As applicable large employers subject to the Employer Shared Responsibility Mandate (ALEs) prepare to comply with their reporting obligations for 2017 under the Affordable Care Act (ACA), the IRS is gearing up for employer shared responsibility enforcement. Earlier this month, the IRS issued FAQs 55 through 58 informing ALEs of the planned procedure to enforce the employer shared responsibility payment.
The general procedures that the IRS will use to propose and assess the employer shared responsibility payment are described in Letter 226J. Among other things, Letter 226J will include an employer shared responsibility payment summary table itemizing the proposed payment by month, a description of the actions an ALE should take if it agrees or disagrees with the proposed employer shared responsibility payment, and the name and contact information of a specific IRS employee that the ALE should contact with questions.
An ALE will have 30 days to respond to Letter 226J before a penalty is assessed and a demand for payment is made by the IRS. The IRS will acknowledge the ALE’s response to Letter 226J with Letter 227, which describes further action that an ALE may need to take if it disagrees with the proposed employer shared responsibility payment. If an ALE disagrees with the IRS’s response in Letter 227, the ALE may request a pre-assessment conference with the IRS Office of Appeals. If requested, a conference will take place 30 days from the date of Letter 227.
If an ALE does not respond to either Letter 226J or Letter 227, the IRS will assess the amount of the proposed employer shared responsibility payment and issue a notice and demand for payment.
More information on Letter 226J is available on the IRS website, and we will continue to keep you updated on ACA developments.