The IRS has been sending signals since the summer that it will be enforcing the Affordable Care Act's employer mandate.
Those signals have culminated in the IRS starting the process of sending letters to businesses with 50 or more full-time or full-time equivalent employees—referred to as Applicable Large Employers, or ALEs—on what they owe for failing to comply with the Affordable Care Act’s employer shared responsibility mandate for IRS filings related to the 2015 tax year.
Letter 226J is the communication that provides the general procedures the IRS will use to propose and assess the ACA’s employer shared responsibility payment, or ESRP. Click here to see the sample letter on the IRS website.
There have been reports of letters containing ACA penalties anywhere from the tens of thousands of dollars to nearly $6 million. Surely some are even higher. More are on the way.
CPAs need to move now to prepare their clients for the possibility that they will receive their own Letter 226J.
Letter 226J provides information on the individual employees who, for at least one month in the year, were full-time employees, were allowed a premium tax credit, and for whom the ALE did not qualify for an affordability safe harbor or other relief, as per instructions for Forms 1094-C and 1095-C, Line 16. It also provides the indicator codes for the ALE, reported on lines 14 and 16, of each assessable full-time employee’s Form 1095-C. ...Full story here.
Resources:
- Sample IRS Letter 226J
- Text of IRS Form 14764: ESRP Response (PDF)
- Text of IRS Form 14765: Employee Premium Tax Credit (PTC) Listing (PDF)
- Legislative Alert: IRS Issues Pay of Play Enforcement Guidance
- IRS Questions and Answers
