Missed your ACA 1094-C/1095-C filing and now there’s an IRS letter in the mail? This is a fixable situation—but only if you move fast. To confirm the best first steps, we reached out to Niels Christiansen, president of ABY Benefits (a Plano-based third-party administrator), who helped us with the guidance below.
First 24–48 hours: stabilize the situation
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Call the number on the notice. Ask for a 30-day extension to respond or file. Most agents will grant it when you call promptly.
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Document the call. Write down the agent’s name and badge number, the date/time, and what was granted.
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Start gathering data (payroll hours, FT status, offers of coverage, plan affordability, controlled-group info) so you can complete 1094-C/1095-C for the year in question.
Tip: You usually don’t need an attorney yet just for a “where are your forms?” notice—but if you miss deadlines and the IRS issues a penalty assessment, counsel can be very helpful.
Which IRS letter did you get?
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Letter 5699 – “Where are your Forms 1094/1095-C?”
This is the inquiry the IRS sends when it believes you should have filed but didn’t. Respond and file quickly to keep it from escalating. -
Letter 5698 – Follow-up / potential non-compliance
Commonly issued if 5699 isn’t resolved on time; can lead to failure-to-file/furnish penalties. -
Letter 226J – Proposed Employer Shared Responsibility Payment (ESRP)
This is different: it’s a proposed 4980H penalty based on your filed codes and employees’ premium tax credits. It has its own 30-day response process. -
Notice 972CG – Proposed information-return penalties
Used for late/incorrect information returns; amounts are indexed annually.
File what’s missing—don’t wait for another letter
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Confirm ALE status year-by-year. If you averaged 50+ FTEs/FTE equivalents in the prior year, you’re an ALE for the filing year.
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File the current year in the notice (for many employers this is now 2023 or 2024) and identify any earlier gaps. An IRS inquiry about one year doesn’t prevent them from looking at other years.
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How far back? Many employers clean up at least the last three years; some go back farther (up to seven) depending on risk tolerance and records. Remember, when returns weren’t filed, the statute of limitations may not start—so getting everything on file reduces exposure. (Penalty amounts vary by year; see IRS guidance.)
“Furnish on request” now applies to 1095s—filing with the IRS still required
Beginning with 2024 forms (furnished in 2025), the Paperwork Burden Reduction Act lets ALEs furnish Forms 1095-C to individuals only upon request, if you post the required website notice and honor requests by the later of Jan 31 or 30 days after the request. This does not change your duty to file with the IRS (generally by March 31 electronically). Also check state mandates (e.g., CA, MA, NJ, RI, DC).
A practical game plan (agents can share this)
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Week 1: Call the IRS, secure the extension, document the call. Engage a third-party administrator (TPA) experienced in ACA reporting to build your data set and generate 1094-C/1095-C.
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Week 2–3: Reconcile full-time determinations (monthly vs. look-back), verify affordability safe harbor, confirm controlled-group aggregation, QA employee data/TINs.
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Week 4: E-file with the IRS and prepare your website notice (if using furnish-on-request). Set a process to respond to any employee requests within 30 days.
When to involve counsel
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You’ve received Letter 226J proposing an ESRP, or a 972CG penalty you plan to challenge.
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There are complicated controlled-group/common ownership issues, or prior filings appear materially incorrect.
Bottom line
Call, extend, file. A quick phone call can buy you 30 days to get compliant; use it. Get the missing 1094-C/1095-C filed (and fix any earlier gaps), post the furnish-on-request notice for 1095s, and partner with a capable TPA to keep things on schedule. Waiting turns a simple cleanup into a formal penalty process.
Educational summary only; not legal or tax advice.