ACA Penalty Letters
Letter 226-J is a letter sent to employers from the Internal Revenue Service (IRS) to notify them of noncompliance with the employer mandate of the Affordable Care Act (ACA). The employer mandate can lead to one of two potential penalties. The "A" penalty, in where the employer does not offer coverage 95% of their full-time employees, and at least one full-time employee receives a premium tax credit through a market place is the most significant penalty. The "B" penalty is where the employer offers coverage, but the coverage is unaffordable and at least one full-time employee receives a premium tax credit through a marketplace. The "B" penalty is far less substantial than the "A" penalty.