How to Respond to IRS Letter 226-J: A Complete Guide

Introduction: Why Your Letter 226-J Response Matters

If you've received IRS Letter 226-J, you're facing a critical decision point that could cost your organization hundreds of thousands—or even millions—of dollars. Learning how to respond to Letter 226-J properly is essential because this IRS notice proposes Employer Shared Responsibility Payment (ESRP) penalties under the Affordable Care Act, and your response directly determines whether you'll pay the full amount, negotiate a reduction, or eliminate the penalties entirely. The stakes are simply too high to ignore or mishandle this correspondence.

Many employers who receive Letter 226-J are surprised to learn that the proposed penalties are often based on incomplete or incorrect information. The IRS data-matching process that triggers these notices compares your filed Forms 1095-C with Health Insurance Marketplace data about employees who received premium tax credits. However, this process is imperfect—data entry errors, timing mismatches, and coding mistakes can all result in penalty assessments that shouldn't apply. When you know how to respond to Letter 226-J effectively, you can often demonstrate that the IRS's proposed penalties are unwarranted or significantly overstated.

The financial impact of getting this right cannot be overstated. For tax year 2025, Section 4980H(a) penalties reach $2,970 per full-time employee (minus the first 30), while Section 4980H(b) penalties are $4,460 per employee who received premium tax credits. An employer with 300 full-time employees facing a 4980H(a) assessment could see proposed penalties exceeding $800,000. Even a 4980H(b) assessment affecting just 50 employees would result in proposed penalties of over $223,000. Your timely and thorough response is the only opportunity you have to challenge these amounts before they become final assessments.

This comprehensive guide explains exactly how to respond to Letter 226-J, including:

  • Critical deadlines: Understanding the 30-day response window and how to request extensions
  • Required forms: How to complete Form 14764 and supporting documentation
  • Dispute strategies: Common grounds for challenging proposed penalties
  • Documentation requirements: What evidence you need to support your response
  • Filing corrections: When and how to submit corrected 1095-C forms
  • Follow-up procedures: What happens after you submit your response

Understanding the Letter 226-J Response Deadline

The Critical 30-Day Window

When you respond to Letter 226-J, timing is everything. You have exactly 30 days from the date printed on the letter to submit your response. This deadline is absolute—the IRS calculates it from the letter date, not from when you actually receive the correspondence. If your letter was delayed in the mail, sat in a mailroom, or was forwarded from an old address, you may have significantly less than 30 days to act.

The consequences of missing this deadline are severe. If the IRS doesn't receive your response within the 30-day window, they will issue Letter 227-M, which confirms the full proposed penalty as a final assessment. At that point, your options become extremely limited. You lose your primary opportunity to dispute the penalties through the normal administrative process, and challenging the assessment becomes far more difficult and expensive.

Here's how the response timeline typically works:

Day Action/Event Importance
Day 0 Letter 226-J date (printed on letter) Response deadline clock starts
Days 1-7 Letter in transit via certified mail Clock is running
Days 7-14 You receive and review letter Begin immediate analysis
Days 14-25 Gather documentation, analyze employees Prepare your response
Days 25-28 Complete Form 14764, compile attachments Finalize submission
Day 30 Response deadline Must be received by IRS

Requesting a Deadline Extension

If you cannot complete your Letter 226-J response within 30 days, you can request an extension. However, this request must be made before the original deadline expires. To request an extension:

  1. Call the IRS: Use the phone number printed on your Letter 226-J to contact the ESRP unit directly
  2. Explain your situation: Provide a valid reason why you need additional time (gathering records, complex analysis, etc.)
  3. Request in writing: Follow up your phone call with a written request sent to the address on the letter
  4. Document everything: Keep records of who you spoke with, when, and what was agreed

The IRS generally grants reasonable extension requests, typically adding 30 additional days. However, don't assume an extension will be granted—continue preparing your response while awaiting confirmation. If the IRS denies your extension request, you'll need to submit whatever response you can prepare by the original deadline.

Step-by-Step Process: How to Respond to Letter 226-J

Step 1: Verify Letter Authenticity and Review Contents

Before you begin preparing your response to Letter 226-J, verify that the letter is legitimate. IRS correspondence scams are common, and you should confirm:

  • Return address: The letter should come from an official IRS address (typically Ogden, UT or other IRS processing centers)
  • Your information: The EIN, company name, and address should match your records
  • Tax year: The letter should reference a tax year for which you filed ACA forms (typically 12-24 months prior)
  • Accompanying forms: Legitimate Letter 226-J packages include Form 14764, Form 14765, and possibly Form 14765-A

Once verified, carefully review the entire package. Note the proposed penalty amount, the response deadline, and the specific tax year in question. Identify which type of penalty is being proposed—Section 4980H(a) or 4980H(b)—as this affects your response strategy.

