Letter 6147: Your Guide To IRS Employer Penalties

Last updated 11/13/2024 by

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Summary:

The IRS sends out Letter 6147 as a final notice for businesses that have failed to meet their Employer Shared Responsibility (ESR) obligations under the Affordable Care Act (ACA). This letter serves as the IRS’s last communication before assessing a potential penalty. Employers receiving Letter 6147 should carefully review the letter, understand their ESR responsibilities, and take prompt action to resolve any issues or dispute the notice if needed.

Receiving an IRS notice, especially one concerning penalties, can be alarming for any business owner. Letter 6147 is a final warning sent by the IRS to employers who may not have complied with the Employer Shared Responsibility (ESR) mandate under the Affordable Care Act (ACA). If ignored, this notice can lead to a substantial Employer Shared Responsibility Payment (ESRP). In this guide, we’ll break down what IRS Letter 6147 entails, how it affects your business, and what steps you should take to respond effectively to avoid potential penalties.

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What is IRS letter 6147?

Letter 6147 is issued by the IRS to notify employers that they may face a penalty for not meeting ACA guidelines. The ESR mandate requires applicable large employers (ALEs) to offer minimum essential health coverage to full-time employees or risk a penalty. The notice serves as the IRS’s final attempt to inform businesses of their non-compliance status before assessing the Employer Shared Responsibility Payment.

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Purpose of letter 6147

The primary goal of Letter 6147 is to alert employers about a potential penalty due to insufficient health insurance coverage for employees. This letter outlines specific details, such as the tax year in question and the amount of the potential ESRP. It gives the employer an opportunity to review, accept, or dispute the assessment before the IRS moves forward with penalties.

Who receives letter 6147?

Typically, Letter 6147 is directed to Applicable Large Employers (ALEs), generally defined as businesses with 50 or more full-time employees or full-time equivalents. These employers must provide adequate health coverage to avoid IRS penalties under ACA guidelines. Receiving this letter indicates that the IRS believes the employer did not meet these healthcare coverage obligations for the specified tax year.

Pro Tip

Document every communication you have with the IRS regarding Letter 6147. Keeping a detailed record, including dates and names of IRS representatives, can help you track progress and support your case if needed.

Steps to take when you receive IRS letter 6147

If you receive Letter 6147, taking immediate action is essential. Here’s a step-by-step guide on how to proceed:

Read the letter thoroughly: Understand the contents of the letter, including the tax year, the amount of the ESRP, and any instructions provided.
Review your records: Confirm your compliance with ACA requirements for the tax year stated in the letter. Check whether you offered affordable, minimum essential coverage to full-time employees.
Compare coverage documentation: Verify the health insurance coverage records you have on file. This can help determine if an error was made in the IRS’s assessment.
Contact the IRS: If you have questions or need clarification, reach out to the IRS using the contact information provided in Letter 6147.
Respond promptly: The letter includes a deadline. To preserve your rights to appeal or dispute, ensure you respond before this due date.

How to respond to IRS letter 6147

Steps for responding to letter 6147

To effectively address Letter 6147, follow these steps:

1. Gather supporting documents: Collect any documents that demonstrate compliance, such as health insurance enrollment forms, coverage offers, and payroll records.
2. Complete Form 14764 (ESRP Response): This form accompanies Letter 6147 and is used to agree or disagree with the ESRP assessment. If you disagree, explain why and include relevant documentation.
3. Submit Form 14765 if applicable: This form, known as the Employer Shared Responsibility Payment Report, helps the IRS identify employees for whom coverage was not offered.
4. File by the deadline: Submitting the response by the due date helps avoid additional penalties and ensures your appeal rights remain intact.

Pro Tip

Double-check your ALE (Applicable Large Employer) status yearly. As employee counts fluctuate, your ACA obligations may change, and this affects your responsibility for offering health insurance.

