Past filings and future filings: how to fix both after IRS Letter 5699.
Answering the letter takes care of one year. To stay out of trouble you also need the missing years filed and a plan for every year ahead. This page covers both tracks and how to choose help for each. It is general information, not legal or tax advice.
Past years and every year after.
Track One: Past Years
The letter asks you to file or explain returns that are missing. That means preparing Forms 1094-C and 1095-C for each year you were required to file and did not, and furnishing the employee statements for those years.
Track Two: Current and Future Years
Reporting repeats every year. Each year needs its own data, its own filing and its own employee statements. Setting this up now keeps a second letter from arriving.
Why You Need Both
The letter addresses the year it names. A provider that only catches up old years does not run next year’s filing, and a provider that only runs ongoing filing may not take prior years. Confirm each track has an owner.
Six steps to catch up the missing years.
1. Confirm Every Missing Year
Start with the year the letter names, then check every other year you were required to file. Ask your prior provider, payroll team and tax preparer what was filed.
2. Confirm ALE Status for Each Year
The letter states ALE status turns on an average of 50 or more full time employees, including full time equivalents, in the preceding calendar year. Document the count for each year in question.
3. Gather the Data
Each return needs employee by employee, month by month information about the coverage offered and about employee status. Payroll and benefits administration records are the usual sources.
4. Use a Provider Built for Prior Years
Some providers prepare and file only the current year. Late returns are a separate service. Ask any provider whether it prepares prior year returns and how many years it can take.
5. File and Furnish
The letter states employers filing 10 or more information returns must file electronically. The employee statements for those years also need to be furnished.
6. Answer the Letter With the Plan
Check the Will File by a Date box with a date you can meet. If it is more than 90 days from the letter date, explain the reasons under Other.
Six steps to keep every year on track.
Set Up Ongoing Reporting Early
Choose an annual provider well before the next filing season so data collection starts with the year, not after it ends.
Track Status and Offers Monthly
Record employee status and coverage offered as it happens, from payroll and benefits administration, rather than rebuilding it at year end.
Keep Your ALE Determination Current
Recalculate each year from the preceding year headcount, and confirm how related companies are treated.
Know What Your Provider Relies on You For
Providers commonly rely on the employer for items such as controlled group status. Ask what the provider decides and what it expects you to supply.
Keep a Record of What Was Filed
Keep copies of the transmittal, the employee forms and the IRS acceptance for every year. It is the answer to the next IRS letter.
Calendar the Deadlines
Add the employee statement and IRS filing dates and any extension dates to a shared calendar.
Examples of the exposure from missing years.
These illustrations use the same hypothetical employer, 121 returns and 120 statements, and the IRS rates for returns due in 2025. Annual maximums can lower real totals.
Example: One Missing Year
The year is never filed, so every return and statement falls in the highest rate: 241 times $330 is $79,530 before any maximum. Filing the missing year promptly and explaining it to the IRS is how an employer works toward a reduced or removed penalty.
Example: Two Missing Years
If two years are missing, the exposure roughly doubles, to $159,060 in this illustration, because each year carries its own returns and statements. This is why the first step is to find every missing year.
Why Filing Sooner Matters
The IRS rate steps up with lateness, from $60 to $130 to the top rate after August 1. The IRS also states that if you can correct an issue in a notice, there may be a reduced or no penalty. Acting before an assessment gives you more options.
Example: A Reasonable Cause Request
A hypothetical employer relied on a provider who said it was filing, then learns nothing was filed. It files at once and explains what happened. The IRS states it may remove or reduce a penalty for acting in good faith with reasonable cause. Relief is never guaranteed.
Intentional Disregard Costs Double
The IRS rate doubles to $660 for returns due in 2025 where there is intentional disregard, and there is no maximum. Treating the letter as a nuisance and doing nothing is the path that risks that finding. Respond and file.
Fees Versus Exposure
Weigh a provider’s fees against the exposure in the examples. Ask for setup, per form or per employee, and renewal fees in writing and compare them to what each missing year could cost.
The second kind of penalty, explained.
Late filing is one risk. The employer shared responsibility payment is another, and it depends on the coverage you offered.
The A Payment in Brief
Not offering minimum essential coverage to at least 95 percent of full time employees, with a premium tax credit received, can lead to $3,340 per full time employee for 2026, excluding the first 30.
The B Payment in Brief
Offering coverage that is unaffordable or lacks minimum value, with a premium tax credit received, can lead to $5,010 per affected employee for 2026, capped at the A payment amount.
Full Penalty Guide With Examples
Worked examples of every penalty, with the numbers shown, on the IRS Letter 5699 page.
Past and ongoing filings are often two different providers.
Help With Past Filings
Look for a provider that prepares delinquent returns, files them electronically and furnishes employee statements for each missing year. Ask how many years it handles and how long it takes.
Help With Ongoing Filings
Look for a provider that runs the reporting every year, including a data portal, form preparation, filing and distribution. Ask whether it also takes prior years.
Ask What Is Included
Ask whether the service covers data validation, employee forms, IRS filing, support when an IRS letter arrives and any penalty protection, and what each one excludes.
Ask About Fees Up Front
Ask for the setup fee, the ongoing per employee or per form fee and the renewal fee in writing, and how fees apply if you have more than one related company.
Ask About Term and Termination
Ask how long the agreement runs, how it renews and what happens to fees and open work if you leave.
How We Can Help
We can help you with the filing. We work with specialist partners, one that catches up prior years and another that runs reporting going forward, and we can help you choose which fits.
A sensible sequence after the letter arrives.
Day One
Log the letter date, calendar the 30 day response date and send a copy to your adviser or provider.
Week One
Confirm which years are missing and your ALE status for each, and decide which box on the letter applies.
Week Two
Collect the employee data and choose the provider for past filings and for future filings.
Before Day 30
Mail the response with the right box checked, the filing date and your contact information.
After the Response
File and furnish the missing years and keep the IRS acceptance records.
Next Filing Season
Run the ongoing process from the start of the year so no year is missed again.
Six questions before you hire help.
Which Years Do You File?
Ask whether the provider handles prior years, the current year, or both.
How Do You File?
Ask whether returns are filed electronically and how you get proof of acceptance.
What Do You Need From Us?
Ask for the exact data list and the format so payroll can start now.
What Happens If the IRS Writes Again?
Ask whether the provider helps respond to IRS letters and what that covers.
How Are Fees Structured?
Ask for setup, per form or per employee, and renewal fees in writing.
Who Owns the Deadline?
Ask who tracks each date and who tells you when something is due.
Send us your renewal.
We’ll tell you whether it looks competitive, where we see opportunity, and the five questions we’d put to your carrier. No cost, and no obligation to move anything.
The renewal letter
Your current plan summary
Contribution split by tier
Enrolled counts by tier
Four documents — two more if your group is 50 or more. Nothing else; every extra one is a reason to postpone.
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