The Internal Revenue Service issues 226J letters to employers in a bid to collect penalties under ACA mandates about Employer Shared Responsibility Payments or ESRP’s. However, Applicable Large Employers or ALEs are given a chance to correct the wrong information by applying for an extension to Letter 226J. Some employers face reduced penalties by claiming for transition relief. Here, they need to correct the full employee counts.
Know more on Letter 226J Extension
When you receive Letter 226J, you must know what you should do. Check the letter carefully to see whether it is correct or not. Experts say you may apply for a letter 226j extension however, before doing so, keep in mind the following steps:
- Find out the amount of time you have to respond to the Letter- Experts in the field say you have 30 days to furnish your response to Letter 226J. Whether you agree with what is written in the Letter or not, you need to review its complete data and request for an extension over the 30- day period you get for the Letter. The IRS will go through your appeal and grant you the extension if they find it legitimate.
- The response to Letter 226J should be correctly made- When you receive Letter 226J and need to respond to it, do not rely on your HR team for the task. The response has to be strategized correctly so make sure you hire a professional company that is well-versed in the field of Letter 226J extension responses. You should always bank on companies or legal experts that have proven track records and experience in the field.
- Measure your liability- You need to work with the experts here to measure the amount due. You need to know the number of penalties you need to pay the IRS. You should also review forms 1094-C and 1095-C. Make sure that the reports are accurate. If the forms are inaccurate, you are likely to face penalties imposed by the IRS.
- Response to Letter 226J- You need to fill in Form 14764 to state whether you agree with the Letter or not. In case, you disagree with the Letter 226J; you need to provide a complete explanation to the IRS stating the reasons why you disagree with the discrepancies.
Once you have applied for Letter 226J extension, make sure that the IRS has confirmed the receipt of the response you have sent. The IRS will reply back to you with a request for either more information or a revised amount. In case you need to send corrected information in Form 1094-C you do not have to send the Form again, you can provide the corrected information in the response letter that you give to the IRS.
Therefore, if you need a letter 226j extension, always rely on experienced professionals to help you. In this way, you effectively are able to provide the IRS with corrected information without incurring any penalty woes and tensions at all!