IRS Won’t Withhold Tax Refunds if Americans Ignore ACA Insurance Requirement

//IRS Won’t Withhold Tax Refunds if Americans Ignore ACA Insurance Requirement

IRS Won’t Withhold Tax Refunds if Americans Ignore ACA Insurance Requirement

Many taxpayers are unaware that the Trump administration has taken the first steps to put its imprint on the Affordable Care Act, reversing plans to withhold tax refunds this year from Americans who do not follow an insurance requirement in the law.

Quietly the Internal Revenue Service has revoked an Obama-era instruction to taxpayers that was taking effect during the 2016 filing season to further compliance with the ACA’s requirement that most Americans carry health insurance or pay a tax penalty.

Following the Trump directive to easy the ACA penalty the IRS announced that it would process tax returns for people even if they do not send the require insurance notice (1095) with their returns as previously required by the ACA insurance requirement.  Instead tax returns will be processed as always.  Per a Washington Post article “The IRS said the decision, made earlier this month but not previously publicized, was in line with an executive order that President Trump signed hours after his inauguration, giving agencies broad authority to lighten the burden of federal rules under the ACA. ”https://www.washingtonpost.com/national/health-science/trump-health-officials-propose-rule-to-shore-up-affordable-care-act-marketplaces/2017/02/15/1f69bd7c-f307-11e6-b9c9-e83fce42fb61_story.html?utm_term=.0cdff656acc0

While allowing tax refunds to keep flowing, the IRS change does not affect the actual penalty most people face for not having health coverage, which can be eliminated only through a new law. The penalty is $695 per adult or 2.5 percent of a household’s income, whichever is greater.

At this time. it is unclear what impact this change may have on taxpayers that already filed a 2016 tax return and included the calculation and payment of the penalty on that return.

If you have a tax question or you would like to make an appointment to have your taxes prepared please feel free to call Michael Sargent, CPA at 262 923-8100 Extension 1.

To stay up to date with the quickly changing tax regulations follow Tax Management and Financial Horizons on Linked-In or visit our web site at https://www.managedtaxes.com/

2017-02-16T17:28:15+00:00