The IRS has recently taken affirmative steps towards assessing the Affordable Care Act (ACA) employer mandate penalties, which are set to begin before the end of 2017. The agency has updated its website with information (questions 55-58) discussing how employer mandate penalties will be assessed and contested. It has also released a sample Letter 226J, which formally describes the procedures the IRS will use to propose and assess the penalties. The IRS plans to issue the first letters in late 2017 (for 2015 calendar year penalties).
An employer that receives a Letter 226J will be able to respond to the IRS before penalties are assessed. The letter will provide instructions for how the employer should respond in writing, either agreeing with the proposed penalties or disagreeing with part or all of the proposed amount. The letter will also contain the name and contact information of an IRS employee that the employer may contact for assistance.
