In yet another sign that the IRS will be enforcing the Affordable Care Act, the IRS’s ACA Information Center for Taxpaying Professionals is providing updated guidance that it will require taxpayers to provide an indication of whether they had healthcare coverage in 2017, as required by the ACA, when electronically filing 2017 tax returns.
The IRS also said that paper returns that do not contain the ACA information may be suspended until the IRS receives additional information. This may delay any tax refunds.
The IRS said to avoid refund and processing delays when filing 2017 tax returns in 2018, taxpayers should indicate whether they and everyone on their return had coverage, qualified for an exemption from the coverage requirement or are making an individual shared responsibility payment. This process reflects the requirements of the ACA and the IRS’s obligation to enforce those requirements.
The 2017 reporting year will be the first time the IRS will not accept tax returns that omit this information. The Journal of Accountancy in a report noted: “Last filing season, President Donald Trump’s administration issued an executive order directing the government to limit any burdens imposed by the Patient Protection and Affordable Care Act, P.L. 111-148, pending repeal. In response, the IRS did not enforce the health care reporting requirement on 2016 returns filed in 2017, although taxpayers were still required to pay the shared-responsibility payment if they did not have coverage or qualify for an exemption.”
However, after a review of its process and discussions with the National Taxpayer Advocate, the IRS determined identifying omissions and requiring taxpayers to provide health coverage information at the point of filing will make it easier for the taxpayer to successfully file a tax return and should minimize refund delays.
The IRS guidance notes that taxpayers remain obligated to follow the law and pay what they may owe at the point of filing.
The recent guidance is consistent with previous information provided by the IRS. Earlier this year, IRS staff released letters that confirmed it would be enforcing the employer mandate and the individual mandate.
And IRS staff have indicated that penalty notices for the 2015 tax year may be sent by the end of the year.