What to do if you agree with the notice

If you review the information and agree with the ESRP assessment:

– Pay the amount owed: Use the payment methods listed in the letter to settle the ESRP amount due. This may involve either a one-time payment or an installment agreement if you cannot pay in full.
– Keep a copy for your records: Document your payment and retain a copy of Letter 6147 along with any related documents for future reference.

What to do if you disagree with the notice

If you disagree with the ESRP assessment outlined in Letter 6147:

– Complete Form 14764 with a detailed explanation: Clearly state why you disagree and provide evidence to support your stance, such as health coverage documentation or corrected payroll records.
– Attach relevant documentation: Submit any supporting documents to back up your claim.
– Follow up if needed: If the IRS requests additional information, respond promptly to avoid delays in the resolution process.

Appealing the ESRP assessment in letter 6147

Your right to appeal

If you feel the ESRP was assessed in error, you have the right to appeal. Here’s how to go about it:

1. Submit Form 14764 and attach a detailed response: Explain why you believe the ESRP is incorrect and include supporting documents.
2. Request a conference: You may be eligible for an IRS conference call to discuss your case further.
3. Follow appeal deadlines: File your appeal before the deadline noted on the letter. Missing the deadline may waive your right to appeal.

Understanding the potential consequences of not responding

Ignoring Letter 6147 can lead to several consequences, including:

Penalties and interest: The IRS will assess the ESRP along with additional penalties and interest for non-payment.
Collection actions: The IRS may pursue collection actions, such as levies or liens, if the payment remains unpaid.

Pro Tip

Use Form 14764 carefully to explain any disputes with the ESRP assessment. Be detailed and include all supporting documentation to strengthen your case and avoid additional IRS inquiries.

Resources to help address IRS letter 6147

If you need assistance, the IRS offers several resources:

– Interactive Tax Assistant: This online tool can provide answers to many common questions about ESRP and ACA requirements.
– Contact the IRS: Use the phone number provided in the letter to speak with a representative if you need clarification.
– Local IRS Office: Your local IRS office can provide in-person assistance with Letter 6147 issues.
– Tax Professional: Consulting a tax professional familiar with ACA guidelines can be helpful for resolving ESRP assessments.

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Frequently asked questions

What is the employer shared responsibility provision under the ACA?

The Employer Shared Responsibility Provision is a requirement under the Affordable Care Act (ACA) for certain large employers, known as Applicable Large Employers (ALEs), to provide minimum essential health coverage to full-time employees and their dependents. If an ALE fails to offer this coverage or if the coverage does not meet affordability or minimum value standards, they may be subject to an Employer Shared Responsibility Payment (ESRP), which is the penalty indicated in IRS Letter 6147.

How can I verify if my company is an applicable large employer (ALE)?

An employer is generally considered an Applicable Large Employer (ALE) if they have 50 or more full-time employees, including full-time equivalents, during the prior calendar year. The IRS provides detailed guidance on calculating your employee count to determine ALE status. If you’re unsure of your ALE status, consulting with a tax professional or using the IRS’s ALE determination tools can help you confirm whether you fall under this category.

Can I pay the employer shared responsibility payment in installments?

Yes, if you agree with the ESRP assessment in Letter 6147 but are unable to pay the full amount upfront, you may contact the IRS to set up an installment plan. The IRS will review your financial situation and may offer payment arrangements that allow you to pay off the ESRP over time. Be aware that interest and penalties may still accrue until the balance is fully paid.

What documentation should I gather before responding to IRS letter 6147?

If you intend to respond to or dispute IRS Letter 6147, you should gather documentation that proves compliance with ACA requirements. Key documents include health insurance enrollment records, offers of coverage, payroll information, and any forms related to ACA reporting, such as Forms 1095-C and 1094-C. Having complete records helps support your case if you are disputing the ESRP assessment or appealing a penalty.

How long does it take for the IRS to review my response to letter 6147?

The time frame for IRS response reviews can vary. Typically, once you submit your response with all required documentation, the IRS may take several weeks to a few months to review and respond to your submission. If additional information is needed, the IRS will reach out, which may extend the resolution time. To track progress, you may contact the IRS or check the status through your IRS online account.

