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Letter 226J: what it means and what to do

Got an IRS Letter 226J? Here is what it means, your deadline, what to check before you answer, and how to reply. Check your own letter free: it stays on your phone.

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This page covers: Letter 226J, Letter 226.

What the IRS says this notice is about

Letter 226-J is the initial letter issued to Applicable Large Employers (ALEs) to notify them that they may be liable for an Employer Shared Responsibility Payment (ESRP). The determination of whether an ALE may be liable for an ESRP and the amount of the proposed ESRP in Letter 226-J are based on information from Forms 1094-C and 1095-C filed by the ALE and the individual income tax returns filed by the ALE’s employees.

What you need to do

Read your letter and attachments carefully. These documents explain the ESRP process and how the information received affects the computation.
The letter fully explains the steps to take if you agree or disagree with the proposed ESRP computation.
Complete the response form ( Form 14764, ESRP Response PDF ) indicating your agreement or disagreement with the letter.
If you disagree with the proposed ESRP liability, you must provide a full explanation of your disagreement and/or indicate changes needed on Form 14765 PDF (PTC Listing). Return all documents as instructed in the letter by the response date.
If you agree with the proposed ESRP liability, follow the instructions to sign the response form and return with full payment.

Your deadline

Answer by the date printed on your notice. If there is no date, answer as soon as you can, and call the number on the notice if you need more time.

What to check before you answer

Is this letter really from the IRS?

The IRS writes first by mail. A real letter shows a notice or letter number, your name and part of your tax ID number. The IRS does not ask for payment by gift card, crypto or wire transfer. If in doubt, sign in to your IRS online account, where many notices are listed.

You may want to

Review the information reported on Forms 1094-C and 1095-C for the applicable year to confirm that the information filed with the IRS was accurate because the IRS uses that information to compute the ESRP.
Keep a copy of the letter and any documents you submit.
Contact us using the information provided in the letter if you have any questions or need additional time to respond.
Send us a Form 2848, Power of Attorney and Declaration of Representative to allow someone to contact us on your behalf. Note that the Form 2848 must state specifically the year and that it is for the section 4980H Shared Responsibility Payment.

Common questions

Why did I receive this letter?

The IRS used the information you provided on Forms 1094/5-C and determined that you are potentially liable for an ESRP.

Where did the IRS get the information used to compute the ESRP?

The IRS used form 1094/5-C filed by the ALE and the individual income tax returns of your full-time employees to identify if they were allowed a premium tax credit.

Is this letter a bill?

No, the letter is the initial proposal of the ESRP.

What do I need to do?

Review the letter and attachments carefully and complete the response form by the date provided.

What do I do if the information is wrong or I disagree?

Follow the instructions in the letter to provide corrected information for consideration by the IRS. The IRS will reply with an acknowledgement letter informing you of their final determination.

Do I have appeal rights?

Yes, the acknowledgement letter that you receive will spell out all your rights, including your right to appeal.

General information

For more info visit ACA information center for applicable large employers .

Review additional publications that may be helpful to you:

Publication 5, Your Appeal Rights and How to Prepare a Protest If You Don’t Agree PDF
Publication 594, The IRS Collection Process PDF

Get my response letter for Letter 226J

Related notices

Source

IRS: Understanding your letter 226-J