The IRS is actively issuing ACA-related notices to applicable large employers (ALE). Also known as Letter 226-J, the notice is the initial letter to notify ALEs that they may be liable for an employer shared responsibility payment. The letters employers are receiving now relate to 2015 ACA reporting.
Employers have 30 days from the date on the letter to respond via the provided Form 14764. If the employer does not respond, the IRS will issue a demand for payment for the amount listed on the letter.
In the event that you receive one of these letters, it is important to consult with a licensed broker and/or attorney to create a plan of action and form a response to the letter, especially if the assessment is significant. Below are steps you can take to get started.
- Carefully read your letter, taking note of the preliminary calculation of the assessment and the response due date. If you have not received a letter, you may view the sample released by the IRS.
- Keep in mind that the assessment amount in the letter is preliminary. It is based on Forms 1094-C and 1095-C and any premium tax credits your employees enrolled in the healthcare exchange may have received.
- Read the IRS page, Understanding your Letter 226-J.
- Contact your broker and/or your licensed attorney as they are best positioned to offer guidance on coding corrections and your response to the letter.
- Work with your ACA reporting vendor to gather the necessary supporting data.
- Complete and submit the response form by the due date.
- If you disagree with the assessment, you must provide a full explanation and supporting documentation.
- If you agree with the assessment, you may send payment with the signed response form.
- Maintain copies of all forms and documents submitted to the IRS.
- National Law Review: IRS Letter 226J: The Million-Dollar Letter (And How To Respond)
- SHRM: IRS Starts to Send ACA Penalty Letters