Need help understanding other IRS letters and notices? Visit our comprehensive guide to IRS Letters and Notices or search for the document you received in the table below.

IRS Letter or Notice Number

Notice Description

CP01	The IRS verified your claim of identity theft and will monitor your account.
CP01H	The IRS received a tax return with a social security number that belongs to a dead person.
CP02H	Money is due on an amended return based on a grant received due to Hurricane Katrina, Rita, or Wilma.
CP03C	You received the First-Time Homebuyer Credit for a house you purchased.
CP04	You may be eligible for tax deferment because either you or a spouse served in a combat zone, a qualified contingency operation, or a hazardous duty station during the tax year specified on your notice.
CP08	You may be entitled to additional money due to the Additional Child Tax Credit.
CP10	Your tax return changed due to a miscalculation, and the refund you wanted to apply to an estimated tax payment has changed.
CP10A	Your tax return changed due to a miscalculation of the Earned Income Credit, and the refund you wanted to apply to an estimated tax payment has changed.
CP11	You owe money because the IRS amended your return due to a miscalculation.
CP11A	Your tax return changed due to a miscalculation of the Earned Income Credit, and the refund you wanted to apply to an estimated tax payment also changed.
CP11M	Your tax return changed due to a miscalculation of the Making Work Pay and Government Retiree Credit, and the refund you wanted to apply to an estimated tax payment has changed.
CP12	You are due a bigger refund because the IRS corrected one or more mistakes on your tax return.
CP12A	The IRS made changes to correct the Earned Income Credit (EIC) claimed on your tax return.
CP12E or CP12F	The IRS corrected a miscalculation on your return.
CP12M	The IRS made changes to the computation of the Making Work Pay and/or Government Retiree Credits on your return.
CP12R	The IRS made changes to the computation of the Rebate Recovery Credit on your return.
CP13	The IRS made changes to your return due to a miscalculation. There is no refund or amount due. Your balance is zero.
CP13A	The IRS made changes to your return due to a miscalculation of the Earned Income Credit. There is no refund or amount due. Your balance is zero.
CP13M	The IRS made changes to your return due to a miscalculation of the Making Work Pay credit or the Government Retiree Credit. There is no refund or amount due. Your balance is zero.
CP13R	The IRS made changes to your return due to a miscalculation of the Recovery Rebate Credit. There is no refund or amount due. Your balance is zero.
CP14	You owe money on unpaid taxes.
CP16	The IRS made changes to your return due to a miscalculation. The refund you were due was applied to other tax debts.
CP21A	You owe money due to the changes you requested that the IRS make on your tax returns.
CP21B	You are due a refund due to the changes you requested that the IRS make on your tax returns. The money should arrive within 2 to 3 weeks.
CP21C	The IRS made the requested changes to your tax return. You will not receive a refund, and there is no tax due. Your balance is zero.
CP21E	As a result of your recent audit, the IRS made changes to your tax return, and you owe money as a result of those changes.
CP21I	The IRS made changes to your tax return relating to the Individual Retirement Arrangement (IRA) taxes. You owe money due to the changes.
CP22A	The IRS made the changes you requested, and you owe money as a result.
CP22E	As a result of your recent audit, the IRS changed your tax return, and you now owe money.
CP22I	The IRS made changes to your tax return relating to the Individual Retirement Arrangement (IRA) taxes. You owe money due to the changes.
CP23	The IRS changed your return because there was a difference between the amount of estimated tax payments listed on your tax return and the amount actually posted to your account. You owe taxes due to these changes.
CP24	The IRS changed your return because there was a difference between the amount of estimated tax payments listed on your tax return and the amount actually posted to your account. This resulted in an overpayment of estimated taxes.
CP24E	The IRS changed your return because there was a difference between the amount of estimated tax payments listed on your tax return and the amount actually posted to your account. This resulted in an overpayment of estimated taxes.
