What This Letter Means
Letter 5040-J, Preliminary ESRP Second Notice, is a follow-up letter. It goes to an applicable large employer (ALE) that did not respond to Letter 226-J, the letter proposing an Employer Shared Responsibility Payment (ESRP) under the Affordable Care Act.
The IRS sends Letter 5040-J when there has been no response to Letter 226-J within 30 days. A copy of Letter 226-J and all of its attachments comes with it.
The Deadline
Letter 5040-J gives you 15 days to respond. If you don't, the IRS prepares the case for assessment. After the payment is assessed, the IRS sends assessment and balance due notices on the ESRP account.
What to Do
Go back to the enclosed Letter 226-J and follow its instructions.
- If you agree with the proposed payment, sign and return the response form indicating agreement.
- If you disagree in whole or in part, return the response form with a signed statement explaining why, plus supporting documents. Make any corrections for specific employees on the Form 14765, Employee Premium Tax Credit (PTC) Listing, included with Letter 226-J.
Common disagreements involve the information reported on Forms 1094-C and 1095-C, which employees were full-time, and whether offered coverage was affordable. If you disagree, the IRS answers with a Letter 227 showing a revised or unchanged amount and your options, including an appeal.
Practical Points
- Respond in writing and keep proof of when you sent it.
- If a payroll provider or benefits vendor prepared your Forms 1095-C, get their data now. You'll need it to correct employee-level entries.
- Don't let this one go. Silence leads straight to an assessment.
If you received Letter 5040-J and need to respond to a proposed ESRP, call us at (813) 229-7100.