March 20, 2018

As we have written about previously, the IRS is currently in the process of enforcing the Affordable Care Act employer mandate. The IRS has recently provided us with a preview of what the actual assessment letter will look like, in the form of IRS Letter 220J.

As a reminder, the ACA Employer Mandate Letters 226J that were sent originally were not the penalty assessments. Instead, they were a notice that a penalty might be due and an invitation to let the IRS know if the employer disagreed. Many of these letters contained eye-popping penalty amounts that, once the employer reviewed its records, turned out to be based on incorrect or incomplete information.

On the other hand, if you receive a Letter 220J, that means the IRS has determined that an amount is due. However, that is not necessarily the end of the story. Employers who dispute the assessment can file claims for refund and potentially sue in federal court, as page 2 of the letter notes. Additionally, the IRS even invites employers to ask questions if they are unsure that the amount is due.

Employers who receive a Letter 226J (the non-assessment letter) should be sure to respond promptly and completely to avoid, if possible, receiving the ACA Employer Mandate Letter 220J. If an employer receives a Letter 220J and still disputes the assessment, HUB recommends engaging experienced tax/legal counsel and HUB can provide additional support and education, as appropriate.

If you have any questions, please contact your HUB Advisor. View more compliance articles in our Compliance Directory.
 

NOTICE OF DISCLAIMER

The information herein is intended to be educational only and is based on information that is generally available. HUB International makes no representation or warranty as to its accuracy and is not obligated to update the information should it change in the future. The information is not intended to be legal or tax advice. Consult your attorney and/or professional advisor as to your organization’s specific circumstances and legal, tax or other requirements.