To date we have saved our clients over $235,000 in penalties:
IRS has started sending Proposed Employer Shared Responsibility Payment (ESRP) letters to Applicable Large Employers (ALEs) (Letter 226J). These notices are triggered when at least one full-time employee has been allowed the Premium Tax Credit (PTC) on their individual tax return filed with IRS. ESRPs are assessed if either:
When calculating the A Penalty, the ALEs monthly full-time employee count is reduced by its allocable share of a statutory amount. Usually, this statutory amount is 30. If the ALE is a member of an aggregated ALE group, the statutory amount is allocated between group members.
The A Penalty for 2019 is $208.33 per month per net assessable full-time employee (after reduction by the allocated statutory amount discussed above). The penalty amount is adjusted each year for inflation.
The B Penalty for 2019 is $312.50 per month per assessable full-time employee. The penalty amount is adjusted each year for inflation.
The ESRP is a penalty and cannot be deducted for income tax purposes.
These penalties add up quickly and ALEs should seek immediate assistance to respond to the 226J Letter within the required 30-day response period.
Ellen L. Joseph CPA Chartered specializes in Internal Revenue Code § 4980H - Shared responsibility for employers regarding health coverage and the related reporting requirements of Forms 1094-C and 1095-C. Please call (954) 242-1200 for assistance in responding to your Proposed Employer Shared Responsibility Payment letter.