So I received a letter from the IRS today. I opened the letter expecting it to be a tax bill, which it was. What I didn’t expect to see was the amount owed, which was considerably less than what was on my 1040 form. I opened up my 2016 tax return, got out my calculator, and did a little math. What I found was that the amount that the IRS says I now owe in the letter is the same as what’s on my tax return LESS the ACA Individual Mandate penalty! If this is true for everyone who legitimately owes the penalty, then the ACA is being undermined by the Trump Administration because that tax goes towards paying for other benefits under the law.
I had heard rumors that the IRS was accepting returns without the health care section filled out but every tax professional I spoke with said to include it because the ACA is still the “law of the land” and I could incur additional penalties if the IRS decided to enforce the law. Well the letter seems to confirm the rumors and the IRS is going one step beyond and revising tax returns to exclude the penalty altogether. Who knows? They may even be issuing refund checks to people who have already paid the penalty.
Please note this was not due to an exemption being granted. I did not seek an exemption through healthcare.gov and my family did owe the penalty due to lack of ACA-compliant coverage for one family member. We followed the law as it is written and took our lumps come tax time. We are not complaining about owing less money (who would?) but we are very concerned about Obamacare’s future. Combine not enforcing the Individual Mandate with Trump’s threats of not funding Cost Sharing Reductions (CSRs) and the ACA might not survive to next year, regardless of whatever awfulness the Republican Congress is cooking up.
So I have a favor to ask to Kossack community: If you received a letter like the one I received or a refund for paying the Individual Mandate penalty, could you please make note of it in comments?
Thank you very much!
