I thought IRS was not enforcing Obamacare penalty anymore?

I thought IRS was not enforcing Obamacare penalty anymore?

 Kevin DeHart’s Tax Service has the answer for you.   For more information, contact us at 985-876-3799 or 985-746-5370 (6519 W Main St., Houma) or in Metairie 504-885-3799.

This statement (or question) is partly true.  Please allow us to explain further for the benefit of everyone.

At the present time (April, 2017) the underlying statutory law of the Affordable Care Act (a.k.a. Obamacare) providing tax penalties for not having health insurance; the system of exemptions to not having health insurance; and the tax credit system set up for purchasing health insurance through an authorized marketplace, state health care exchange, all remain in place, and have not been repealed or replaced.

However, what has recently changed is an executive (i.e., Presidential) order directing the IRS to process individual income tax returns, where the health insurance coverage box is left unchecked.  This is different than the situation which existed prior to the order, and different than 2016, where the IRS was sending such tax returns back to taxpayers as being “incomplete.”

In addition, this area of the tax law is currently in a great deal of flux and uncertainty, so please keep monitoring the situation.  It seems likely that there will be further significant changes to heath care and insurance, especially as it impacts the tax code and penalties / credits, going forward.

This IRS will accept your return and process it; however, it has up to 5 years to make adjustments when it comes to the ACA.  The IRS responded on 2/22/17 to the President’s Executive Order:

“The recent executive order directed federal agencies to exercise authority and discretion available to them to reduce potential burden. ‎ Consistent with that, the IRS has decided to make changes that would continue to allow electronic and paper returns to be accepted for processing in instances where a taxpayer doesn’t indicate their coverage status.

However, legislative provisions of the ACA law are still in force until changed by the Congress, and taxpayers remain required to follow the law and pay what they may owe‎.

Processing silent returns means that taxpayer returns are not systemically rejected by the IRS at the time of filing, allowing the returns to be processed and minimizing burden on taxpayers, including those expecting a refund. When the IRS has questions about a tax return, taxpayers may receive follow-up questions and correspondence at a future date, after the filing process is completed‎. This is similar to how we handled this in previous years, and this reflects the normal IRS post-filing compliance procedures that we follow.”  Source:  Internal Revenue Service.

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