The IRS has recently started sending employers Letter 226J. This letter is a proposed assessment of
Employer Shared Responsibility Payments (ESRPs) under the Affordable Care Act. The IRS sends Letter 226J if it
determines that one or more full-time employees of an “applicable large employer” enrolled in health coverage on a
government exchange and received a premium tax credit. The premium tax credit (PTC) is a refundable tax credit in
the United States. It is payable by the Internal Revenue Service (IRS) to eligible households who have obtained healthcare
insurance through a healthcare exchange (marketplace) in the tax year.
You may be asking yourself why you received this letter. Just remember, Letter 226J is just a proposed assessment of liability.
It is a notice that a full time employee received a premium tax credit and the IRS believes the employer may owe a payment.
It is very important to respond to Letter 226J. The response date is listed on the first page of the letter, which is 30 days from the
date of the letter (not from the date you receive it). If you don’t respond within the 30 day timeframe, the IRS will assess the
proposed amount and will issue a notice and demand for payment. And once the IRS demands payment, interest begins to accrue
and will continue to accrue until the entire balance is paid.