ACA Penalties and What You Need to Do When You Receive an IRS Letter 226J
Have you received an IRS Letter 226J or do you want to be better prepared for an Affordable Care Act (ACA) penalty just in case? Now that the IRS has figured out how to calculate the Employer Shared Responsibility Payments (ESRP), applicable large employers (ALE) have started to see waves of ACA penalties from the 2015 tax filing year rolling in.
And 2016 penalties may be just around the corner. Remember, ALEs, with 50 or more full-time and full-time equivalent employees must offer affordable health coverage that meets the minimal essential coverage (MEC) standards to full-time equivalent employees and file Form 1094-C and a Form 1095-C for each employee who was a full-time employee for any month of the calendar year. If you fail to follow these requirements, it can (and has) translate into millions of dollars in penalties, especially since responses need to be sent to the IRS within 30 days from the date on Letter 226J.
Of course, you may want to dispute the ESRP if there was bad data, incorrect full-time employee data, a coding error or missing information. Researching the data and identifying the discrepancies can be very time consuming, so hopefully you have the right ACA software and enough resources to quickly gather the data needed and provide a solid audit trail.
If you have received a Letter 226J or are concerned you may receive one, our white paper, ACA Penalties and What You Need to Do When You Receive an IRS Letter 226J, provides essential guidance such as:
- Common ACA penalty terms and why they matter such as Letter 226J, Section 4980H, ESRP penalty, response form 14674 and more.
- An example Letter 226J
- Instructions for how to respond to the ACA penalty Letter 226J with and without a full-service ACA vendor
- What you should look for when validating the ESRP penalty amount
- Checklist of what to include in your form 14764 response
- Guidance for how be prepared for an IRS penalty
- What you should look for in a full-service ACA vendor (spoiler alert-the vendor should provide expedited Letter 226J analysis and response at no extra cost)