How to Complete Form 14764: Letter 226-J Response and Appeals

To complete IRS Form 14764, review the Employee Premium Tax Credit Listing (Form 14765) that came with your Letter 226-J, check it against your own coverage and reporting records, then mark on Form 14764 whether you agree with the proposed Employer Shared Responsibility Payment, disagree with it entirely, or agree with part of it. Sign the form, attach a written explanation and any supporting documentation, and mail the package to the address printed on your letter within 30 days of the date on the letter.

What Form 14764 Does

Form 14764 is the “ESRP Response.” It is the vehicle the IRS gives an Applicable Large Employer to answer a Letter 226-J proposing an Employer Shared Responsibility Payment under Section 4980H of the Internal Revenue Code. The form itself is short. Almost all of the work happens before you write on it, in the records review that decides what you are going to tell the IRS.

The deadline is printed on Letter 226-J and is generally 30 days from the date of the letter.¹ If you need more time, call the contact number in the letter and request an extension before the deadline runs. The IRS does not grant extra time automatically, and silence is treated as agreement with the proposed penalty.

Review Form 14765 Before You Write Anything

Letter 226-J arrives with Form 14765, the Employee Premium Tax Credit Listing. This is the document that determines your response. It lists every full-time employee the IRS considers “assessable” for the year, month by month, along with the Line 14 (offer of coverage) and Line 16 (safe harbor or other relief) codes your organization reported on that employee’s Form 1095-C.²

The IRS explicitly recommends reviewing your Forms 1094-C and 1095-C for the applicable year before responding, because the proposed penalty is computed straight from that filed data.¹ Work through these checks for each employee on the listing:

Did your organization actually offer coverage during the flagged months? Pull enrollment records, eligibility dates, and any signed waivers.
Are the Line 14 and Line 16 codes on the 1095-C correct? Missing or wrong codes, particularly a missing affordability safe harbor code on Line 16, are the most common reason an ESRP proposal is too high.
Was the person actually a full-time employee during the months in question? Part-time, seasonal, and waiting-period months should not drive a penalty.
If you discover reporting errors, file corrected Forms 1094-C and 1095-C. The IRS considers whether an employer corrected failures promptly after discovering them, so filing corrections alongside your response strengthens your position.

Mark up the Form 14765 as you go. For each row where the IRS’s information does not match your records, note the correct code and the reason, month by month. That annotated 14765 becomes part of what you send back.

Filling Out Form 14764

The IRS includes a copy of Form 14764 with Letter 226-J, and it is also available as a PDF on IRS.gov. On the form, you tell the IRS one of three things.

If You Agree With the Full Proposed ESRP

Sign the form and return it with payment for the amount shown in Letter 226-J.¹ That closes the matter. You will receive Letter 227-J confirming the agreement and that the payment will be assessed.³

If You Disagree, in Whole or in Part

Mark the appropriate section on Form 14764 and attach a written explanation of why the proposed penalty is wrong. In your explanation, reference specific employees on Form 14765 and point to the exact months and codes at issue. Common grounds for disagreement include:¹

The employee was offered coverage, but the 1095-C was coded incorrectly.
An affordability safe harbor (W-2, rate of pay, or federal poverty line) applied but was not reported on Line 16.
The person was not a full-time employee during the flagged months.
The employee was in a permissible waiting period or limited non-assessment period.

Sign the form. Keep a full copy of everything you send.

What to Send and Where

Return the completed Form 14764, the annotated Form 14765 with your corrections, your written explanation, and any supporting documentation together as one package. Send it to the address printed on your specific Letter 226-J. Do not send it to a general IRS address or directly to the IRS Independent Office of Appeals, which can delay processing or keep your case from being considered properly.¹

Your letter also includes a phone number, and in some cases a fax number, for questions or to request additional time. Use them if you need to.

What the IRS Sends Back

After the IRS reviews your Form 14764 package, you will receive one of several follow-up letters in the 227 series. The letter determines what happens next.³

Letter 227-J acknowledges your signed agreement. The ESRP is assessed and the case is closed.
Letter 227-K reduces the ESRP to zero. No payment is owed.
Letter 227-L revises the ESRP downward but does not eliminate it. It includes an updated Form 14765 and revised calculation. You can agree, request a meeting with the IRS manager, or request an Appeals conference.
Letter 227-M keeps the proposed ESRP unchanged after review. Same options as 227-L.
Letter 227-N states the ESRP amount after an Appeals conference and closes the case.

If You Still Disagree: Appeals

Your 227 letter spells out your appeal rights. If you disagree with the IRS’s position after the initial review, you can request a conference with the IRS Independent Office of Appeals by sending your request to the address shown in the letter, not directly to Appeals.⁴

The request must generally be filed within the time limit stated in the letter, typically 30 days. If the total proposed penalty is $25,000 or less per tax period, you can use the Small Case Request procedures by filing Form 12203 (Request for Appeals Review) or a brief written statement identifying what you disagree with and why. For larger amounts, a formal written protest is required.⁴

Errors That Commonly Inflate the Proposed Penalty

A Letter 226-J proposal is only as accurate as the data behind it. In practice, many proposed penalties shrink or disappear once the employer responds with corrected information. The errors that surface again and again:

Missing or incorrect Line 16 codes on Form 1095-C. Forgetting an affordability safe harbor code is probably the single most common reason employers get proposed a penalty they do not actually owe. If you used the W-2, rate of pay, or federal poverty line safe harbor, that code needs to be on Line 16 for each applicable month.
Never filing Forms 1094-C and 1095-C. Without those returns, the IRS works only from employee tax returns showing Premium Tax Credits and will propose the maximum penalty.
Misclassifying full-time employees. Reporting someone as non-full-time when they averaged 30 or more hours creates mismatches in both offer-of-coverage and reporting.
Ignoring the letter. Missing the 30-day deadline turns the proposed ESRP into a final assessment and costs you your right to a formal appeal.

The 30-day window is tight, especially when the letter lands during open enrollment or a holiday stretch. Call the number on the letter and request more time rather than sending an incomplete response.

1
Internal Revenue Service. Understanding Your Letter 226-J
2
Internal Revenue Service. Questions and Answers on Employer Shared Responsibility Provisions Under the Affordable Care Act
3
Internal Revenue Service. Understanding Your Letter 227
4
Internal Revenue Service. Preparing a Request for Appeals