Enrollment Policy Corner

2016

GEAR Alert: What to do with IRS 12C Letters

The issue: 

We have been hearing from enrollment assisters that consumers have been receiving 0012C or 12C letters from the IRS after they file their taxes. With the tax deadline right around the corner, we want to make sure you understand how to explain these letters to consumers and what to do about them.

The IRS sends a 12C letter to people that are on file as receiving an Advanced Premium Tax Credit (APTC), but did not include Form 8962 when they filed their 2015 taxes. Without the Form 8962, the APTC has not be reconciled. It is very important that people complete Form 8962 to reconcile their APTC because if they DON’T they will lose their APTC and cost-sharing reductions for the following calendar year.

Here’s what you need to do if you are working with someone that has received a 12C letter: 

Read the letter carefully and make sure the consumer responds in a timely manner.

They MUST respond to the letter, even if they disagree with the information in the letter. If there is a disagreement, the consumer should send the IRS a letter explaining what information they think is in error. If they didn’t purchase a health policy from the Marketplace, they need to let the IRS know.

Help them to provide the information requested in the letter. This includes:

  • a copy of their FORM 1095A provided by the Marketplace
  • a completed Form 8962
  • a copy of the corrected second page from their original return that shows the “Tax and Credits” and “Payments” sections. You must complete either the line for “excess advance premium tax credit repayment” (line 56, Form 1040, or line 29, Form 1040A) or the line for “net premium tax credit” (line 69, Form 1040, or line 45, Form 1040A)
  • If they did not receive a form 1095-A, have them log in to their HealthCare.gov or state Marketplace account or contact the Marketplace directly.

Note: If they originally filed a Form 1040EZ tax return, they must transfer the information from their Form 1040EZ to a Form 1040A and include it with their response. Form 1040EZ does not have the designated lines needed to carry forward amounts from a Form 8962.

How to respond to Letter 0012C:

The response can be sent by fax to the fax number on the Letter 0012C. It can also be mailed to the address listed at the beginning of the letter. Be sure to include a copy of the letter with the response. Detailed information on the Letter 0012C can be found here.

If you have any questions about this information, please contact Pranay Rana.

Note: If the consumer worked with a tax preparer, you should consider having them work with their preparer to fix the issue. You should share this information with their tax preparer.