The approval of tax reform legislation by Congress may ultimately have an impact on the Affordable Care Act (ACA) in 2019. That’s when the legislation essentially repeals the individual mandate provision of the ACA by making the tax penalty $0 for any American who does not obtain health insurance.
Until then, expect the IRS to move forward with its efforts to enforce compliance with the ACA for the individual mandate. There is no change with respect to the employer mandate. The IRS has been and will continue to enforce it.
With the individual mandate in effect for the 2017 tax year, the IRS has indicated that it is only accepting 2017 tax returns that confirm the status of taxpayer healthcare coverage during the year. This is a change from past filing seasons, when the agency accepted tax returns without this information.
The IRS has issued guidance on how taxpayers can calculate the affordability exemption for the ACA’s individual mandate. The guidance addresses the challenges for individuals who live in areas where no bronze level plans are available in the healthcare marketplace for 2017.
In regards to the employer mandate, the IRShas started sending IRS Letter 226J tax penalty notices containing ACA penalty assessments for ACA information filings for the 2015 tax year. Some of these IRS Letter 226J notices contained penalties in the millions of dollars. More are expected to be issued in 2018, including for 2016 tax year filings.
For an infographic on how to respond to Letter 226J penalty notices, click here.
As for 2017 tax year filings, the IRS has extended good faith relief for 2017 and has extended the deadline for when employers must provide 2017 health coverage information forms to individuals as required by the ACA. For more information on IRS filing dates for 2018, click here.
If you haven’t done so already, now is the time to assess your compliance with the ACA and what data you need to file ACA related forms with the IRS for the 2017 tax year. Review your past years’ filings, consult with experts if you have any questions, and confirm that your previous year’s filings were properly filed. Implementing these simple steps now will help you timely respond to any IRS inquiries, and possibly reduce your overall penalty exposure under the ACA.
