News headlines are proclaiming the end of the ACA Individual Mandate. But, what does this really mean for taxpayers?
2/15/2017: National networks and publications blasted out shocking headlines:
IRS No Longer Enforcing Obamacare Individual Mandate!
IRS Deals Major Blow to Obamacare Mandate!
Obama’s Individual Mandate Is NO MORE!
The Sky is Falling! (oh wait, that was Chicken Little)
Don’t believe the hype….just yet.
On January 20th the President signed an executive order that directed federal agencies to interpret health care regulations to minimize the economic burden on individuals and businesses. With no fanfare, back on February 3rd the IRS notified tax preparation software companies that they would continue to accept “silent returns”. Starting with 2016 returns, the IRS was supposed to reject any forms where the insurance section was left blank (or “silent”).
What will this mean? This was the practice under 2014 and 2015 tax returns, so I don’t expect much to change at all. Those returns were accepted, but were subject to follow-up IRS inquiries. There were 5.1 million silent returns for tax year 2014 (no data seems to be available for the 2015 tax year). The IRS redirected staff throughout their organization once tax season was over to reach out to these taxpayers. It is not certain yet if staff will once again concentrate efforts in this area in 2016.
Tax materials will continue to illustrate the requirement to have coverage, along with the penalty amounts, and the IRS will continue to expect taxpayers to pay any required penalty.
So I wouldn’t get too excited about all the recent eye-catching headlines. If a taxpayer is audited, expect them to be charged a penalty if they cannot show they had medical coverage during 2016.
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I love numbers. I'm a math geek. I read benefits industry articles and periodicals for relaxation (but, honestly, I'm still a fun gal). I also like to share what I've learned and you'll find it all here.