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2015 Employer Shared Responsibility Penalty Assessments : IRS Issues New Forms

The IRS has released Forms 14764 and 14765 related to the 2015 employer shared responsibility penalty assessments against applicable large employers (“ALEs”) under Code Section 4980H (“Code Section 4980H penalties”). These forms will be included with Letter 226J and should be used by employers responding to IRS proposed penalties.  As a reminder, Letter 226J is used by the IRS to notify ALEs of proposed Code Section 4980H penalties and an ALE’s response to the same is generally due within 30 days of the date of the letter.  A description and highlights of each form is outlined below.

IRS Form 14764

ALEs that receive IRS Letter 226J will complete the enclosed Form 14764 titled “ESRP Response” to either agree with the proposed IRS penalty amount or indicate its disagreement with all or part of the proposed penalty.

If an ALE agrees with the proposed penalty amount, it should sign and return Form 14764 to the IRS in the provided envelope.  ALEs have the option to include payment {full or partial_ with the signed form or use the electronic federal tax payment system.

If an ALE disagrees with the proposed penalty amount, it should check the appropriate box and return the form to the IRS.  In addition, the ALE must use Form 14765(discussed below) to provide a full explanation of its disagreement and indicate any proposed changes, if needed, to the information reported on Form 1095-C.

IRS Form 14765

ALEs that receive Letter 226J will also receive a completed Form 14765 titled “Employee Premium Tax Credit (PTC) Listing.” Form 14765 provides a list of assessable full-time employees who (for at least one month in the year) received a premium tax credit and for whom the ALE did not qualify for an affordability safe harbor or other erlief along with the indicator coes the ALE reported on lines 14 and 16 of the employees Form 1095-C. Any month not highlighted on Form 14765, indicates a month for which the employees i an assessable full-time employee and for which the ALE is subject to a penalty.  ALEs may make changes, such as corrections to indicator codes, to this form and include it, along with Form 14764 when in disagreement with the proposed penalty amount.
Next Steps
The IRS has already started issuing Letter 226J to ALEs with proposed 2015 Code Section 4980H penalties.  As a reminder, a response to Letter 226J is generally due 30 days from the date of the letter.  ALEs should immediately take steps to gather and review their 2015 Forms 1094-C and 1095-C to assist in responding to the IRS.  ALEs should also consult with an advisor to obtain assistance in preparing their response to the IRS.  Form 13764 allows an ALE to authorize another individual to contact the IRS on the ALE’s behalf regarding the proposed penalties.
For additional information regarding the penalty assessment process, please see our alert from November 2017, “Paying the Piper: IRS Issues New 4980H Penalty Guidance and Letter 226J.”
The content herein is provided for educational and informational purposes only and does not contain legal advice.  Please contact our office if you have any questions about Letter 226J, IRS Form 14764 and 14765, or compliance with the Employer Shared Responsibility provisions under the ACA.
Dated: December 19, 2017