Letter 226-J is a penalty assessment notice that the IRS sends to employers with 50 or more full-time employees. Letter 226-J is the first letter you would receive from the IRS and the first step the IRS has taken to enforce the ACA mandate.
One of the most common reasons Letter 226-J is sent is because the employer has yet to submit an ACA information filing to the IRS for tax year 2015, 2016, 2017 or later. If you didn’t paper or electronically file the 1095-B or 1095-C forms, now is your time to do so. We can help. We can prepare for you to review current or prior year 1095 forms and once approved, we can electronically transmit to the IRS and forward the results when they arrive. All e-filing is done using our company’s transmitter control code or TCC number. This eliminates the hassle of obtaining an account with the IRS. Just contact sales at (480) 460-9311 to get started.
Once a response has been submitted to the IRS, the client should expect to receive a second letter from the IRS. This will be Letter 227, which is a series of five different letters that the IRS is using to acknowledge responses to Letter 226-J. The different versions describe additional actions that may be required of an employer to address. They are listed here in their order of preference:
Letter 227K: This is the letter that you hope your client receives. It means that the case has been resolved in the employer’s favor. Essentially, 227K acknowledges that the information in the employer’s response to Letter 226J was accepted, the employer does not anything and the IRS has closed its inquiry.
Letter 227L: While not as thrilling as receiving Letter 227K, receiving this version of Letter 227 is still a plus. The IRS sends this version of the letter when it agrees with the employer that the amount owed should be reduced. While the employer will still have to make a payment, it won’t be as much as originally requested.
Letter 227M: This version of the letter is not one that you want your client to receive. This is the version the IRS sends when it disagrees with the employer’s response to Letter 226J and reiterates its demand for the original penalty assessment.