CP25	The IRS changed your return because there was a difference between the amount of estimated tax payments listed on your tax return and the amount actually posted to your account. You are not due a refund, nor do you owe any money. Your balance is zero.
CP31	You need to update your address because your refund check was returned to the IRS.
CP45	The IRS was unable to apply your overpayment to your estimated tax as you requested.
CP49	The IRS used all or part of your refund to pay a tax debt.
CP53	Your refund check will be sent by mail because the IRS can’t provide your refund through direct deposit.
CP57	The bank declined your payment, so the IRS was unable to draft funds from your bank account.
CP71	A reminder of the amount you owe in tax, penalty, and interest.
CP71A	A reminder of the amount you owe in tax, penalty, and interest.
CP71C	A reminder of the amount you owe in tax, penalty, and interest.
CP71D	A reminder of the amount you owe in tax, penalty, and interest.
CP88	The IRS is holding your refund because you haven't filed one or more tax returns, and it believes you will owe tax.
CP90	The IRS is notifying you of its intent to levy certain assets for unpaid taxes. You have the right to dispute the levy in a Collection Due Process hearing.
CP91	The IRS will levy up to 15% of your social security benefits for unpaid taxes.
CP120	The IRS needs documentation of your tax-exempt status.
CP120A	Your organization’s tax-exempt status has been revoked because it failed to file a Form 990 series return for three consecutive years.
CP130	You may no longer need to pay the Alternative Minimum Tax (AMT) because your tax return filing requirements changed.
CP152	The IRS received your return.
CP153	The IRS will send your refund by mail because your direct deposit did not go through.
CP161	You have an unpaid balance due to the IRS.
CP166	Your monthly payment to the IRS did not go through due to insufficient funds in your bank account.
CP178	You may no longer owe excise tax because your tax return filing requirements changed.
CP231	You need to update your address because your refund was returned to the IRS.
CP259	You did not file the business tax return identified in the notice.
CP259A	You should have filed these forms but did not – Form 990/990-EZ, Return of Organization Exempt From Income Tax, or Form 990-N (e-Postcard).
CP259B	The IRS requires you to file these forms but did not – Form 990-PF, Return of Private Foundation or Section 4947(a)(1) Nonexempt Charitable Trust Treated as a Private Foundation.
CP259C	The IRS believes that you are a private foundation, but did not file the required Form 990-PF, Return of Private Foundation or Section 4947(a)(1) Nonexempt Charitable Trust Treated as a Private Foundation.
CP259D	You must file this form, but you did not – Form 990-T, Exempt Organization Business Income Tax Return.
CP259E	You should have filed this form, but you did not – Form 990-N (e-Postcard) or Form 990/990-EZ, Return of Organization Exempt From Income Tax.
CP259F	The IRS requires you to file this form but did not – Form 5227, Split-Interest Trust Information Return.
CP259G	The IRS requires you to file this form, but you didn’t – Form 1120-POL, U.S. Income Tax Return for Certain Political Organizations.
CP259H	As a tax-exempt political organization, you must file this form, but you did not – Form 990/990-EZ, Return of Organization Exempt From Income Tax.
CP276A	You submitted your tax liability schedule incorrectly. The IRS typically charges a Federal Tax Deposit (FTD) penalty for this but did not this time.
CP276B	The IRS did not receive the correct amount of tax deposits. It normally charges a Federal Tax Deposit (FTD) penalty but did not this time.
CP297	The IRS is notifying you of its intent to levy certain assets for unpaid taxes. You have the right to dispute the levy at a Collection Due Process hearing.
CP297A	The IRS has levied your assets for unpaid taxes. You have the right to dispute the levy at a Collection Due Process hearing.
CP298	The IRS notifying you of its intent to levy up to 15% of your social security benefits for unpaid taxes.
CP501	You have a balance due on one of your tax accounts.
CP503	You have an unpaid balance on one of your accounts, and the IRS has not heard from you.
CP504	You have an unpaid amount due on your account. If you do not pay immediately, the IRS will levy your state income tax refund to apply it to the amount you owe.
