As the IRS escalates enforcement efforts, more employers will receive an ESRP Penalty Letter. Here’s What to do if you receive one:

 Before You Act

  1. Understand that you (employer) only have 30 days to respond (from date letter was sent).

  2. A single, 30-day extension may be requested.

    Taking Formal Action

  3. Carefully review all Letter 226J details in order to fully understand what the IRS is claiming.

  4. Verify that the information reported was accurate for each employee listed in the letter’s Premium Tax Credit (PTC) table. If it is not, make necessary changes as described in letter’s instructions.

  5. Verify that compliant offers of coverage were offered to the employees listed in the PTC table and begin collecting the necessary supporting documentation.

  6. Complete Form 14764 and attach any documentation/ statements countering the IRS claims (if organization disagrees with proposed penalty).

 DO NOT Ignore a Letter

Failing to respond in the 30-day window will assuredly make matters worse. Parties failing to respond within this time frame may concede their right to counter the proposed penalty or even negotiate. If the IRS does not receive your response within the allotted time, they will issue Notice CP220J Demand for Payment before entering any resolution discussions.

 Speak to an Expert

These issues are challenging, particularly if you do not have expert advice at your disposal. If you have received a letter or would like assistance implementing a policy to ensure ACA compliance, we strongly recommend contacting SIA Group today.

Mayar Mahmoud