What happens if I fail to Respond to IRS Letter 5699?
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Last modified 1/11/2021 12:22:23 PM EST |
Added by ACAwise Team
The Letter 5699, Missing Information Return Form 1094/1095-C is the initial contact letter sent by the IRS to the employer who failed to file the required ACA Information Returns (Form 1094-C and 1095-C) under the ACA reporting requirement section 6055 & 6056.
The letter asks the employer to respond to the letter by choosing the below option, which is appropriate to them with the supporting information, and return it within 30 days as directed in the letter.
- Filed the forms under a different EIN. (You are asked to provide the name, EIN, and date for when the returns were filed).
- Should have filed the forms but did not because you need more time. (You are asked to either submit the forms with the response letter or provide an explanation of when the returns will be electronically submitted).
- You were not an ALE for the calendar year and thus not required to file. (Provide supporting documents with this response letter)
- Had an “Other” reason for not to file.
No response to the letter
- When you fail to respond to the received inquiry letter 5699 within the allowed time, the IRS will initially issue a Letter 5698, Information Return Inquiry Follow Up.
- Once you receive that letter 5698, you must respond to it. If not, the case will be moved forward to pursue a penalty case file for Failure to File.
- But before starting the penalty case, the examiner will make an attempt to contact you through telephone if a phone number is available on IDRS.
- If they cannot contact you even through a call, the examiner will use established procedures for working a penalty case file. You will then receive a Letter 5005-A, Information Return Penalty Notice (Form 1094-C or 1095-C) with the Form 886-A, Explanation of Items, from the IRS.
When you receive letter 5005-A from the IRS, you must be aware that you are subject to a potential penalty from the IRS, and next steps will be taken based on whether you disagree or agree with the proposed penalties.
Penalties
| Corrected within 30 days |
$50 | $545,500 per year | $191,000 |
| Corrected after 30 days, but before Aug. 1 | $100 | $1,637,500 per year | $545,500 |
| Corrected after Aug. 1 | $270 | $3,275,500 per year | $1,091,500 |
If you are an ALE, receiving the letter and failing to respond to it within the allowed time is an absolutely wrong thing because the IRS will issue penalties that can go up to millions of dollars.
By now, most U.S employers are in a challenging situation and receiving overwhelming penalties from the IRS because of not responding to the received inquiry letter. Have you received an IRS Letter 5699 and need help moving forward? You can contact us, and we’ll be happy to assist you and save you from paying millions of unnecessary penalties.