CP504B	You have an unpaid amount due on your account. If you do not pay immediately, the IRS will levy certain property or rights to property to apply it to the amount you owe.
CP521	A reminder that you have an installment agreement payment due.
CP523	You have defaulted on your payment agreement. Therefore the IRS is terminating the agreement and will levy your assets.
CP601	Usted tiene un saldo pendiente de pago (dinero que le debe al IRS) en una de sus cuentas contributivas.
CP603	No hemos recibido respuesta de parte de usted y todavía tiene un saldo sin pagar en una de sus cuentas contributivas.
CP604	Usted tiene un saldo sin pagar en su cuenta. De no pagar esta cantidad inmediatemente, el IRS embargará cualquier reembolso de impuestos estatales al que tenga derecho y aplicarlo al pago de su deuda.
CP604B	Usted tiene un saldo sin pagar en su cuenta. De no pagar esta cantidad inmediatemente, el IRS embargará ciertas propiedades o derechos de propiedad y lo aplicará al pago de su deuda.
CP621	Este aviso es para notificarle que usted tiene un plan de pagos a plazos vencido. Por favor, envíe el pago inmediatamente.
CP623	Este aviso es para informarle nuestra intención de cancelar su plan de pagos a plazos y confiscar (embargar) sus bienes. Usted incumplió en su acuerdo.
CP711	Nosotros realizamos cambios a su planilla debido a que entendemos que hubo un cálculo erróneo. Como resultado de estos cambios, usted adeuda dinero por sus contribuciones.
CP721	Hicimos el(los) cambio(s) que usted solicitó a su declaración de impuestos para el año tributario que aparece en su aviso. Como resultado de éste(estos) cambio(s) usted debe dinero en sus impuestos.
CP722	Hicimos el(los) cambio(s) que usted solicitó a su declaración de impuestos para el año tributario que aparece en su aviso. Como resultado de éste(estos) cambio(s) usted debe dinero en sus impuestos.
CP771	Usted recibió este aviso para recordarle sobre la cantidad que adeuda en contribuciones, multas e intereses.
CP772	Usted recibió este aviso para recordarle sobre la cantidad que adeuda en contribuciones, multas e intereses.
CP773	Usted recibió este aviso para recordarle sobre la cantidad que adeuda en contribuciones, multas e intereses.
CP774	Usted recibió este aviso para recordarle sobre la cantidad que adeuda en contribuciones, multas e intereses.
CP959	Usted no radicó su planilla de contribución de negocios identificada en este aviso.
CP2000	The income or payment information on file doesn’t match your tax return. The discrepancy may result in an increase or decrease in your tax due.
CP3219A	The IRS has received information that is different from what you reported on your tax return. This may result in an increase or decrease in your tax.
CP3219N	The IRS didn’t receive your tax return, so it calculated your return based on the information received from employers, financial institutions, and others. If you want to challenge the proposed tax, you have 90 days from the date of this notice. If you are outside the country, you have 150 days.
Letter 0012C	The IRS needs additional information to process your tax return.
Letter 0484C	The IRS wants a completed
Letter 0525	Updates you on proposed changes after an IRS examination. Any changes are explained and details the refund due or taxes owed.
Letter 531	IRS Notice of Deficiency. The information the IRS received about you was different from what you reported on your return.
Letter 0668D(LP 68)	The IRS released their levy.
Letter 0549C	Your tax bill was paid.
Letter 0681C	The IRS accepted your payment proposal. However, this is not a formal Installment Agreement.
Letter 0757C	You did not adhere to the terms of your Installment Agreement.
Letter LT 11	The IRS plans to seize your property or rights to property.
Letter 1058	The IRS has not received your payment. It plans to seize your property or rights to property.
Letter 1615 (LT 18)	You must respond to the IRS within 10 days of this notice regarding past due tax returns.
Letter 1737 (LT 27)	Complete and sign Form 433F, Collection Information Statement.
Letter 1961C	Your application for a Direct Debit Installment Agreement was declined. It explains why and what you need to do to qualify.
Letter 1962C	Your application for a
Letter 2050 (LT 16)	The IRS is trying to collect unpaid taxes from you from returns that have been filed or from returns that have not been filed.
Letter 2257C	The IRS is providing the payoff amount that you requested.
