The IRS is on the move and Applicable Large Employers should take notice. Remember, the ACA defines an Applicable Large Employer (ALE) as one with 50 or more full time equivalent employees. Those with 100+ full time equivalents have been subject to its Employer Shared Responsibility provisions, also known as “the employer mandate”, since 2015. Early last month, the IRS announced their intent to begin sending notices (called Letter 226J) to these employers during the last six weeks of 2017, advising them that they owe a payment (“ESRP”) to the IRS based on the information reported to them on Forms 1094-C and 1095-C, which were filed in 2016 for tax year 2015.
Please note that an ALE should be exempt from this ESRP, provided that they had a qualified plan in place by 4/1/15. That means the plan met the Affordability test, included Minimum Essential Coverage (MEC) or Minimum Value Coverage (MVC), and the ALE can document their offers of coverage and employee waivers. The Letter 226J comes along with an “ESRP Response” (Form 14764), which the employer needs to return to the IRS within 30 days of the date on their Letter 226J, along with the applicable supporting documentation.
This is precisely why we strongly urge all our clients, both large and small, to retain proof of all offers of coverage and employee enrollment elections. The ability to quickly furnish necessary documentation to the IRS (or DOL) is more critical now than ever before, and we have excellent tools in place for our clients that make it easy to do so.
If you have any questions or concerns about this, please let us know. We cannot provide tax advice but we are pleased to assist you within the scope of our expertise and employer documentation resources.