Employers Have Opportunity to Respond Before ‘Pay or Play’ Penalty Assessment

The Internal Revenue Service (IRS) is currently issuing Letter 226-J to certain applicable large employers (ALE)—generally those with at least 50 full-time employees, including full-time equivalent employees, on average during the prior year—it believes owe a penalty for failing to comply with the Affordable Care Act’s employer shared responsibility provisions (“pay or play” provisions). In conjunction with Letter 226-J, employers will receive Form 14764, which they can use to respond to Letter 226-J. Employers who submit Form 14764 to the IRS will generally receive one of 4 letters back:

• Letter 227-J, which acknowledges receipt of Form 14764 and the employer’s agreement to pay the penalty;
• Letter 227-K, which acknowledges receipt of Form 14764 and shows that the penalty has been nullified;
• Letter 227-L, which acknowledges receipt of Form 14764 and shows that the penalty has been revised; or
• Letter 227-M, which acknowledges receipt of Form 14764 and shows that the penalty amount did not change.