Understanding ESRP

If you’ve received IRS Letter 226j—an Employer Shared Responsibility Payment (ESRP) notice—you might be in a panic. Reading the words “noncompliance with Affordable Care Act (ACA)” and seeing a large dollar figure is sure to sound alarm bells ringing in your head!

Why do I owe? What’s the penalty? How can I fix this?

Don’t panic! Chances are it’s a problem an ACA expert will be able to help resolve. In fact, we’ve eliminated over $5.4 million in penalties for our clients - nearly 90% of the total penalties assessed!

Continue reading to learn more about common ACA reporting errors to help put your penalty letter into perspective.

Check your forms.

Count your employees properly and make sure you fill the form out correctly. Miscounting your full-time employees can result in significant penalties.

We worked with one client that faced more than $800,000 in penalties over two separate years—just for miscounting employees. In both years, we helped correct their forms and eliminated their penalties entirely!

Check the boxes.

A common trigger for IRS Letter 226j occurs when employers forget to check off a box on their filings. Finding the missing checkbox and explaining the situation to the IRS could reduce or eliminate your ACA penalty.

One of our clients missed a single checkbox on their forms, triggering a $200,000 fine. Discovering this error, we worked with the IRS to remedy the situation in just under two weeks, with nothing owed.

Check your records.

See how many full-time employees you have vs. part-timers and contractors. Then, review this against the ACA rules for small businesses to see if you’ve filed incorrectly. A mistake here could drastically change the landscape of your ESRP.

We worked with a multiple-entity client to take their whopping $550,000 penalty down to $6,000, simply by navigating the different filings of their 20 businesses and explaining the proper entity structure to the IRS.

Get help!

If you’re staring down IRS letter 226j, know you’re not alone—many businesses receive this unpleasant surprise in the mail. Contact James Moore’s HR Solutions Team for more information about how to reduce or eliminate your ACA penalty and get your business back in good standing with the IRS.

Need help minimizing or eliminating your ACA penalty?

Contact us today for a free assessment!

Get to know the ACA Leadership Team

With an average of 20+ years’ experience in human resources across dozens of industries, our team has real-world expertise you can rely on.

Professional headshot of Jay Hutto

Jay Hutto, CPA/ABV/CFF, CVA

Partner

As a CPA in the state of Florida, Jay has more than 30 years of experience providing personalized accounting services including auditing and tax services, business consulting, business valuations and litigation support. While he has worked with clients representing the real estate, manufacturing, professional services, dealership and retail industries, he has significant experience addressing issues and providing solutions for healthcare-related entities. As such, Jay leads the firm’s Healthcare Segment Team. Jay works primarily with for-profit clients looking to maximize revenue and minimize expenses, and he is dedicated to providing them peace of mind that they’re getting the best possible tax savings. His guidance helped one client avoid a $1,000,000 tax liability with a cost segregation study, and he helped another client eliminate a $50,000 IRS tax penalty. He also takes a proactive approach to revenue enhancement, cost controls,  applying best practices, and emphasizing the importance of having the right policies and procedures already in place (instead of as a reactive remedy) to best facilitate business growth. Jay also specializes in preparing business valuations and litigation support services and has earned several accreditations including the Accredited in Business Valuation (ABV), Certified in Financial Forensics (CFF) and Certified Valuation Analyst (CVA) designations. Litigation support services include related party transactions, fraud, child support, divorce and dispute resolution.
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Kevin Golden-NoBG

Kevin Golden, CPA

Partner

Kevin has over 10 years of experience in the accounting industry. He is responsible for every aspect of client management including tax preparation, planning and correspondence. He enjoys building relationships with his clients as he helps them understand everything from basic economic terms to complicated tax issues. Kevin also supervises tax accounting staff members and reviews tax returns prepared by the firm.

While his work covers a variety of industries, Kevin’s focus is manufacturing and construction clients. He serves as a member of the firm’s Manufacturing and Construction Services teams and is a co-host of Moore on Manufacturing, our monthly video series addressing the business concerns facing manufacturing companies. He also presents regularly to professional groups in the community on tax-related issues.

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Professional headshot of Julie Kniseley.

Julie Kniseley, SHRM-SCP

President, HR Solutions

Julie has over 30 years of diverse human resources management experience that spans start-ups to established organizations. She has worked extensively in all facets of human resources including audits and compliance, benefits and compensation, recruiting, employee and labor relations, training and development, and policy design and has experience in both union and non-union environments.

Julie leads the James Moore HR Solutions Consulting team, which provides clients with guidance and solutions to build and improve their HR infrastructure. Clients include start-ups, non-profits, government entities, construction companies, medical practices and more. She is regularly asked to give presentations to various professional organizations.

Julie earned a Bachelor of Arts in Communication from the University of Toledo. She is a member of the Society for Human Resources Management (SHRM) and a SHRM Senior Certified Professional.

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