Letter 226J Penalty Reduction Service

First Capitol’s Letter 226J Penalty Reduction Service
can either significantly reduce or eliminate 
IRS penalty assessments contained in Letter 226J

Many employers were blindsided in November 2017 when they unexpectedly received ACA penalty assessments from the IRS for ACA information filings for the 2015 reporting year. Some of these IRS Letter 226J notices contained penalties in the millions of dollars. More notices are expected to be issued for the 2015 reporting year, with the Congressional Budget Office predicting that penalty assessments will reach $12 billion in 2018.

As the IRS continues to issue Letter 226J penalty notices for the 2015 reporting year, the agency is setting the groundwork for a Letter 226J process for the 2016 reporting year.

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Contact us to review your options for responding to IRS Letter 226J.

The IRS has started issuing Letter 5699 to organizations the agency believes were Applicable Large Employers (ALEs) that failed to file information returns for the 2016 reporting year.Once the IRS completes this Letter 5699 exercise, we can expect the agency to start issuing Letter 226J penalty notices to those employers that are determined to be non-compliant with the ACA for the 2016 reporting year.

The IRS began sending ALEs Letter 226J notices for the 2015 reporting year in November last year. It’s anticipated that the Letter 226J notices for the 2016 reporting year will be issued starting this fall. Expect the penalty assessments for 2016 to much greater than those issued for 2015 violations of the ACA.

First Capitol’s Letter 226J Penalty Reduction Service uses its extensive ACA knowledge coupled with the expertise the company has developed in migrating, consolidating and validating the data critical to submitting successful ACA filings to help organizations that have been assessed ACA penalties by the IRS to eliminate or reduce these penalties to the greatest extent possible.

Our approach fills the gaps that result from operational mishaps and data-related errors that lead to these IRS penalty notices. It’s a service that payroll and software vendors don’t provide.

First Capitol works with employers directly or in concert with their insurance brokers, CPAs or law firms.

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With only 30 days to respond to IRS Letter 226J, First Capitol is prepared to mobilize quickly to help clients respond to the IRS in a timely manner.

Determining which phase is right for you is the first step.

First Capitol will review the Letter 226J, the relevant summary table, identify the types of penalties being assessed, and see how many employees received a Premium Tax Credit (PTC).

 

From there we will suggest one of our two penalty reduction services:

Phase I Service

We undertake a review of the accuracy of the client’s methodology for its ACA filings to determine if there is straight forward information that can be provided to the IRS to effectively reduce or eliminate the IRS proposed penalty assessment.

This service includes:

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  • Review ACA filings for the applicable time frame covered by the proposed penalty

  • Determine if an extension is required and proceed accordingly

  • Evaluate any filings exemptions claimed

  • Review benefits information for applicable time frame

  • Update 1094-C information

  • Prepare response package and relevant documentation

  • Submit response, explanation, and relevant documentation to IRS

Phase II Service

If the issues identified in Letter 226J are complex, we undertake a comprehensive redetermination of the ACA information reported in the Client’s 1094-C and 1095-C forms for reporting year with the objective of minimizing, if not eliminating, the proposed IRS penalty assessment.

This service includes:

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  • Review ACA filings for the applicable time frame covered by the proposed penalty

  • Determine if an extension is required and proceed accordingly

  • Evaluate any filings exemptions claimed

  • Review benefits information for applicable time frame

  • Obtain historical data in order to accurately apply the appropriate IRS measurement method

  • Perform comprehensive redetermination

  • Apply appropriate safe-harbor codes

  • Update applicable coding for applicable 1095-C schedules

  • Update 1094-C information

  • Perform aggregated employer group analysis (if necessary)

  • Prepare response package and relevant documentation

  • Submit response, explanation, and relevant documentation to IRS

  • Handle any additional requests from the IRS

Whatever phase is used to try to reduce or eliminate your organization’s penalty assessment, a dedicated ACA Specialist will work with your team to gather and assess the necessary workforce data and documentation to ensure a successful outcome.

Contact us to review your options for responding to IRS Letter 226J.

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Worried about the risk of ACA penalties?

We’ll review your ACA Filings to the IRS
Free of Charge to Calculate Your Potential Penalty Risk

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Received a Letter 226J from the IRS?

 Our ACA Penalty Reduction Service can reduce or eliminate your penalty.