Step 2: Analyze Form 14765 (Employee PTC Listing)

Form 14765 is the heart of your Letter 226-J response analysis. This form lists every employee whose receipt of premium tax credits (PTCs) contributed to the proposed penalty. For each employee, you'll see:

  • Employee name and Social Security Number
  • Months during which PTCs were received
  • Penalty amount attributed to that employee

Create a spreadsheet to track your analysis of each employee. For every person listed, you need to determine:

Employment Status Questions:

  • Was this person actually employed by your organization during the months shown?
  • Were they a full-time employee (averaging 30+ hours per week)?
  • Were they in a valid initial measurement period or stability period?
  • Were they a seasonal employee not counted toward your full-time count?

Coverage Offer Questions:

  • Was this employee offered minimum essential coverage (MEC)?
  • Was coverage extended to dependent children up to age 26?
  • Was the coverage affordable under one of the IRS safe harbors?
  • Did the coverage provide minimum value (pay at least 60% of expected costs)?

Response and Enrollment Questions:

  • Did the employee enroll in the offered coverage?
  • Did they decline coverage in writing?
  • Were they in a permissible waiting period?
  • Did they have coverage through another source (spouse, another job)?

Step 3: Gather Supporting Documentation

The strength of your Letter 226-J response depends entirely on the documentation you provide. For each employee you plan to dispute, gather evidence supporting your position:

Coverage Offer Documentation:

  • Open enrollment materials: Copies of benefit guides, enrollment forms, and communications sent to employees
  • Employee offer letters: Written offers of coverage showing what was offered and employee contribution amounts
  • Plan summaries: Summary Plan Descriptions (SPDs) or Summary of Benefits and Coverage (SBCs) showing minimum value
  • Enrollment system records: Screenshots or exports showing coverage was offered in your benefits system

Employee Response Documentation:

  • Enrollment confirmations: Records showing employees who enrolled in coverage
  • Waiver forms: Signed declination forms from employees who declined coverage
  • Coverage elsewhere attestations: Documentation of employees with coverage through other sources

Employment and Hours Documentation:

  • Payroll records: Time and attendance data proving hours worked and employment dates
  • Measurement period calculations: Documentation of your look-back measurement period approach
  • Status change records: Evidence of part-time to full-time transitions and applicable stability periods

ACA Reporting Documentation:

  • Filed 1095-C copies: The original forms you submitted to the IRS
  • Corrected 1095-C copies: Any corrections you've filed or are filing
  • 1094-C transmittal: Your transmittal form showing full-time employee counts and offer percentages

Step 4: Identify Grounds for Disputing Penalties

When preparing your Letter 226-J response, identify which of the following common dispute grounds apply to each employee:

Category 1: Employee Was Not Full-Time

If an employee worked fewer than 30 hours per week on average (or 130 hours per month), they shouldn't trigger penalties. Common situations include:

  • Part-time employees incorrectly classified in Marketplace applications
  • Employees in look-back measurement periods who weren't yet determined full-time
  • Seasonal employees working full-time hours for less than 120 days
  • Variable hour employees in initial measurement periods

Category 2: Coverage Was Offered But Not Reported Correctly

Many Letter 226-J penalties result from Form 1095-C coding errors. If you offered coverage but used incorrect codes:

  • Line 14 errors: Wrong offer code indicating no offer when coverage was actually offered
  • Line 15 errors: Incorrect or missing employee contribution amounts
  • Line 16 errors: Missing safe harbor codes that would have explained apparent non-compliance

Category 3: Employee Was in a Valid Non-Assessment Period

The IRS allows certain periods during which penalties don't apply:

  • Limited non-assessment period for new employees: Up to 3 full calendar months after hire for monthly measurement period employers
  • Initial measurement period: Time during which you're measuring whether a variable hour employee is full-time
  • Administrative period: Brief period between measurement and stability periods

Category 4: Marketplace Data Is Incorrect

Sometimes the problem isn't with your reporting but with Marketplace data:

  • Employee provided incorrect employer information when applying for Marketplace coverage
  • Employee received PTC when they shouldn't have (perhaps PTC was later recaptured)
  • Employee's PTC eligibility was based on estimated income that proved incorrect

Step 5: File Corrected Forms 1095-C If Needed

If your analysis reveals that original Forms 1095-C contained errors, file corrected forms immediately—ideally before or concurrent with your Letter 226-J response. Corrections demonstrate to the IRS what the accurate information should have been.

