Beginning December 1, 2017, the IRS will begin mailing enforcement notices to applicable large employers (ALEs) regarding the penalties owed under the Affordable Care Act’s (ACA) employer shared responsibility mandate for the 2015 tax-year filings.

Below is a summary of the update, quoting liberally from the information provided by the IRS:

The IRS plans to issue Letter 226J to an ALE if it determines that, for at least one month in the year, one or more of the ALE’s full-time employees were enrolled in a qualified health plan for which a premium tax credit was allowed and the ALE did not qualify for an affordability safe harbor or other relief for the employee.

What to Expect

The letter will include:

  • an employer shared responsibility payment summary table itemizing the proposed payment by month and indicating for each month if the liability is under section 4980H(a) or section 4980H(b) or neither,
  • an employer shared responsibility response form, Form 14764, “ESRP Response,”
  • an employee PTC list, Form 14765, “Employee Premium Tax Credit (PTC) List” which lists, by month, the ALE’s assessable full-time employees (individuals who for at least one month in the year were full-time employees allowed a premium tax credit and for whom the ALE did not qualify for an affordability safe harbor or other relief (see instructions for Forms 1094-C and 1095-C, Line 16), and the indicator codes, if any, the ALE reported on lines 14 and 16 of each assessable full-time employee’s Form 1095-C,
  • a description of the actions the IRS will take if the ALE does not respond timely to Letter 226J.

ALEs will have 30 days to respond to the letter.

Let Us Help

It can be very frightening and frustrating to receive one of these letters. You could be in compliance with the law but be penalized for

  • Missing information,
  • Incorrect data,
  • Conflicting data sets, and more.

If you receive an IRS Letter 226J or need help sorting out your Affordable Care Act status, please contact us. We can help ease your mind.

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