A letter arrives for you with the IRS seal on it – your heart sinks. What could it be?
Once you open it, the top right column continues to read that for a particular tax year the IRS is sending you: Letter 5699. The letter continues to read that you may be an Applicable Large Employer (“ALE”) and you may have been required to file information tax returns (Form 1094-C or Form 1095-C) for that year.
What is Letter 5699?
The initial Letter 5699 is an exploratory inquiry that the IRS sends to gather more information relating to informational tax returns required for the Affordable Care Act. It is triggered by the IRS comparing the employer’s W-2 count for a given calendar year to the information that should be reported on the employer’s 1094-C.
If the W-2 count is high enough for the IRS to believe that the employer is an ALE, and there is no record that the IRS received a Form 1094-C or Form 1095-Cs for an ALE, the IRS will send this letter to gather additional information about the calendar year in question. The letter includes the following options and responses to their initial inquiry:
- If you believe that you filed the required forms, confirm the employer name, employer identification number (“EIN”), and date of filing for the calendar year in question (if you have it, be sure to include your IRS ReceiptID for the transmission);
- Confirming that the employer did not initially file the returns; but Employer has included the required forms with the response to (if the employer has fewer than 250 FTEs – for filing years prior to 2023);
- Confirming that the employer did not initially file the returns; but Employer will electronically file the required forms by a certain date (it is recommended to file within 90 days);
- Providing an explanation to the IRS why the employer is NOT an ALE and thus why there was no reporting requirement for the Form 1094-C or Form 1095-Cs; or
- Other information and/or explanation to the IRS.
