IRS Letter 226J Employer Shared Responsibility
Payment (ESRP)

This article further explores the
following points:

  • How To Respond To IRS Letter 226J?
  • IRS Letter 226J: Information To Keep

IRS Letter 226j - An Overview

- Updated september 14, 2020 - 8.00 AM - Admin, ACAwise

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

How To Respond To IRS Letter 226J?

  • Details for responding to Letter 226j will be included in the correspondence. Generally, you have 30 days from the date listed on Letter 226j to respond.
  • Verify your letter/attachment carefully before responding to Letter 226j. 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.

IRS Letter 226J: Information To Keep

  • You may also receive Letter 226j 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.

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