Report of Health Insurance Provider Information,” in accordance with the instructions for the form. A covered entity that has net premiums written during the data year is subject to this reporting requirement even if it does not have any amount taken into account as described in § 57.4(a)(4). If an entity is not in the business of providing health insurance for any United States health risk in the fee year, it is not a covered entity and does not have to report.
( 2 ) *Manner of reporting* — ( i ) *In general.* The IRS may provide rules in guidance published in the Internal Revenue Bulletin for the manner of reporting by a covered entity under this section, including rules for reporting by a designated entity on behalf of a controlled group that is treated as a single covered entity.
( ii ) *Electronic Filing Required.* Any Form 8963 (including corrected forms) filed pursuant to paragraph (a)(1) of this section and reporting more than $25 million in net premiums written must be filed electronically in accordance with the instructions to the form. If a Form 8963 or corrected Form 8963 is required to be filed electronically under this paragraph (a)(2)(ii), any subsequently filed Form 8963 filed for the same fee year must also be filed electronically. For purposes of § 57.3(b), any Form 8963 required to be filed electronically under this section will not be considered filed unless it is filed electronically.
( 3 ) *Disclosure of reported information.* Pursuant to section 9010(g)(4), the information reported on each original and corrected Form 8963 will be open for public inspection or available upon request.
( b ) *Penalties* — ( 1 ) *Failure to report* — ( i ) *In general.* A covered entity that fails to timely submit a report containing the information required by paragraph (a) of this section is liable for a failure to report penalty in the amount described in paragraph (b)(1)(ii) of this section in addition to its fee liability and any other applicable penalty, unless the failure is due to reasonable cause as defined in paragraph (b)(1)(iii) of this section.
( ii ) *Amount.* The amount of the failure to report penalty described in paragraph (b)(1)(i) of this section is— ( A ) $10,000, plus
( B ) The lesser of— ( 1 ) An amount equal to $1,000 multiplied by the number of days during which such failure continues; or
( 2 ) The amount of the covered entity's fee for which the report was required.
( iii ) *Reasonable cause.* The failure to report penalty described in paragraph (b)(1)(i) of this section is waived if the failure is due to reasonable cause. A failure is due to reasonable cause if the covered entity exercised ordinary business care and prudence and was nevertheless unable to submit the report within the prescribed time. In determining whether the covered entity was unable to submit the report timely despite the exercise of ordinary business care and prudence, the IRS will consider all the facts and circumstances surrounding the failure to submit the report.
( iv ) *Treatment of penalty.* The failure to report penalty described in this paragraph (b)(1)— ( A ) Is treated as a penalty under subtitle F;
( B ) Must be paid on notice and demand by the IRS and in the same manner as a tax under the Internal Revenue Code; and
( C ) Is a penalty for which only civil actions for refund under procedures of subtitle F apply.
( 2 ) *Accuracy-related penalty* — ( i ) *In general.* A covered entity that understates its net premiums written for health insurance of United States health risks in the report required under paragraph (a)(1) of this section is liable for an accuracy-related penalty in the amount described in paragraph (b)(2)(ii) of this section, in addition to its fee liability and any other applicable penalty.
( ii ) *Amount.* The amount of the accuracy-related penalty described in paragraph (b)(2)(i) of this section is the excess of— ( A ) The amount of the covered entity's fee for the fee year that the IRS determines should have been paid in the absence of any understatement; over
( B ) The amount of the covered entity's fee for the fee year that the IRS determined based on the understatement.
( iii ) *Understatement.* An understatement of a covered entity's net premiums written for health insurance of United States health risks is the difference between the amount of net premiums written that the covered entity reported and the amount of net premiums written that the IRS determines the covered entity should have reported.
( iv ) *Treatment of penalty.* The accuracy-related penalty is subject to the provisions of subtitle F that apply to assessable penalties imposed under chapter 68.
( 3 ) *Controlled groups.* Each member of a controlled group that is required to provide information to the controlled group's designated entity for purposes of the report required to be submitted by the designated entity on behalf of the controlled group is jointly and severally liable for any penalties described in this paragraph (b) for any reporting failures by the designated entity.
[T.D. 9643, 78 FR 71487, Nov. 29, 2013, as amended by T.D. 9881, 84 FR 61547, Nov. 13, 2019]