Letter 226-J
Employer Shared Responsibility Payment

Letter 226-J is the initial proposal letter issued by the IRS to notify certain Applicable Large Employers that are potentially liable for an Employer Shared Responsibility Payment (ESRP).

ALEs may receive Letter 226-J if employees were allowed a premium tax credit. This is determined by entries on Form 1095-C and 1094-C which is filed by ALEs along with the individual income tax returns filed by their employees.

How To Respond To Letter 226-J

  • Details for responding to Letter 226-J will be included in the correspondence. Generally, you have 30 days from the date listed on Letter 226-J to respond.

  • Verify your letter/attachment carefully before responding to Letter 226-J. The letter will include instructions on the next steps ALEs should take if they agree or disagree with the proposed ESRP computation.

  • Complete the response form (Form 14764) indicating your agreement or disagreement with the letter.

  • If you agree with the proposed ESRP liability, follow the instructions to sign the response form and return with full payment in the envelope provided.

  • 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 (PTC Listing). Return all documents as instructed in the letter by the response date.

Letter 226-J: Information To Keep

  • You may also receive Letter 226-J due to filing incorrect information on 1095-C and 1094-C. It is important to double check that information filed on 1095-C and 1094-C Forms is accurate due to the IRS using that information to compute the ESRP.

  • Keep a copy of the letter and any documents you submit.

  • Contact IRS using the information provided in the letter if you have any questions or need additional time to respond.

  • You can give access to someone to contact the IRS on your behalf by completing and submitting Form 2848 (Power of Attorney and Declaration of Representative).

Note: Form 2848 must specifically state the current year and that it is for Section 4980H Shared Responsibility Payment.

Have you recently received Letter 226-J? Let us help you through the process. Contact ACAwise now!