Internal Revenue Service officials sometimes issue an initial intimation in the form of 226-J to certain entrepreneurs. All of these businessmen fall under the general category of ‘Applicable Large Employers.’ It is in response to the information they file in Forms 1094-C, 1095-C and personal tax returns. This letter is to remind them of their obligations and liabilities under the Affordable Care Act. It comes under the clause of ‘Employer Shared Responsibility Payment’ (ESRP) provisions of this legislation. The notice also brings to the attention of these proprietors an important fact. The Federal Government can impose certain penalties and interest charges on them.
How can entrepreneurs respond to ACA 226-J letter from the Federal authorities?
Legal experts say it is common for entrepreneurs to receive an ACA 226-J letter from the taxmen. However, they shouldn’t panic on seeing this notice in their postbox. There are certain provisions in the Affordable Care Act (ACA) which safeguards their interests. One of them is their right to dispute the claims of IRS officials in relevant tribunals. These professionals explain these businessmen have no reason to worry. They should first seek the help of experts specializing in this field. For this, they only have to pay them a nominal fee. Only can these specialists can suggest the right course of action these proprietors need to take.
On receiving an ACA 226-J letter, these businessmen need to take the following 3 important steps:
- Read the document thoroughly
This is the first and most important step which entrepreneurs need to take on receiving this notice. They should also go through all the relevant attachments to this letter. It can help these businessmen understand their liabilities under ESRP provisions. They also come to know how the information they gave to tax authorities in the 1094-C declaration. The proprietor will understand how such details affects their overall tax liability.
- How can they respond to the information
On reading the letter thoroughly, they’ll come to know relevant clauses containing their rights. This gives them a step-by-step approach on how they can contest the decision of tax authorities. In the opinion of these businessmen, the computation which IRS official has come up with is incorrect. In such a case, they can submit a response. However, if they choose to so, they should note the deadline for taking this course of action. Normally, it is within a period of 30 days.
- Submitting relevant information
The entrepreneurs may disagree with the decision of federal tax authorities. In such a case, they need to file Form 14765 in this regard. In doing so, they should provide all the relevant information the regulators ask for. Only then can they justify their claims. On the other, they may agree with assessment of the taxmen. In such a case, they just to follow the instructions to submit their response. Moreover, they pay up their liability and file the relevant returns.
All entrepreneurs want to conduct their market activities without any hassle. Receiving an ACA 226-J letter from tax authorities hampers this process. The last thing they want is to be on the wrong side of the law. However, the following 3 important steps can help them file an appropriate response to this notice.