For non-adherence to the mandatory requirements stipulated by the IRS relating to the Employer Mandate Provisions under the ACA (Affordable Care Act) for any taxable year, all ALEs (Applicable Large Employers) are issued by the IRS penalty letters. Such awful Letter 226-J must be obligatorily submitted to the IRS with other allied requisite forms, and the stipulated penalty amount within a maximum period of 30 days.
Herein, to ease such hassles, it would be quite sensible for the ALEs to obtain the trustworthy service of any ACA Compliance experts, like Compliance Solutions Services, Inc. to simplify the entire operational disparity for the non-compliance formalities.
What is the Importance of The 226-J Penalty Letter from IRS?
Letter 226-J is the introductory letter issued by the IRS to all ALEs for alerting them of their obligation of the Employer Shared Responsibility Payment (ESRP) protocols related to the non-compliances of the minimum health insurance coverage of the eligible employees. Herein, the information provided by the ALEs in the Forms 1094-C and 1095-C, and IT file returns determines the pre-specified amount mentioned in Letter 226-J, and also the eligibility of ALEs for an ESRP.
In this context, this letter specifies that the IRS has evaluated the particular health coverage offered by ALEs to specific employees’ for a premium tax credit, allowing that ALE for ESRP. This crucial letter of 226-J by IRS is only dispatched to those specific ALEs, failing to meet the employer-shared liability of health insurance coverage of eligible employees for any given taxable year. Herein, it is needed to be mentioned that this letter is not an invoice for the ALEs; instead, it comprises the proposed penalty charge. Thus, it is not the final penalization amount, but just a simple estimate.
What are the Different Penalty Types Imposed by IRS Relating To ACA Non-Compliance?
The two most common penalty types charged by the IRS for non-compliance with employer mandates are Penalties A and B. In this context, the IRS issues the Penalty A or the ‘Sledge Hammer Penalty’, falling under section 4980H (a), which is charged when the ALEs ignore to provide the essential health insurance coverage to at least 95% of its full-time employees in any given tax year. It can be triggered by a minimum of single full-time employees, who are not offered the minimum essential coverage by ALEs.
Again, coming under section 4980H (b), the less significant charge is Penalty B or the Tack Hammer Penalty’, which is only applied to any full-time manpower, registered under the sponsored health insurance coverage. Unlike, Penalty A, this charge does not multiply the full-time employees for obtaining the stipulated non-compliance charge.
What are the Distinct Solutions of ACA Compliance Solution Services for Letter 226-J?
For negating their hassles and resolving the dreadful Letter 226-J from IRS, the concerned ALEs need to approach the authentic adherence service of ACA Compliance Solution Services. With extensive expertise and practical cognizance gained by working with the law firms, CPAs, and insurance agents, these reputed compliance specialists offer faster responses to such aforementioned letters from IRS.
The proficient experts can quickly resolve the operational loopholes in the specific ALE that caused the issuance of the 226-J Letter from IRS. These specialists sustain the stipulated timeframe of 30 days and submit a highly effective and fast-tracked reply to the IRS. Moreover, along with Letter 226-J, they also quickly send the comprehensive review form of 14765 (Employee Premium Tax Credit (PTC) Listing) to the IRS and satisfy their obligations within one month.
The ALEs should read carefully the aforesaid letter sent by the IRS, which is just like an inquiry letter, rather than a bill, offering an option for the ALEs to clarify. Herein, they should take a note of the deadline for responding, which is generally one month. In this scenario, they should consult the ACA compliance expert to produce a response to IRS.
Final Verdict
Being mindful of the vital mileages brought to the ALEs by ACA Compliance Solution Services Inc., in resolving the IRS penalty letters within the pre-mentioned period of 30 days, it would be a prudent idea to hire such proficient compliance specialists and get peace of mind.
