IRS Letter 226J
Employer Shared Responsibility Payment (ESRP)
IRS Letter 226J is sent to applicable large employers (ALEs) who the IRS believes did not offer adequate health insurance coverage to full-time employees as required by the Affordable Care Act (ACA).
This letter proposes a penalty called the Employer Shared Responsibility Payment (ESRP) under IRC § 4980H and provides you with an opportunity to respond before the penalty is assessed.
▸ Why Did I Receive Letter 226J?
You received this notice because:
You are an applicable large employer (50+ full-time employees or equivalents)
The IRS believes you did not offer minimum essential coverage to enough employees
One or more employees received a premium tax credit on the health insurance marketplace
The IRS is proposing an ESRP penalty based on forms 1094-C and 1095-C filed for that year
▸ What’s in the Letter?
Letter 226J includes:
The proposed ESRP amount you may owe
A breakdown of how the penalty was calculated
A list of employees who received premium tax credits
Form 14764, which must be completed and returned with your response
A deadline to respond, typically 30 days from the letter date
▸ What Should You Do?
Review the letter and Form 14764 carefully.
Compare the IRS's data with your company’s records and ACA filings.
If you agree, you can sign and return the form with payment.
If you disagree, provide documentation and a detailed response to dispute the penalty.
▸ When to Call a Tax Attorney
ACA penalty letters are complex and time-sensitive. A tax attorney can help if:
You believe the penalty is incorrect
Your ACA filings (Forms 1094/1095) were incomplete or misinterpreted
You need help responding with documentation
You want to avoid further penalties and interest
We can help you challenge or reduce the penalty and resolve the issue before it escalates.
▸ Don't Let an ACA Penalty Catch You Off Guard
If you’ve received IRS Letter 226J, you may be facing a substantial financial penalty.
Call (903) 595-1000 or fill out this quick form to schedule a consultation.