Tax law changed regarding Obamacare mandate
Tax filers can skip disclosing whether they have obtained health insurance or not
February 25, 2017
In early February, the IRS quietly made a change in their rules saying they will no longer systematically reject income tax returns that fail to disclose whether the tax filers have obtained health insurance or not. The move was made by the IRS in response to a new Presidential Executive Order that authorized federal agencies to lower the financial burden of complying with the Affordable Care Act (ACA), also known as Obamacare. Under the mandate, tax filers have been required to have approved healthcare insurance, and not doing so resulted in a tax penalty called the "shared responsibility payment."
The Obamacare law survived financially through participation, or collecting the tax penalty from those who refused to purchase health care insurance. The IRS would not accept 1040s unless the coverage box was checked, or the shared responsibility payment noted, or an exemption form included. Otherwise these returns would be labeled "silent returns" and rejected.
The new decision raises questions on what will happen to people who have not obtained the required health insurance and submit tax returns without disclosing that information on their tax returns. 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 oweż. It is unclear how the IRS will now pursue obtaining the penalty payment when a taxpayer doesnt indicate their coverage status.