Eliminate ACA Penalties with Confidence

Letter 226J is a preliminary proposal of an Employer Shared Responsibility Payment (ESRP) — an ACA penalty assessment. You received it because the IRS cross-referenced your 1095-C filings with individual tax returns and identified at least one full-time employee who received a Premium Tax Credit (PTC) from a state or federal health exchange. This signals that the IRS believes you either:

• Failed to Offer Coverage: You did not offer Minimum Essential Coverage to at least 95% of your full-time employees (Triggering Penalty A).
• Offered Non-Compliant Coverage: You offered coverage, but it was unaffordable, did not provide Minimum Value, or was not reported correctly (Triggering Penalty B).

How Trusaic Helps: We look beyond the summary page. We digitize the included Form 14765 (the list of employees who received credits) and cross-reference it against your historical payroll data. We often find that these penalties are triggered by simple data coding errors — such as a missing 2C code (Employee Enrolled) — rather than an actual failure to offer coverage. We identify these false positives”to dispute the assessment and reduce your liability.

Trusaic has saved clients over $1 billion in proposed IRS assessments, with many achieving penalty reductions of 90% or more. Because the IRS often bases its initial Letter 226J assessments on incomplete data or False Positive triggers, many multi-million dollar penalties can be legally eliminated through forensic data correction. By identifying coding errors, we can prove to the IRS that your organization was actually in compliance. 

How Trusaic Helps: We’ve never lost an IRS audit. We don’t just ask for a reduction; we earn it through a Forensic Data Audit. Our analysts reconstruct your historical payroll and benefits data month-by-month for the year in question. We then generate a mathematically defensible response packet that identifies every employee who was erroneously flagged for a Premium Tax Credit (PTC), directly lowering your liability at the source.

Letter 5699 is an inquiry letter asking why you did not file returns (Forms 1094-C/1095-C) for a specific tax year. Do not ignore this letter. It is often the precursor to a massive financial assessment. If you fail to respond or file the missing returns, the IRS will likely generate a Substitute for Return based on estimates and issue a Letter 226J  5005A penalty assessment.

How Trusaic Helps: We can quickly generate and file the missing tax years for you. We prepare the response to Letter 5699 and handle the retroactive filing with the IRS to close the inquiry before it escalates to a financial demand.

Yes. You do not need to be a current Trusaic client to use our Penalty Response Service. We work with organizations that filed in-house, used a payroll provider, or used a different ACA vendor for the year in question.

Deadlines for responding to an IRS ACA notice vary significantly by letter type, and recent laws have changed the rules:

• Letter 226J: Under the Employer Reporting Improvement Act (effective Jan. 1, 2025), you now have 90 days to respond to the initial penalty assessment.
• Other Inquiries (Letter 5699 / 5005A): These often still carry a shorter 30-day response window.

Warning: Missing a deadline can cause the IRS to finalize the assessment and issue a Notice and Demand (CP220J) for payment, at which point it becomes much harder to dispute.

How Trusaic Helps: We manage the entire timeline. If necessary, we file for extensions on your behalf to ensure you have enough time to gather data without defaulting on the assessment.