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ACA Penalty Reduction Services

Received an IRS Letter 226-J? Let’s Reduce What You Owe.

Received IRS Letter 226-J, Letter 227, or another Employer Shared Responsibility Payment (ESRP) notice? The Selerix ACA penalty specialists help employers uncover what triggered the penalty, prepare a defensible response, and work to reduce or eliminate IRS assessments.

$650M+ in IRS penalties mitigated since 2017

Received an IRS Letter 226-J? We Can Help.

An ACA penalty notice doesn’t have to be the final word.

If you’ve received IRS Letter 226-J, Letter 227, or another Employer Shared Responsibility Payment (ESRP) notice, our ACA specialists can help you understand what triggered the penalty, evaluate your options, and build a response designed to reduce or eliminate your exposure. Our ACA penalty consultants work directly with your HR team—and when appropriate, alongside your ERISA attorney—to prepare a complete response package.

Since 2017, we’ve helped employers mitigate more than $650 million IRS penalties by identifying reporting issues, uncovering coding errors, and developing defensible response strategies.

Consistent ACA Support. Trusted Results
650 M+ IRS penalties mitigated since 2017
40 k+ Companies filed
1 in 4 Companies in the US use Selerix for ACA

How Our ACA Penalty Reduction Process Works

01
We Review Your IRS Notice

Your role: Send us your IRS notice and supporting documentation.

Our role: We review the letter, identify deadlines, assess the proposed penalty, and determine what information is needed.

Outcome: You gain a clear understanding of your situation and next steps.

02
We Identify What Triggered the Penalty

Your role: Provide requested reporting and coverage information.

Our role: We analyze Forms 1094-C and 1095-C, employee records, and filing data to uncover the root cause.

Outcome: We identify reporting errors, coding discrepancies, or other factors that may have contributed to the penalty assessment.

03
We Build Your Response Strategy

Your role: Review recommendations and provide final approval.

Our role: We prepare supporting documentation, complete applicable response forms, and develop a response strategy tailored to your circumstances.

Outcome: You have a structured, defensible response backed by ACA specialists

04
We Work to Reduce or Remove the Penalty

Your role: Submit the response or authorize us to assist throughout the process.

Our role: We support your response efforts and help address IRS follow-up requests when applicable.

Outcome: The strongest possible case for penalty reduction or mitigation.

05
We Help Prevent Future Penalties

Your role: Implement recommended process improvements.

Our role: We identify gaps in your ACA processes and recommend solutions that support ongoing compliance.

Outcome: Greater confidence moving forward and a reduced risk of future IRS notices.

Who This Service is Built For

ACA penalties rarely happen because employers intentionally ignored the rules. More often, they’re the result of reporting discrepancies, coding errors, employee classification issues, or incomplete data.
Ideal for:
Employers responding to IRS Letter 226-J
Employers who received Letter 227
ALEs with variable-hour workforces
Multi-entity organizations
Employers switching from another ACA vendor
Organizations that filed ACA reporting internally
Whether you’ve received Letter 226-J, Letter 5699, or are facing a potential 4980H penalty, we’ll help you understand the situation and determine the best path forward.

How Employers Respond to IRS Letter 226-J


  • 1

    1

    Employer opens Letter 226-J

  • 2

    2

    Proposed penalty: $427,000

  • 3

    3

    The Selerix team reviews reporting.

  • 4

    4

    Finds coding inconsistencies affecting variable-hour employees.

  • 5

    5

    Prepares Forms 14764 and supporting documentation.

  • 6

    6

    Submits Formal Appeal Response to the IRS then IRS reassesses.

  • Final

    Final

    Penalty substantially reduced.

AE2S
“We had zero IRS notices for the first time in years — the team’s oversight caught issues before they became problems.”
MVT
“The compliance workload dropped by more than half. We can finally focus on our people, not penalties.”
McElroy Trucks
“The solution is very simple.  Selerix set us up for success.”
Questco
“Completing ACA reporting has never been easier or faster. We consistently meet deadlines ahead of schedule, eliminating the usual anxieties and late-night scrambles.”
AE2S
“We had zero IRS notices for the first time in years — the team’s oversight caught issues before they became problems.”
MVT
“The compliance workload dropped by more than half. We can finally focus on our people, not penalties.”
McElroy Trucks
“The solution is very simple.  Selerix set us up for success.”
Questco
“Completing ACA reporting has never been easier or faster. We consistently meet deadlines ahead of schedule, eliminating the usual anxieties and late-night scrambles.”

