What is the employer shared responsibility payment?
The employer shared responsibility provision requires these large employers to offer affordable health insurance that provides minimum value to all full-time employees (working at least 30 hours per week).
How do I respond to IRS letter 226J?
Employers respond via Form 14764 (ESRP Response) agreeing or disagreeing with the penalty amount assessed by the listed response date. The deadline is generally 30 days from the date of the Letter 226J.
How are ACA penalties calculated?
c) Penalty Calculation The maximum penalty for an employer with more than 50 employees that offer coverage but requires employees to pay more than 9.5 percent of an employee’s wage would be: total FTEs minus 30 FTEs times $2,000. The penalty will not be higher than the employer who offers no coverage.
What will trigger the employer shared responsibility penalty?
An employer will be subject to a penalty if the employer-sponsored coverage is unaffordable or does not provide minimum value, and if one or more full-time employees receive subsidized coverage through an exchange.
What is IRS 226J?
Letter 226-J is the initial letter issued to Applicable Large Employers (ALEs) to notify them that they may be liable for an Employer Shared Responsibility Payment (ESRP).
What is the difference between 4980H A and 4980H B?
The annual Section 4980H(a) penalty is calculated as the ALE’s number of full-time employees (minus 30) x $2,000 (as adjusted). The annual Section 4980H(b) penalty is calculated as $3,000 (as adjusted) x the number of the ALE’s full-time employees who receive an Exchange subsidy.
Do you have to report ESRP to IRS?
You will not report or include an ESRP payment with any tax return you may file. Instead, based on information from your and from your employees’ tax returns, the IRS will calculate the potential ESRP payment and contact you to inform you of any potential liability.
How to file a federal tax return for 2016?
In order to file a 2016 IRS Tax Return, download, complete, print and sign the 2016 IRS Tax Forms below and mail the forms to the address listed on the IRS and State Forms. Select your state (s) and download, complete, print and sign your 2016 State Tax Return income forms.
How are hours of Service determined under ESRP?
Under the ESRP, you need to measure your employees’ hours of service to determine whether they are full-time employees. The number of full-time employees ultimately determines your responsibilities under the ESRP and subsequently any payment that may be due.
Who is liable for ESRP under section 4980h?
To be liable for an ESRP payment under section 4980H, one of your full-time employees must receive a premium tax credit. The calculation for the section 4980H (a) payment is significantly different from the calculation for the section 4980H (b) payment.