Update to IRS 226J Infographic Now Includes IRS Letter 227 [UPDATED]
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The Affordable Care Act (ACA) is complex. The ACA Penalty Process now being initiated by the IRS is no exception. With 30 days to respond upon receipt of Letter 226J (you may want to request a reasonable extension), the process your organization undertakes to develop your response needs to be focused and efficient.
A new infographic is now available that outlines the process of responding to Letter 226J as well as Letter 227, which the IRS sends in acknowledgment of a Letter 226J response. This infographic can serve as a guide as you set up your internal processes to address this ACA penalty process. The infographic describes the procedure undertaken by the IRS to determine whether an organization has not complied with the ACA, how penalties are calculated, and how you can mount a defense to eliminate or reduce your proposed ACA penalties.
It has been updated with more information on the five versions of Letter 227 that has been released by the IRS. Here is how the IRS describes each version:
Letter 227-J: Letter 227-J acknowledges receipt of the signed agreement Form 14764, ESRP Response, and that the ESRP will be assessed. After issuance of this letter, the case will be closed. No response is required.
Letter 227-K: Letter 227-K acknowledges receipt of the information provided and shows the penalty has been reduced to zero. After issuance of this letter, the case will be closed. No response is required.
Letter 227-L: Letter 227-L acknowledges receipt of the information provided and shows the ESRP has been revised. The letter includes an updated Form 14765 (PTC Listing) and revised calculation table. The ALE can agree or request a meeting with the manager and/or appeals.
Letter 227-M: Letter 227-M acknowledges receipt of information provided and shows that the ESRP did not change. The letter provides an updated Form 14765 (PTC Listing) and revised calculation table. The ALE’s can agree or request a meeting with the manager and/or appeals.
Letter 227-N: Letter 227-N acknowledges the decision reached in Appeals and shows the ESRP based on the Appeals review. After issuance of this letter, the case will be closed. No response is required.
You can see the new information on the IRS website by clicking here.
Our updated infographic explains the entire process of how to respond to Letter 226J and any action required from receiving one of the versions of Letter 227. Click here to download a printable version.
For those of you who have not yet received a Letter 226J now is not the time to sit back. The process has just started with more than 30,000 Letter 226Js already issued by the IRS since last November representing more than $4.3 billion in penalty assessments for the 2015 tax year alone. More Letter 226Js and Letter 227s will be sent by the IRS in the weeks ahead.
With half the businesses in the U.S. saying they are not confident in their ability to satisfy ACA requirements and reported penalties in the millions of dollars being assessed by the IRS against the organizations receiving Letter 226J, the stakes are high. Now is the time to get prepared. This infographic can help.
Click here to download a printable version.
To learn more about ACA compliance in 2018, click here.
For ACA reporting in 2019, organizations should review this link for important dates and requirements.
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