Fresno, California – Datatech’s Jason Titterington in our HRM support department posted this ‘ACA Penalty Letter’ alert to our blog earlier in the week and it’s important and time sensitive enough to make sure you see it. So if you’ve already seen this post, good, if not, Datatech wants you to be alerted to this and the 30 day window to respond to the IRS ACA Penalty letter being received now by many employers.
Jason wrote: Some of you may already be in receipt of the first ACA Penalty Letters from the IRS for the 2015 Tax Year. J. Edward McClements, Jr. at Barkley Insurance & Risk Management provided us with some helpful tips on dealing with these Penalty Letters. You can read his “Brace for Impact…” letter shown below.
For the 2015 calendar year, the IRS plans to issue Letter 226J, informing ALE’s of their potential liability for an employer shared responsibility payment, if any, in late 2017. The IRS determination of whether an employer may be liable for such payment and the amount of the potential payment are based on the information reported to the IRS on Forms 1094-C and 1095-C, as well as information about Full-Time employees of the ALE that were allowed the premium tax credit (read: they received a subsidy on the Exchange.)
The IRS has provided a copy of the letter at this link: https://www.irs.gov/pub/notices/ltr226j.pdf
If you receive this letter and you want to dispute any IRS ACA Penalty assessment, you will need to do so quickly. You have 30 days following the date on the letter to respond to Letter 226J. The letter itself provides instructions on how the ALE should respond in writing. The IRS will then acknowledge your response with one of five different versions of letter 227, depending on which one applies to your situation. If you still disagree with the proposed or revised employer shared responsibility payment, you may request a pre-assessment conference with the IRS Office of Appeals.
Since the majority of potential penalties could be due to incorrect reporting on your 2015 information return, we recommend you review all of the applicable 1094-C and 1095-C Forms for the 2015 Tax Year to make sure you reported correctly and that you met the requirement to offer coverage to at least 70% of your Full Time employees. If you did and you are still being assessed a penalty for not reaching that threshold, respond to the IRS using Form 14764 included in the letter. Indicate “Partial/Total disagreement with proposed assessment” and designate an authorized contact to discuss and provide information to the IRS about this letter.
Complete, sign, and date the Form 14764 ESRP Response. Include a signed statement explaining why you disagree and include any supporting documentation. If you need to make changes to the information reported on your Forms 1094-C and 1095-C, make sure you describe those changes. If needed, you may also make changes on the Employee PTC Listing included in the Letter 226J. Then mail the revised Employee PTC Listing, supporting documentation, Form 14764 ESRP Response, and signed letter so that it is received by the Response date on the front page of your Letter 226J.
The following is provided with permission from J Edward McClements, Jr.: