The ACA Times


  Show menu
  • Home
  • Articles
  • Get to Know the ACA
  • ACA – Frequently Asked Questions
  • Resources
  • Meet the Editors
  • Trusaic
  • Contact Us
  • Terms of Service
  • Privacy Notice
  
  • Home
  • ACA Compliance
  • The IRS is Sending Million Dollar ACA Penalty Notices to Employers

Articles

The IRS is Sending Million Dollar ACA Penalty Notices to Employers

November 15, 2017 Robert Sheen ACA Compliance, Affordable Care Act, IRS 226J/226-J
The IRS is Sending Million Dollar ACA Penalty Notices to Employers

The letter no one wants is now in the mail!

IRS 226J ACA Penalty Letter(click the image for the full letter)

Applicable Large Employers (ALEs), employers with 50 or more full-time or full-time equivalent employees, are starting to receive the IRS’s Letter 226J. The letters are being sent to ALEs the IRS believes have failed to comply with the requirements of the employer mandate under the Affordable Care Act (ACA) for the 2015 tax year. We have heard reports of letters anywhere from the tens of thousands of dollars to nearly six million dollars. We’re sure there are some that are even higher.

If you receive Letter 226J, what should you do?

ALEs receiving Letter 226J need to do the following:

  • Contact your ACA solutions provider. Find out how you should proceed and if they will be assisting you in responding to the IRS.
  • Review the data that was submitted as part of the 2015 ACA filing with the IRS to identify any errors in the information provided in the IRS letter.
  • Provide the requested information to the IRS by the response date shown in the letter, which generally will be 30 days from the date the letter was issued. The letter will contain the name and contact information of a specific IRS employee that the ALE should contact if the ALE has questions about the letter.
  • Respond in writing, either agreeing with the proposed employer shared responsibility payment or disagreeing with part or all of the proposed penalty assessment. You should have backup documentation to justify your disagreement. The letter will provide instructions on how the ALE should respond.
  • Request a pre-assessment conference. If the ALE disagrees with the proposed or revised ESRP payment. Following this conference with the IRS, the ALE may also ask the IRS Office of Appeals to review the case.

The IRS will acknowledge any response to Letter 226J with a Letter 227.

What happens if an ALE doesn’t respond?

The IRS will assess the amount of the proposed ESRP shown in Letter 226J, and will issue a Notice and Demand for Payment (Notice CP 220J). This Notice offers directions and alternatives to pay the penalty.

What happens if the ALE agrees with the proposed ESRP?

The ALE may complete, sign, and date the enclosed Form 14764, ESRP Response, and return it to the IRS by the response date. If the ALE doesn’t pay the entire agreed-upon ESRP, it will receive a Notice and Demand notice for the balance due.

ALEs that receive Letter 226J only will have 30 days from the date of the letter to respond. Failing to do so could lead to a significant IRS penalty assessment for your client and, possibly, an IRS audit.

If your organization was not taking seriously the possibility of receiving an IRS penalty notice for failure to comply with the ACA, now is the time to rethink that strategy.

For more background on Letter 226J, click here.

We’re committed to helping companies reduce risk, avoid penalties, and achieve 100% ACA compliance. For questions about the ACA contact us here.

Summary
The IRS is Sending Million Dollar ACA Penalty Notices to Employers
Article Name
The IRS is Sending Million Dollar ACA Penalty Notices to Employers
Description
The IRS is sending penalty notices to employers it believes are not in compliance with the Affordable Care Act. What to do if receive if your organization receives one in the mail.
Author
Robert Sheen
Publisher Name
The ACA Times
Publisher Logo
The ACA Times
Short URL of this page: https://acatimes.com/sdh
Robert Sheen

Robert Sheen

Esq., is Editor-in-Chief of The ACA Times. He also is founder, president and CEO of Trusaic.

Robert Sheen is Founder and President of Trusaic. Robert is a graduate of the University of Southern California, in Business Administration with an emphasis in International Finance. He earned his Juris Doctor from Loyola Law School, Los Angeles, concentrating in Tax Law.

View more by Robert Sheen

Related tags to article

ACA ComplianceACA FilingAffordable Care ActApplicable Large EmployersEmployer MandateEmployer Shared Responsibility PaymentIRSIRS AuditIRS Form 14764IRS Letter 226JIRS Letter 227IRS Office of AppealsNotice and Demand for Payment (Notice CP 220J)Penalties
Related Articles EEOC Gears up for the Return of EEO-1 Component 2 Pay Data Reporting EEOC Gears up for the Return of EEO-1 Component 2 Pay Data Reporting
Related Articles Roe v. Wade Decision Signals Loss of Equality Roe v. Wade Decision Signals Loss of Equality
Related Articles California SB 1162 Continues Through State Legislature California SB 1162 Continues Through State Legislature
Related Articles Administration Predicts Lower ACA Enrollment by Robert Sheen  •  
Related Articles IRS Eases Rules on Hardship Exemptions by Robert Sheen  •  
Related Articles HHS Awards $36 Million To Health Centers by Robert Sheen  •  
ACA Essential Guide for Employers 2021
Subscribe

Popular Posts

  • What Employers Need to Know About the California Individual Mandate
  • What you Need to Know About IRS Letter 5699
  • Handling Seasonal Employees and Workers is Critical for ACA Compliance
  • The 2022 ACA 101 Toolkit is Here
  • These Industries are Most at Risk for ACA Penalties From the IRS

Trending Topics

  • Regulations
    (91)
  • Legislation
    (47)
  • Editorials
    (19)
  • ACA Compliance
    (169)
  • Tax Filings
    (19)
  • Applicable Large Employer (ALE)
    (13)
  • Penalties
    (19)
  • IRS
    (86)
  • Health Insurance Marketplace
    (28)
  • Polls/Surveys
    (18)
  • Health Care Reform
    (22)
  • Reporting
    (22)
  • IRS 226J/226-J
    (28)

Categories


Brought to you by Trusaic

 

Twitter Facebook

Downloads

The ACA 101 Toolkit

The Essential Guide to the ACA

Letter 226J Infographic

5 Common ACA Compliance Mistakes

Triangle of Trust

Articles

IRS Affordability Safe Harbors Help Avoid ACA Penalties

Calculating FT and FTE Employees

The ACA Monthly Measurement Method: A Few Examples

The IRS’s 1095 Forms for ACA Explained

Incorrect ITINs Will Cause Havoc With ACA Compliance

Knowledge Center

Get to know the ACA

Get to know Letter 226J

Webinar: What triggers an ACA penalty

Trusaic News

Our Story


FEATURED IN

Human Resources Today
Connected Health Pulse

© 2021 Copyright Trusaic - All Rights reserved.

Close Window

Loading, Please Wait!

This may take a second or two. Loading, Please Wait!