Common corrections include:

  • Line 14 corrections: Changing the offer code to accurately reflect that MEC was offered
  • Line 15 corrections: Adding or correcting the employee required contribution amount
  • Line 16 corrections: Adding safe harbor codes (2C for Federal Poverty Line, 2D for Form W-2, 2E for Rate of Pay, 2F for waiting period, 2G for limited non-assessment period)
  • SSN corrections: Fixing incorrect Social Security Numbers that may have caused matching issues

Include copies of corrected forms with your response and explain in your cover letter what changes were made and why. The IRS will process corrections and use the updated information when evaluating your dispute.

Step 6: Complete Form 14764 (ESRP Response)

Form 14764 is the official response form you must complete and return. This form allows you to indicate your position regarding the proposed penalties:

Option 1: Agree with Full Assessment

If you determine that the proposed penalties are accurate and you owe the full amount:

  • Check the box indicating full agreement
  • Sign and date the form
  • Return by the deadline
  • Await payment instructions (typically Letter 227-J with payment voucher)

Option 2: Disagree with Full Assessment

If you believe no penalties are owed:

  • Check the box indicating full disagreement
  • Attach a detailed written explanation addressing every employee on Form 14765
  • Include supporting documentation for each disputed employee
  • Reference specific Line 14, 15, and 16 codes and safe harbor provisions
  • Include copies of corrected 1095-C forms if applicable

Option 3: Partially Agree

If you believe some penalties are valid but others are not:

  • Check the box indicating partial agreement
  • Specify which employees and months you agree with
  • Specify which employees and months you dispute
  • Provide documentation only for disputed items
  • The IRS will assess agreed penalties and review disputed items

Step 7: Write a Compelling Cover Letter

Your Letter 226-J response should include a cover letter that summarizes your position and guides the IRS reviewer through your documentation. A strong cover letter includes:

Opening paragraph:

  • Reference the Letter 226-J date and your EIN
  • State the tax year in question
  • Clearly state whether you agree, disagree, or partially agree

Summary of dispute grounds (if applicable):

  • List the categories of employees you're disputing
  • Provide a count of employees in each category
  • State the dollar amount of penalties being disputed

Employee-by-employee analysis:

  • Create a table or list showing each disputed employee
  • Explain the specific reason each employee's penalty is disputed
  • Reference the attached documentation by exhibit number

Documentation inventory:

  • List all attachments with clear labels
  • Organize documents logically (by employee or by document type)
  • Include page numbers if the package is lengthy

Closing:

  • Request that the IRS review your documentation
  • Provide contact information for questions
  • Request written confirmation of receipt

Step 8: Submit Your Response Properly

How you submit your Letter 226-J response matters as much as what you submit. Follow these best practices:

Mailing method:

  • Use certified mail with return receipt requested to prove delivery
  • Consider overnight delivery services (FedEx, UPS) for guaranteed delivery tracking
  • Do NOT fax or email your response unless specifically instructed by the IRS

Package organization:

  • Place completed Form 14764 on top
  • Follow with your cover letter
  • Include Form 14765 with your annotations or corrections
  • Attach supporting documentation in the order referenced
  • Consider using tabs or dividers for lengthy packages

Recordkeeping:

  • Make complete copies of everything you submit
  • Keep the certified mail receipt and delivery confirmation
  • Note the date mailed and expected delivery date
  • Store copies securely for at least seven years

Common Mistakes When Responding to Letter 226-J

Mistake 1: Missing the Deadline

The most catastrophic mistake is failing to respond to Letter 226-J by the 30-day deadline. Once this deadline passes, the IRS will finalize the assessment, and your administrative appeal options become severely limited. Even if you believe the penalty is completely wrong, missing the deadline essentially waives your right to dispute it through normal channels.

How to avoid: Mark the deadline on your calendar immediately. Set multiple reminders. If you can't complete a full response, submit a partial response or extension request before the deadline.

Mistake 2: Ignoring the Letter Entirely

Some employers assume Letter 226-J is a mistake and will be corrected automatically, or they're so overwhelmed they simply don't respond. This is a guaranteed path to paying the full proposed penalty.

