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Responding to IRS Letter 226J penalty assessments quickly and accurately is very important for a number of reasons, including reducing or eliminating the proposed penalty assessment. But just how quickly you respond can make all the difference.
When the IRS issues Letter 226J to employers, organizations have 30 days from the date issued to respond, with the possibility of one 30-day extension under permitted circumstances. If the Letter 226J is ignored, the IRS will issue Notice CP220J, Demand for Payment.
The IRS cites that Notice CP220J will accrue interest on the unpaid amount if you don’t pay the full amount you owe by the date provided in the notice.
Bottom line, employers need to respond promptly to Letter 226J and CP220J if they want to avoid seeing their penalty assessments increase due to interest assessed on late payments.
The agency is currently issuing Letter 226J penalty assessments to employers identified as having failed to comply with the ACA’s Employer Mandate for the 2017 tax year. Download our guide for responding to the penalty notice by clicking here.
The IRS also is issuing Letter 5005A penalty notices to employers that have failed to distribute 1095-C forms to employees and to file 1094-C and 1095-C forms with the federal tax agency by required deadlines for the 2015 and 2016 tax years, in violation of IRC Section 6721/6722.
Employers also need to be alert to receiving Letter 5699, which requests specific information that could lead to employers being issued ACA penalties by the IRS.
If you haven’t been taking enforcement of the ACA seriously, perhaps it’s time to start doing so.
We’re committed to helping companies reduce risk, avoid penalties, and achieve 100% ACA compliance. For questions about the ACA contact us here.