This letter proposes an Employer Shared Responsibility Payment under the Affordable Care Act. Proposed assessments routinely reach six or seven figures — and they are frequently overstated.
Letter 226-J is sent to Applicable Large Employers when the IRS believes they failed to offer adequate, affordable coverage and at least one employee received a premium tax credit. It proposes a penalty based on the IRS's read of your Forms 1094-C and 1095-C.
These proposals are often inflated by coding errors on the original filings — a wrong Line 14 offer code or Line 16 safe-harbor code can manufacture a penalty where none is owed. The response (Form 14764 plus a corrected employee roster on Form 14765) is highly technical.
The proposed penalty becomes assessable if you don't respond within 30 days. Because the assessments are so large and so often driven by clerical coding, a precise, well-documented response can reduce the penalty dramatically — frequently to zero.
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