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Home Regulations IRS Audits Its Own Service to Taxpayers

IRS Audits Its Own Service to Taxpayers

2 minute read
by Robert Sheen

Despite a few glitches, the Internal Revenue Service says, the agency’s staff did a form_1040 “commendable” job implementing provisions of the Affordable Care Act.

The most significant new challenge the IRS faced during the 2015 filing season, the agency said, was the processing of tax returns reflecting two central provisions of the ACA: the Premium Tax Credit (PTC) and the Individual Shared Responsibility Payment (ISRP).

In a report to Congress required by law, National Taxpayer Advocate Nina E. Olson said implementation of those provisions included developing or updating information technology systems, issuing guidance, and working with other federal agencies.

Through the end of April, taxpayers filed about 2.6 million returns with Form 8962, the PTC, with an average of about $3,000 claimed per return. In addition, taxpayers filed about 6.6 million returns reporting the ISRP. The average amount reported was about $190.

About 10.7 million taxpayers filed Form 8965, Health Coverage Exemptions, claiming exemptions from the health-insurance coverage requirements.

The IRS cautioned that this data is preliminary and subject to change as it reviews the data, processes additional tax year 2014 returns, and conducts compliance activities.

The report says there were some significant glitches that occurred during the filing season, but most were not attributable to IRS error. The most significant were the Center for Medicare and Medicaid Services’ issuance of erroneous Forms 1095-A, Health Insurance Marketplace Statement, to about 800,000 individuals who had purchased health insurance from the federal Exchange.

The Treasury Department addressed the mistake by informing taxpayers who had already filed returns based on the incorrect information that they did not need to file amended returns, pledging that the IRS would not pursue the collection of any additional tax based on the updated information in the corrected forms.

The IRS answered about 68% of taxpayer phone calls on ACA issues, nearly double the overall average on its customer service lines of about 37%.

As a result of data sampling and analysis, the IRS discovered that more than 300,000 taxpayers overpaid the ISRP on tax returns processed through the end of April, by an average of $110. Most did not owe the ISRP because they were eligible for an exemption due to their low incomes.

The National Taxpayer Advocate recommended that the IRS issue refunds to these taxpayers without requiring them to file amended returns because the cost of having a tax preparer file an amended return would exceed the amount of the refund. The IRS has not yet made a decision on the recommendation

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IRS Audits Its Own Service to Taxpayers
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IRS Audits Its Own Service to Taxpayers
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Despite a few glitches, the Internal Revenue Service says, the agency’s staff did a “commendable” job implementing provisions of the Affordable Care Act.
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First Capitol Consulting, Inc.
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