Letter 226-J	An IRS letter to large employers notifying them that they may be liable for an Employer Shared Responsibility Payment (ESRP).
Letter 2271C	A request for an Installment Agreement has been approved. It explains the fees and how to qualify for a Low Income Fee Reduction. The letter may also request missing information.
Letter 2272C	An IRS letter explaining why your request to pay the balance due in installments was declined.
Letter 2273C	A confirmation letter of your request to pay the balance due in installments. It contained the amount to pay, fees charged, and where to send payment. Instructions on how to apply for the Low Income Fee Reduction included.
Letter 2318C	A response to a request to pay taxes due to payroll deductions. It also explains the fees that are charged.
Letter 2357C	The IRS is admitting that it did not send you the balance due notices that it should have.
Letter 2603C	The IRS accepted your installment agreement. The IRS will file a Notice of Federal Tax Lien on your personal property.
Letter 2604C	The IRS has accepted your request for installment payments. This IRS letter provides the monthly payment, the address where to send it, and the fees charged. The letter also provides instructions on how to apply for the Low Income Fee Reduction.
Letter 2761C	The IRS is requesting your combat zone service dates to ensure that it provides you with the special provisions and protection of the combat zone deferment. Copies of military orders or other documentation to support your time served may be requested. Civilians working in support of the Armed Forces may be required to provide a Letter of Authorization or a letter from their employer.
Letter 2789C	An annual reminder notice, as required by law, of the balance due to the IRS. It explains that penalties and interest continue to accrue until the balance is fully paid.
Letter 2840C	Confirms your Installment Agreement request and includes the payment amount and due date. This IRS letter explains the fees charged for paying monthly and explains how to apply for the Low Income Fee Reduction (if you qualify).
Letter 3030C	Provides an explanation of the tax, penalty, and interest still due on your account.
Letter 3127C	A confirmation of your request to make a change to your Installment Agreement. This IRS letter explains the fees for the change. Changes can be to the payment amount or due date, or it can include additional liabilities.
Letter 3174	A reminder of taxes due after the IRS has sent a Notice of Intent to Levy.
Letter 3217C	The IRS has accepted your request to pay the balance in installments. This IRS letter provides your payment amount, the due date, and fees charged. The letter also provides instructions on applying for the Low Income Fee Reduction (if you qualify).
Letter 3228 (LT 39)	A request to pay the balance due within 10 days using the envelope provided.
Letter 3500	The IRS has received your documents, and it needs additional time to review them.
Letter 3572	Your Federal Income Tax Return has been selected for examination. The IRS auditor requests that you call to schedule an audit appointment.
Letter 4883C	The IRS received your federal income tax return but needs more information to verify your identity in order to process your tax return accurately.
Letter 4903 (LT 26)	You must file your tax returns immediately. The IRS has previously contacted you, but it did not receive a response.
Letter LP 47	The IRS is trying to locate the person identified in the letter and is requesting that you provide their new address.
Letter LP 59	The IRS has not received a response to the notice of levy it previously sent.
Audit Letter 2205	The IRS manages audits either by mail or through an in-person interview to review your records. The interview may be at an IRS office (office audit) or the taxpayer’s home, place of business, or accountant’s office (field audit).
Letter 915	You recently underwent an audit, and the IRS informs you that you now owe taxes.

Key takeaways

IRS Letter 6147 is a final notice before the IRS assesses a penalty for failure to comply with ACA’s Employer Shared Responsibility provisions.
If you disagree with the ESRP assessment, respond promptly by providing supporting documents and completing Form 14764.
Failure to respond can lead to penalties, interest, and potential IRS collection actions.
Consulting a tax professional can help ensure a proper response to Letter 6147.

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