How to avoid: Take every Letter 226-J seriously. Even if you believe the penalty is completely erroneous, you must respond in writing to protect your rights.

Mistake 3: Submitting a Response Without Documentation

Simply checking "disagree" on Form 14764 without providing supporting evidence will likely result in the IRS confirming the original penalty. The IRS needs documentation to justify changing their position.

How to avoid: Every disputed employee must have supporting documentation. If you can't document a dispute, consider agreeing to that portion of the penalty.

Mistake 4: Not Filing Corrected 1095-C Forms

If your original forms contained errors, simply explaining the errors in your response isn't enough. The IRS's systems rely on the filed data, so you need to file corrected forms to update their records.

How to avoid: File corrections for any 1095-C forms that had coding errors, missing information, or incorrect data. Include copies with your response.

Mistake 5: Disputing Legitimate Penalties

Attempting to dispute penalties that you legitimately owe wastes time and resources and may damage your credibility with the IRS on legitimate disputes.

How to avoid: Honestly assess each employee on Form 14765. If you genuinely failed to offer compliant coverage to an employee who received PTCs, consider accepting that portion of the penalty while disputing others.

Mistake 6: Not Getting Professional Help When Needed

Letter 226-J responses can be complex, especially for large employers or those with complicated workforce situations. Trying to handle a major penalty assessment without appropriate expertise can result in missed opportunities or errors.

How to avoid: Consider working with a tax professional, employee benefits attorney, or ACA compliance specialist for significant assessments.

What Happens After You Respond to Letter 226-J

IRS Review Process

After you submit your Letter 226-J response, the IRS ESRP unit will review your documentation and make a determination. This process typically takes several months. During this time:

  • Initial review: The IRS confirms receipt and begins analyzing your response
  • Documentation review: Reviewers examine your supporting evidence for each disputed employee
  • Correction processing: Any corrected 1095-C forms you filed are processed and incorporated
  • Additional requests: The IRS may contact you for clarification or additional documentation
  • Determination: The IRS makes a decision on each disputed employee

Possible Outcome Letters

After reviewing your Letter 226-J response, you'll receive one of several follow-up letters:

Letter 227-J: Penalty Reduced or Eliminated

This is the best outcome. Letter 227-J indicates that the IRS accepted some or all of your disputes and reduced the penalty accordingly. If penalties were eliminated entirely, the letter will confirm no payment is due. If penalties were reduced, the letter will show the new amount and provide payment instructions.

Letter 227-K: Penalty Confirmed

If the IRS rejects your disputes and maintains the original penalty assessment, you'll receive Letter 227-K. This letter makes the assessment final at the proposed amount. However, you still have appeal rights (discussed below).

Letter 227-L: Conference Scheduled

In complex cases or when significant amounts are at stake, the IRS may schedule a conference to discuss disputed items. This is an opportunity to present your case verbally and provide additional context.

Letter 227-M: No Response Received

If you failed to respond by the deadline, you'll receive Letter 227-M confirming the full penalty as a final assessment. At this point, your options are severely limited.

Appeal Rights If Your Response Is Rejected

If the IRS confirms penalties despite your Letter 226-J response, you have additional options:

Request a Conference:

  • You can request a meeting with the IRS ESRP unit to discuss the assessment
  • Bring documentation and be prepared to explain your position
  • This may be offered automatically for large assessments

Appeal to IRS Appeals Office:

  • If you disagree with the ESRP unit's determination, you can request an independent review
  • The Appeals Office is separate from the unit that made the initial determination
  • Appeals officers have settlement authority and may negotiate reductions

Pay and File Refund Claim:

  • Pay the assessed penalty to stop interest accumulation
  • File a claim for refund with the IRS
  • If the refund claim is denied, you may sue in federal court

Letter 226-J Response: Penalty Amounts and Calculations

Understanding Your Proposed Penalty

When you respond to Letter 226-J, it helps to understand exactly how the penalty was calculated. This allows you to identify calculation errors or incorrect assumptions:

Tax Year 4980H(a) Annual 4980H(a) Monthly 4980H(b) Annual 4980H(b) Monthly
2024 $2,880/employee $240/employee $4,320/employee $360/employee
2025 $2,970/employee $247.50/employee $4,460/employee $371.67/employee
2026 (Projected) ~$3,060/employee ~$255/employee ~$4,590/employee ~$382.50/employee