Why Employers Choose Selerix

ACA Expertise

Our specialists understand the complexities of ACA reporting requirements, IRS notices, and ESRP assessments.

Proven Results

More than $650M IRS penalties mitigated since 2017.

Practical Guidance

We don’t just help resolve today’s penalty. We help employers strengthen their ACA processes for the future.

Support Through Every Step
From the first notice to the final resolution, you’ll have experienced professionals helping you navigate the process.

Frequently Asked Questions 

What is IRS Letter 226-J?

Letter 226-J is an IRS notice informing an Applicable Large Employer (ALE) that it may owe an Employer Shared Responsibility Payment (ESRP) under ACA regulations. The letter outlines the proposed penalty and provides instructions for responding.

Can ACA penalties be reduced?
In many situations, employers may have opportunities to challenge or reduce proposed penalties if reporting errors, coding issues, or other circumstances contributed to the assessment. Every case is unique and requires review.
How quickly should I respond to a 226-J notice?
ACA penalty notices have strict response deadlines. Employers should review the notice and begin evaluating response options as soon as possible.
Do you help with Letter 227 and Letter 5699?
Yes. Our team can assist employers responding to a variety of ACA-related IRS notices, including Letter 226-J, Letter 227, and Letter 5699.
What information do I need to get started?
Typically, we’ll review the IRS notice, ACA filing records, employee data, and any supporting documentation relevant to the assessment.
What types of employers benefit most from this service?
This service is especially valuable for Applicable Large Employers (ALEs), organizations with variable-hour workforces, multi-entity employers, companies that manage ACA compliance internally, and employers transitioning from another vendor.
What is Form 14764?

Form 14764, or the ESRP Response, is an IRS form sent to Applicable Large Employers (ALEs) alongside Letter 226J to propose Employer Shared Responsibility Payment (ESRP) penalties under the Affordable Care Act. Employers use it to either agree with the penalty or formally dispute it.

What is Form 14765?

Form 14765, Employee Premium Tax Credit (PTC) Listing, accompanies Letter 226-J and lists the employees whose Premium Tax Credits contributed to the proposed ACA penalty. Reviewing this information carefully can help identify reporting errors, coding discrepancies, or other issues that may support a response to reduce or eliminate the proposed penalty.

Do I need an ERISA attorney?

Not always. Many ACA penalty notices can be addressed by experienced ACA penalty specialists who understand IRS processes, reporting requirements, and Employer Shared Responsibility Payment (ESRP) rules. In more complex situations or when legal interpretation is required, employers may also choose to involve an ERISA attorney. Every situation is different, and the right approach depends on your circumstances.

Can Selerix work alongside our ERISA attorney?
Yes. If you’re already working with an ERISA attorney or outside legal counsel, the Selerix team can collaborate by providing ACA reporting expertise, documentation, data analysis, and technical support throughout the response process. Our goal is to help build the strongest possible response while working seamlessly with your existing advisors.
What if another vendor prepared our ACA filings?
That’s not a problem. Many employers come to us after filing ACA reports through another provider or managing reporting internally. The Selerix team can review your filing history, identify potential reporting or coding issues, and help determine whether they contributed to the proposed penalty. Our focus is on finding the root cause and helping you move forward.
Can ACA penalties still be reduced after we’ve responded?
It depends on the stage of the process and the specifics of your case. Some employers still have options after an initial response has been submitted, while others may need to pursue additional steps outlined by the IRS. If you’ve already responded to a Letter 226-J or received a follow-up notice, it’s worth having your situation reviewed to understand what options may still be available.
How long do I have to respond to IRS Letter 226-J?
IRS Letter 226-J includes a response deadline, and it’s important to act quickly. Missing that deadline can limit your options for disputing the proposed penalty. If you’ve received a Letter 226-J, don’t wait until the last minute—a timely review gives your team more opportunity to identify reporting issues and prepare a complete response.

Let’s Review Your ACA Penalty Notice

If you’ve received IRS Letter 226-J or another ACA-related IRS notice, don’t wait until the response deadline is approaching.

The sooner the Selerix team can review your notice, the sooner we can begin evaluating opportunities to reduce your penalty and prepare your response.

Steele Benefits is Now Part of Selerix.

Steele Benefits is now part of Selerix! Together, we deliver a comprehensive benefits administration, ACA compliance, and employee engagement solution.

We’re excited to support your next chapter!