The PenaltyShield
226-J Response Guide
A practitioner’s playbook for disputing your IRS ESRP assessment under IRC § 4980H. Use this open on your desk while you respond to the letter — not as a summary to read once.
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📅 Schedule a Free Consultation →Full Table of Contents
- 1
What IRS Letter 226-J Is
What triggers it, what it contains, and what the response window means.
- 2
How the ESRP Is Calculated
The mechanical formula behind the proposed assessment — month by month.
- 3
§ 4980H(a) vs. § 4980H(b)
The two penalty paths and why which one applies changes everything.
- 4
Reading Form 14765
Column-by-column walkthrough of the Employee PTC Listing.
- 5
Common Dispute Arguments
Eight patterns with required evidence and impact on the ESRP calculation.
- 6
The 60-Day Response Process
Timeline from letter receipt through submission with internal milestones.
- 7
Sample Response Templates
Signed statement of disagreement and employee-specific explanations.
- 8
Master Response Checklists
Five checklists: response, 1094-C, Lines 14/15/16, documentation, post-response.
- 9
The Letter 227 Family
How to read each of the four possible IRS responses.
- A
Code Quick-Reference
Every Line 14 and Line 16 code with usage rules and ordering guidance.
- B
Authoritative Sources
Full source list with live IRS links.
Built for Practitioners
ERISA and Benefits Counsel
Draft the disagreement statement and lead the response strategy.
HR and Benefits Directors
Own the offer history, eligibility files, and enrollment documentation.
Payroll and HRIS Teams
Pull and reconcile the hours-of-service and measurement-period data.
ACA Reporting Vendors
Reconcile original filings to source data and document the Form 14765 corrections.
Finance and Compliance Officers
Understand the penalty math and preserve appeal rights on disputed months.
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