Section 4980H(a) Calculation

Section 4980H(a) applies when an Applicable Large Employer fails to offer minimum essential coverage to at least 95% of full-time employees in any month where at least one full-time employee receives a PTC. The calculation is:

(Total FT Employees - 30) × Monthly Penalty Amount × Applicable Months

Example: An employer with 200 full-time employees who failed to offer coverage for all 12 months:

  • Calculation: (200 - 30) × $247.50 × 12 = $504,900

When reviewing your Letter 226-J for 4980H(a) penalties, verify:

  • The IRS's count of full-time employees is correct
  • The months of non-compliance are accurate
  • You actually failed to meet the 95% offer threshold

Section 4980H(b) Calculation

Section 4980H(b) applies when an employer met the 95% offer threshold but specific employees received PTCs because they weren't offered coverage, the coverage wasn't affordable, or it didn't provide minimum value. The calculation is:

Number of Affected Employees × Monthly Penalty Amount × Applicable Months

Example: 25 employees received PTCs for 6 months each:

  • Calculation: 25 × $371.67 × 6 = $55,750.50

When reviewing your Letter 226-J for 4980H(b) penalties, verify:

  • Each listed employee actually received PTCs during the months shown
  • Coverage was either not offered or was non-compliant
  • Safe harbor provisions don't apply

Frequently Asked Questions About Responding to Letter 226-J

How long do I have to respond to Letter 226-J?

You have 30 days from the date on the letter to submit your response. This deadline is firm and calculated from the letter date, not when you receive it. If you need more time, contact the IRS number on the letter before the deadline to request an extension. Extensions are generally granted for reasonable requests, but you must ask before the original deadline expires. Missing the deadline results in automatic assessment of the full proposed penalty.

Can I respond to Letter 226-J by phone or email?

No, you must respond to Letter 226-J in writing by completing Form 14764 and mailing it to the address specified in the letter. Phone calls and emails are not accepted as formal responses. You can call the IRS to ask questions, request an extension, or discuss your situation, but the official response must be submitted via mail. Use certified mail with return receipt to prove delivery.

What documentation should I include with my Letter 226-J response?

Include documentation proving your disputes are valid. This typically includes: enrollment records showing coverage was offered, employee waiver forms, payroll records proving hours worked (for part-time claims), plan documents showing minimum value, contribution amounts proving affordability, and copies of corrected 1095-C forms. Each disputed employee should have specific documentation supporting why the penalty shouldn't apply.

Should I file corrected 1095-C forms before responding to Letter 226-J?

Yes, if your original forms contained errors that contributed to the penalty assessment, you should file corrected 1095-C forms promptly. File corrections as soon as you identify errors—ideally before or concurrent with your response. Include copies of corrected forms with your Letter 226-J response and explain what was changed. This shows the IRS what the accurate information should have been and strengthens your dispute.

What happens if I agree with part of the Letter 226-J penalty but dispute the rest?

You can indicate partial agreement on Form 14764. Specify which employees and months you agree with and which you dispute. Provide documentation only for the disputed portions. The IRS will assess the agreed penalties and review your documentation for the disputed items. This approach is often appropriate when some penalties are legitimate but others resulted from errors.

How long does the IRS take to respond after I submit my Letter 226-J response?

The IRS typically takes several months to review your response and issue a determination. During this time, they may contact you for additional information or clarification. You'll receive one of several letters (227-J if penalties are reduced, 227-K if confirmed, or 227-L if a conference is scheduled) once the review is complete. Continue to maintain your documentation during this period.

Can I get professional help to respond to Letter 226-J?

Yes, many employers work with tax professionals, employee benefits attorneys, or ACA compliance specialists when preparing their Letter 226-J response. Professional assistance is particularly valuable for large penalty assessments, complex situations (multiple EINs, variable hour employees, acquisitions), or if you're uncertain about ACA requirements. Some ACA software providers also offer support services for penalty response.

What if I missed the Letter 226-J response deadline?

If you miss the 30-day deadline, you'll receive Letter 227-M confirming the full penalty assessment. Your options become limited but aren't completely eliminated. You may still be able to request a conference, appeal to the IRS Appeals Office, or pay the penalty and file a refund claim. Contact the IRS immediately if you've missed the deadline to understand what options remain available.

Can the IRS change my penalty amount after I respond?

Yes. After reviewing your Letter 226-J response, the IRS may reduce the penalty (if they accept your disputes), confirm the original amount (if they reject your disputes), or in rare cases, identify additional issues that increase the assessment. You'll receive a follow-up letter indicating the IRS's determination and next steps. If penalties are reduced or eliminated, no further action is needed on those amounts.

