Last Updated: May 2026
The IRS has started sending Letter 5699 notices to employers for the 2024 tax year. We are already hearing from organizations that have received them, and based on the agency's accelerating timeline, more letters will be sent out in the weeks ahead.
If your organization has received one, or if you want to be ready in case one arrives, here is what matters most right now: a timely response is required (the response window is short), the penalty exposure is real, and the IRS continues to enforce ACA compliance for Applicable Large Employers (ALEs).
Official IRS guidance on Letter 5699.
A quick refresher on Letter 5699
Letter 5699, formally titled "Missing Information Return Form 1094/1095-C," is how the IRS makes initial contact with employers it believes were Applicable Large Employers (ALEs) that did not file required ACA information returns. The agency identifies likely ALEs by cross-referencing W-2 filings against its ACA database. When W-2s exist for a given EIN but matching 1094-C and 1095-C forms cannot be found, Letter 5699 is generated automatically.
Letter 5699 is not a penalty. It is the warning that comes before one. How an employer responds, or fails to respond, determines whether the matter resolves quickly or escalates into something far more expensive.
For a deeper walkthrough of what Letter 5699 is and how to respond, see our complete guide to IRS Letter 5699.
What's different about this cycle
Three things have changed since the IRS last issued Letter 5699 notices in volume.
- The IRS is moving faster than ever. Historically, employers had a multi-year buffer between filing deadlines and enforcement letters. That gap has compressed significantly. Letters for tax year 2024 are arriving roughly one year after the original filing deadline, leaving employers with far less time to be caught off guard.
- Two new laws took effect for this cycle. The Employer Reporting Improvement Act and the Paperwork Burden Reduction Act, both signed in late 2024, brought meaningful changes to ACA reporting and penalty enforcement. Most notably, the response window for Letter 226-J, the ESRP penalty notice that can follow an unresolved 5699, has been extended from 30 days to 90 days. The Employer Reporting Improvement Act also established a six-year statute of limitations on ESRP penalties for the first time.
- One critical clarification. The new 90-day response window applies only to Letter 226-J. Letter 5699 still requires a response within 30 days. This is a common point of confusion right now, and it matters.
| Letter 5699 | Letter 226-J | |
|---|---|---|
| What it is | Missing filing notice | Proposed penalty assessment |
| What triggers it | No 1094-C/1095-C filed | Filed forms suggest non-compliant coverage |
| Response window | 30 days | 90 days |
| What's at stake | Failure-to-file and failure-to-furnish penalties | Employer Shared Responsibility Payment (ESRP) penalties |
Deep dive into the employer's guide to IRS Letter 226-J.
The 30-day response window
The 30 days run from the date printed on the letter, not the date you received it in the mail. By the time the envelope reaches your desk, you may already have less than four weeks to respond.
The letter offers four response options:
- The forms were filed under a different EIN
- You should have filed but did not
- You were not an ALE for the year in question
- Another reason applies
Whichever option fits your situation, the path forward is the same: verify everything in the letter, pull the supporting records you will need, and respond in writing via certified mail. If you ignore the letter, the IRS will follow up with Letter 5698 (a reminder), then escalate to Letter 5005-A (a formal penalty assessment), then Letter 972CG (the penalty bill), and eventually a Notice of Intent to Levy.
Current penalty figures
For tax year 2024 returns, failure to file under IRC Section 6721 and failure to furnish under Section 6722 carry the following penalties:
- $310 per return for filings that are late or incorrect, with a maximum of $3,783,000 for large businesses
- $630 per return with no annual cap when the IRS determines intentional disregard
Sections 6721 and 6722 can apply to the same form, doubling exposure: one penalty for not filing with the IRS, another for not furnishing the form to employees.
If a 5699 escalates and the IRS determines an actual ACA coverage failure, ESRP penalties under IRC Section 4980H come into play through Letter 226-J:
- 4980H(a): $2,970 per full-time employee per year, applied across the entire workforce minus a 30-employee buffer
- 4980H(b): $4,460 per affected full-time employee per year
For an organization with 250 W-2s, simply ignoring a Letter 5699 can produce more than $150,000 in Section 6721 and 6722 exposure before any ESRP is calculated.
For additional information:
Information return penalties | IRS
How ACA Reporter by Points North Helps
The most important thing to understand about Letter 5699 is that the IRS calculates proposed exposure from raw W-2 count, not from actual full-time employees under ACA measurement rules. Variable-hour, seasonal, PRN, and part-time workers all show up in that count, and the burden is on the employer to prove which workers were actually full-time.
That is exactly the kind of documentation ACA Reporter software by Points North is built to maintain:
- Continuous tracking of full-time status
- Documented measurement periods
- Audit-ready offer-of-coverage records
- Accurate 1094-C and 1095-C generation transmitted through the IRS AIR system
With those records in hand, responding to a Letter 5699 becomes a matter of pulling reports, not reconstructing history.
Received a 5699? Your 30-day clock is already running.
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