What's the difference between 4980H(a) and 4980H(b) penalties in Letter 226-J?

Section 4980H(a) penalties apply when you failed to offer minimum essential coverage to at least 95% of full-time employees—it's calculated based on your total workforce minus 30 employees. Section 4980H(b) penalties apply when you met the 95% threshold but specific employees received PTCs because their individual coverage offer was inadequate—it's calculated per affected employee. Your Letter 226-J and Form 14765-A (if included) will indicate which penalty type applies.

Do I need to respond to Letter 226-J if the penalty seems obviously wrong?

Yes, absolutely. Even if you believe the penalty assessment is completely erroneous, you must respond to Letter 226-J in writing within 30 days. The IRS doesn't automatically correct mistakes—they rely on your documented response to identify errors. Failing to respond because you assume the mistake will be discovered results in the full penalty becoming a final assessment.

How can I prevent future Letter 226-J notices?

The best prevention is accurate ACA reporting combined with compliant coverage offers. Use reliable ACA reporting software like BoomTax to validate your data before filing, apply correct Line 14, 15, and 16 codes, document your safe harbor methods, and maintain comprehensive records of coverage offers and employee responses. Meeting the ACA filing deadlines and filing electronically also reduces the likelihood of issues.

How BoomTax Helps You Respond to Letter 226-J

When you need to respond to Letter 226-J, having accurate records and reliable ACA reporting software makes all the difference. BoomTax provides comprehensive ACA compliance solutions that help you both prevent penalty notices and respond effectively when they arrive:

  • Accurate ACA reporting: File Forms 1095-C and 1094-C with comprehensive data validation that catches errors before filing—reducing the likelihood of receiving Letter 226-J in the first place
  • Intelligent code guidance: Built-in assistance for selecting correct Line 14, 15, and 16 codes ensures your forms accurately reflect coverage offers and safe harbor provisions
  • Unlimited corrections: When you need to file corrected forms as part of your Letter 226-J response, do so at no additional cost through BoomTax
  • Multi-year archives: Access your historical ACA filings instantly to gather the documentation you need for penalty responses
  • Bulk data import: Import employee data from payroll systems like ADP, Workday, and UKG to minimize manual entry errors that trigger penalty notices
  • Safe harbor documentation: Track which affordability safe harbor applies to each employee, creating defensible records for any IRS inquiry
  • State filing support: Handle California, New Jersey, Rhode Island, D.C., and Massachusetts state filings from the same platform

When your ACA reporting is accurate from the start, the IRS data-matching process is more likely to confirm compliance rather than trigger penalties. And if you do receive Letter 226-J, BoomTax's comprehensive records give you the documentation you need to build a strong response.

For employers who prefer comprehensive support, BoomTax also offers ACA reporting services where our team handles the entire filing process. Either way, you gain the peace of mind that comes from knowing your ACA compliance is handled correctly.

Ready to protect your organization from ACA penalties? Get started with BoomTax today and file your ACA forms with confidence.

Conclusion: Protecting Your Organization's Letter 226-J Response

Knowing how to respond to Letter 226-J effectively is crucial for any Applicable Large Employer. This IRS penalty notice represents one of the most significant financial risks of ACA compliance, with potential assessments reaching millions of dollars for large employers. However, many proposed penalties can be reduced or eliminated entirely through a well-prepared response supported by proper documentation.

Key takeaways for your Letter 226-J response:

  • Act immediately: You have only 30 days from the letter date to respond—start your analysis the day you receive it
  • Analyze every employee: Review Form 14765 carefully and categorize each employee based on dispute potential
  • Gather comprehensive documentation: Enrollment records, payroll data, plan documents, and offer communications support your response
  • File corrections promptly: If your original 1095-C forms contained errors, submit corrections before or with your response
  • Be thorough but honest: Dispute penalties you can document, but accept those that are legitimate
  • Use certified mail: Always have proof of delivery for your response
  • Keep copies of everything: Maintain records for at least seven years

The best defense against Letter 226-J is accurate ACA compliance and reporting from the start. Using reliable ACA reporting software like BoomTax ensures your Forms 1095-C are filed correctly with appropriate codes, minimizing the likelihood of receiving penalty notices. When you maintain proper records and file accurate forms, you're also prepared to quickly and effectively respond to Letter 226-J if one arrives.

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